YOUR COMPANY IS LOOKING FOR BUSINESS FINANCE SOLUTIONS!
CAPITAL NEEDS IN CANADA
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Discover how commercial loans can fuel your success and solve cash flow challenges.
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Commercial Business Loans and working capital solutions – Save time and focus on profits and business opportunities
7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”
A SHOCKING STATISTIC?
According to a recent study, nearly 27% of small businesses that applied for commercial loans in the past year were denied funding, despite many having strong credit profiles and profitable operations.
CANADIAN BUSINESS SOLUTIONS
Commercial loan needs in Canada: Cash and capital are two fundamental needs for any Canadian business. Your ability to raise capital and access funding for investment depends on some key factors. So, what are those types of financing for businesses? Let’s dig in!
Commercial loans provide business capital for growth and expansion. Financing can finance equipment and technology, expand operations, or manage day-to-day cash flow. From small startups to large corporations, commercial loans let 7 Park Avenue Financial be your single point trusted partner, showing you tailored solutions to meet business needs.
What Are Your Cash and Working Capital Needs? Understanding Commercial Business Loans
Ever counted the needs you have around working capital and ongoing cash flow for a growing business?
If that applies to your industry, they include fixed costs such as rent/leases, wages, equipment needs, and even ongoing research and development. Business owners also want to ensure they are not overly exposed personally to personal assets and collateral. They are more often than not required to pledge.
The hard reality is that the search for cash and capital is never-ending, and your current situation will rarely mirror your long-term needs. All those factors contribute to a feeling of entering the dark side.
WHAT FACTORS DETERMINE THE AMOUNT AND TYPE OF WORKING CAPITAL LOAN YOUR BUSINESS NEEDS
Many business owners and clients we meet sometimes believe there is one silver bullet in the world of business loans. Top experts tell us that a number of different factors determine what type of capital you require and in what amount. Those factors include:
Type of industry
Capital Intensity requirements re needs for fixed assets
Profit margins
Selecting the right borrowing solution for your business needs is crucial, considering these factors to make the best choice.
ARE YOU UTILIZING YOUR TRUSTED BUSINESS PARTNER NETWORK
Sources of capital and financing in business can potentially be accessed quicker if you have access to people in the know, including a financial institution, accountants, lawyers, or a Canadian business financing advisor such as 7 Park Avenue Financial—their ability to provide you with a road map to financing success increases commensurate with their expertise.
WHAT STAGE IS YOUR BUSINESS IN? HOW DOES IT AFFECT YOUR FINANCING CHOICES
There are considerable differences in capital solutions depending on whether your firm is a start-up, in business and growing, or mature and looking for new markets or acquisitions.
A relationship manager can provide personalized financial solutions tailored to your business stage. NOTE: One of Canada’s best solutions for early-stage start-up financing is the Govt Small Business Loan, aka the ‘ SBL. ‘
We could call it a bank loan per se, but the Canada Small Business Financing program is specially tailored for borrowers who can’t meet traditional bank criteria. It finances equipment and even leasehold improvements to rented premises.
Having a track record in business or a particular industry helps here. Regarding financing for startups, the ‘ SBL LOAN ‘ is one of the best and most popular methods of funding a new business, a franchise, or even completing a business acquisition.
The program is ‘ made to measure ‘ for financing entrepreneurs.
HOW DOES A BUSINESS FINANCE ASSETS - FINANCING OPTIONS FOR BUSINESS
As businesses mature, they need to both acquire and finance assets. Financing assets can be achieved through various means:
Traditional bank lines and term loans at the best competitive interest rates at variable or fixed rate funding. Understanding the amortization period for term loans is essential, as it affects monthly payments and overall loan costs.
Receivable and Inventory Financing / Short-term funding via current asset monetization and ongoing access to working capital.
Monetization of SR&ED tax credits for companies that participate in that program
Asset-based non-bank business credit lines - They are known as ‘ ABL’s
Equipment financing and Sale Leasebacks. An equipment loan can be a viable option for acquiring necessary machinery and equipment.
Merchant Cash Advances / Business Credit Cards. A line of credit is a flexible borrowing option for covering day-to-day operating costs or capitalizing on time-sensitive opportunities
When business owners assess their company needs, they should know that commercial lenders have never been more plentiful and provide financing in various ‘ niches’ for SME COMMERCIAL FINANCE needs.
Financing commercial real estate can be complex, involving various steps and costs compared to residential properties. The interest rate on alternative financing solutions will vary with overall credit quality, type of financing, and funding amount.
A good business plan will benefit a large majority of traditional and alternative financing solutions—in some cases, it’s a key requirement of funding. 7 Park Avenue Financial business plans meet and exceed bank and commercial lender requirements.
Most small business owners will need to demonstrate a good credit score and personal credit history - important in many, but not all, business loan applications.
Entrepreneurs will recognize over time that borrowing money will always intertwine business and personal finances to some extent.
AVOIDING OWNERSHIP CHANGE AND DILUTION OF EQUITY IN YOUR BUSINESS
We constantly remind clients that angel investors, friends and family, venture capital/venture capitalists, and private equity groups offer equity capital for the rare 1-2% of businesses that qualify for this method of capital raising - ' Equity. '
KEY TAKEAWAYS
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Loan terms define the agreement between lender and borrower, including repayment period and interest rates.
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Collateral often secures commercial loans, reducing risk for lenders and potentially lowering interest rates.
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Credit scores are crucial in determining loan eligibility and favourable terms for businesses.
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Interest rates impact the overall cost of borrowing and vary based on factors like creditworthiness and market conditions.
