You Are Looking For Business Credit ! A Commercial Bank Financing Alternative in Canada!
Alternatives To Traditional Bank Loans / Bank Lending
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing businesses today
Unaware / Dissatisfied with your financing options?
Call Now! - Direct Line - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
Email - sprokop@7parkavenuefinancial.com
Are you tired of navigating the complexities of traditional banking for your business financing needs?
Discover streamlined solutions with Canada's leading bank alternatives!
7 PARK AVENUE FINANCIAL originates business financing solutions for Canadian Businesses – We offer BANK ALTERNATIVES & solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
SMALL BUSINESS BANK LENDING ALTERNATIVES IN CANADA
INTRODUCTION: Bank Alternatives in Canada for Business Lending
When most Canadian business owners and financial managers think of commercial finance business loan solutions in Canada] commercial bank financing comes up logically as the ‘go-to’ solution.
These days businesses in Canada seek innovative alternatives to traditional banking for their financial needs. These are often tailored solutions to address the diverse requirements of modern enterprises in Canada - and they are reshaping the way companies access capital to run and grow their businesses.
That seems logical because probably for many decades in Canada, it was the only solution. In recent times financing alternatives via bank competitors have proliferated.
Financial technology companies have emerged as formidable alternatives, offering a wide range of financial services that rival those of traditional banks. Let’s examine some key aspects of Canadian chartered bank loans & commercial financing, and perhaps some alternatives… who knew?
Business financing options without a traditional bank?! Small businesses may be rejected by banks or credit unions, but alternative lenders offer loans that are affordable and quick to fund! The shift from traditional banks to these modern alternatives highlights the evolving landscape of banking, where lower fees, more features, and better convenience are increasingly prioritized by customers.
Borrowing from a chartered bank in Canada comes under two categories for most small to medium-sized corporations … term loans and revolving lines of credit. Banks are very focused on your cash flow for the simple reason that it, plus additional collateral that is pledged, becomes the source of repayment.
It is well known that Canadian chartered banks have pretty well the highest reputation in the world for being well-run, profitable, and soundly capitalized. That becomes a double-edged sword when you are a borrower looking for commercial bank financing, for the emphasis on your overall credit risk, assets, cash flow coverage, and personal guarantees of shareholders are somewhat intense!
WHEN FINANCIAL INSTITUTIONS LET YOU DOWN CONSIDER AN ALTERNATIVE LOAN
When your lines of credit or term loans can’t be repaid in the eyes of the bank then you're deemed 'non-performing... (Even though you're working as hard as ever!).
Over time small business owners realize that a lot of the financing they need might not be accomplished by Canadian chartered bank loans because of the significant emphasis that is placed on the rearview mirror.
What do we mean by that?! Simply that your past financial performance is often a huge part of the overall bank approval decision for your new financing. So even if you have great prospects, new contracts, new owners, new equity, etc., etc., etc. the reality is that last year's financial losses, or negative cash flows or some other incident will probably preclude you from being approved, at least in the amount that you might desire.
But of course, for small businesses, being approved for a traditional bank loan by a chartered bank in Canada for the financing you need pretty well means you are achieving the best finance rates and terms in the country. The banks' low returns on commercial borrowers (because of those low rates) are compensated by the low risk they take.
When clients talk to us about focusing on traditional Canadian commercial bank financing it is our advice that they totally disregard the rate (because as we said, there isn’t any better) and instead focus on the ratios and covenants and personal guarantee that make up your financing approval.
ASSESSING BENEFITS OF CREDIT UNIONS AND ALTERNATIVE LENDING IN CANADA
And what about those alternatives and competitors to Canadian chartered banks? Over the last 10 - 20 years several very solid alternative finance offerings are available to you the Canadian business borrower.
THE ALTERNATIVE LENDING OPTION IN CANADA / TOP ONLINE BANKS AND LENDING ALTERNATIVES TO CONSIDER
They include alternative loans & solutions from alternative lenders such as:
Asset-based lending via non-bank credit lines - line of credit solutions combining your accounts receivable, inventory, and fixed assets via business lines of credit that revolve according to your needs and sales revenues - there is no upper limit loan amount in asset-based lending
Confidential receivable financing/invoice financing / - a short-term loan solution for day-to-day cash flow needs; invoice factoring as a business sells invoices for funding options is used by thousands of businesses every day - Outstanding invoices are a solid form of cash flow when financed properly via a bank or commercial lender
Merchant cash advances/funding for future credit card sales/merchant cash advance has evolved into short term working capital loans readily accessible for many businesses - a good personal credit score of the business owner is required from this type of working capital loan from the alternative lender - these are lump sum term loans typically repayable over a year based on annual revenue
Equipment financing for new equipment and technology with monthly payments tied to your cash flows and business growth prospects around new assets and technologies
Sale-leaseback scenarios
Even more, alternatives are available for many business owners, including:
Purchase order financing,
Bridge loans, and
Tax credit financing (sr&ed)
In many cases, a lot of the banks actually have started new divisions to compete with these new competitors - however typically in our opinion, their same credit standards are in place; that is to say, it’s not a bad thing, just the same challenge of getting approved within a bank offering..