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Different types of commercial loans cater to specific business needs, such as equipment financing or working capital.
CONCLUSION
More mature firms may want to divest either divisions or founders may wish to sell their business.
Acquisition financing must be matched to proper valuation and asset situations.
Small businesses will always find it more challenging to raise funds. If you’re at a crossroads in business financial solutions and don't want to access capital raising via private investors who are focused on your equity, call 7 Park Avenue Financial.
We are a trusted, credible and experienced Canadian business financing advisor who can bring some light to the ‘ dark side’ of business: funding! Sources of financing a business have never been closer!
FAQ
How do commercial loans benefit businesses?
Commercial loans provide essential capital for growth, allowing businesses to invest in equipment, expand operations, or manage cash flow. They offer flexibility, potentially lower interest rates than personal loans, and can help establish business credit.
What types of commercial loans are available?
Several types of commercial loans exist, including term loans, lines of credit, equipment financing, government-guaranteed SBL loans, commercial mortgages, and bridge loans. Each type serves different purposes, from long-term investments to short-term cash flow management.
What factors do lenders consider when approving commercial loans?
Lenders typically evaluate business credit scores, financial statements, time in business, collateral, and industry outlook. They also consider the loan purpose and the borrower's repayment ability based on cash flow projections.
How can I improve my chances of getting approved for a commercial loan?
To increase your chances of approval, maintain a strong credit score, prepare detailed financial statements, create a solid business plan, offer valuable collateral, and build relationships with potential lenders before applying.
What are the typical repayment terms for commercial loans?
Repayment terms vary depending on the loan type and purpose. Short-term loans may have terms of a few months to a year, while long-term loans can extend up to 25 years. Terms often include regular payments of principal and interest.
What alternative financing options exist besides traditional commercial loans?
Alternative financing options include invoice factoring, merchant cash advances, crowdfunding, and peer-to-peer lending. These options may offer faster approval or more flexible terms than traditional loans.
How do economic conditions affect commercial loan availability and terms?
Economic conditions significantly impact loan availability and terms. During economic downturns, lenders may tighten criteria and increase rates, while favourable conditions often lead to more accessible and affordable loans.
Can startups with a limited operating history qualify for commercial loans?
Startups may face challenges obtaining traditional commercial loans due to limited history. However, options like SBL loans, angel investors, or venture capital might be more accessible for new businesses with solid growth potential.
What role do personal guarantees play in commercial lending?
Personal guarantees often serve as additional security for lenders, especially for small businesses. They make the business owner personally responsible for repaying the loan if the business cannot, increasing the lender's confidence.
How do international businesses navigate commercial loans in foreign markets?
International businesses often work with banks experienced in cross-border lending. When seeking loans in foreign markets, they may need to navigate different regulatory environments, currency exchange risks, and potentially higher interest rates.
What is the difference between secured and unsecured commercial loans?
Secured loans require collateral, such as property or equipment, which the lender can claim if the borrower defaults. Unsecured loans don't require collateral but typically have higher interest rates due to increased lender risk.
How do commercial loan interest rates compare to other types of loans?
Commercial loan interest rates often fall between personal loan and mortgage rates. They're typically lower than credit card rates but higher than home loans. Rates vary based on loan type, term length, and borrower creditworthiness.
What are common uses for commercial loans in different industries?
Commercial loans serve various purposes across industries. Retailers might use them for inventory, manufacturers for equipment purchases, tech companies for research and development, and service businesses for expansion or working capital needs.
What are the different types of commercial loans?
Several types of commercial loans are available to businesses, each designed to meet different financing needs.
- Term loans provide a lump sum of capital repaid over a fixed period, which is ideal for long-term investments or major purchases.
- Lines of credit offer flexible access to funds as needed, perfect for managing cash flow fluctuations or short-term expenses around inventory
- Equipment financing allows businesses to purchase necessary machinery or technology, using the equipment as collateral.
- Commercial real estate loans are specifically for purchasing, renovating, or refinancing business properties.
- SBL Government loans, backed by the government of Canada, offer favourable terms for small businesses that might struggle to qualify for conventional loans.
- Working capital loans provide short-term financing to cover operational costs and day-to-day expenses.
- Invoice financing allows businesses to borrow against unpaid invoices, improving cash flow.
- Merchant cash advances provide upfront capital in exchange for a portion of future credit card sales.
- Construction loans fund the building or renovation of commercial properties, typically converting to a mortgage upon completion.
- Business acquisition loans help finance the purchase of existing businesses or franchises.
What are the collateral requirements for business loans?
Collateral requirements for business loans vary depending on the loan type, amount, and lender's risk assessment. Here's an overview:
- Tangible assets often serve as collateral. These may include real estate, equipment, inventory, or vehicles owned by the business.
- Personal assets of business owners sometimes secure loans, especially for smaller companies. This could involve personal property or savings accounts.
- Accounts receivable frequently act as collateral for certain types of financing, particularly invoice factoring or asset-based lending.
- Blanket liens give lenders claim to all business assets, providing comprehensive security but potentially limiting future borrowing options.
- Cash savings or investments can be used as collateral, reducing the lender's risk and potentially securing better loan terms.
- Unsecured loans exist but typically have higher interest rates due to increased lender risk.
- Specific collateral requirements depend on loan size. Larger loans generally demand more substantial or valuable collateral.
- Some lenders accept intellectual property as collateral, particularly relevant for technology or creative industries.
- Government-backed loans, like Canadian government SBL programs, may have more flexible collateral requirements to encourage small business growth.
- Lenders usually require collateral valuation before loan approval, ensuring its worth adequately covers the loan amount.