Choosing the right bank account, including chequing accounts and savings accounts, is crucial for managing business finances effectively. Non-traditional lenders like Neo Financial offer innovative credit services, providing businesses with more flexibility.
Credit unions present an alternative with a focus on local communities and various membership opportunities.
EQ Bank stands out for its low fees and absence of foreign transaction fees, making it an attractive option for businesses looking to minimize costs. The benefits of a linked debit card and mobile banking app cannot be overstated, allowing for efficient management of finances on the go.
Financial technology companies offering the mid-market exchange rate ensure businesses can make international payments without unnecessary costs.
The presence or absence of monthly fees is a significant consideration when choosing an alternative lender, as it directly impacts the cost of banking services.
Online banks offer numerous benefits over traditional banking, including lower fees and higher interest rates. Registered accounts are another savings option available through some alternative financial institutions, providing businesses with additional ways to manage their finances.
KEY TAKEAWAYS
Alternative Lenders: These institutions offer financing outside traditional banks, providing faster approvals and tailored solutions.
Fintech Solutions: Technological innovations revolutionize financial services, offering convenience and efficiency.
Regulatory Compliance: Bank alternatives adhere to regulations ensuring consumer protection and financial stability.
Accessibility and Convenience: Digital platforms offer easy access to financial services, catering to diverse business needs.
Risk Management: Employing algorithms and data analytics, bank alternatives assess and mitigate lending risks effectively.
CONCLUSION - ALTERNATIVE LENDING OPTIONS
Venture capital or angel investors out of the question -? They usually are! As a business owner, you owe it to yourself to investigate business loans via alternative lending -
Want to discuss commercial bank financing via a bank loan, or an alternative via competitors to the chartered banking industry in Canada?
Speak to 7 Park Avenue Financial about what alternative lenders offer, we're a trusted, credible and experienced Canadian business financial advisor who can work with you to achieve proper financing for your firm at interest rates commensurate with your overall credit quality for small and mid-size businesses in Canada.
FAQ: FREQUENTLY ASKED QUESTIONS / MORE INFORMATION
What are the advantages of using bank alternatives for business financing?
Bank alternatives often offer faster approval processes, more flexible terms, and tailored solutions compared to traditional banks. They also provide access to innovative financial products and may be more willing to work with businesses with less established credit histories.
How do bank alternatives differ from traditional banks in Canada?
Bank alternatives typically operate online or through digital platforms, offering convenience and accessibility. They may focus on specific niche markets or offer specialized products like invoice factoring, merchant cash advances, or peer-to-peer lending, providing more tailored solutions to businesses' financial needs.
Are bank alternatives regulated in Canada?
Yes, bank alternatives in Canada are subject to regulations and oversight by various regulatory bodies, depending on the type of financial services they offer. This regulation helps ensure consumer protection, fair lending practices, and financial stability within the industry.
Can businesses of all sizes benefit from using bank alternatives?
Yes, bank alternatives cater to a wide range of businesses, from small startups to large enterprises. They offer flexible financing options that can be tailored to suit the needs of businesses at different stages of growth, making them a viable option for companies of all sizes.
How can businesses find reputable bank alternatives in Canada?
Researching online, reading reviews, and seeking recommendations from other business owners can help identify reputable bank alternatives in Canada. It's essential to consider factors such as reputation, terms and conditions, fees, and customer service when selecting a financial partner.
What types of businesses are best suited for bank alternatives in Canada?
Bank alternatives can be beneficial for various industries, including retail, hospitality, e-commerce, and professional services. Businesses with fluctuating cash flow, seasonal sales, or limited collateral may find bank alternatives particularly advantageous.
Do bank alternatives in Canada offer business savings or investment options?
While bank alternatives primarily focus on providing financing solutions, some may offer ancillary services such as business savings accounts or investment opportunities. However, the availability and features of these services may vary among providers.
How do bank alternatives in Canada mitigate risk for lenders and borrowers?
Bank alternatives often employ risk assessment algorithms, data analytics, and proprietary underwriting criteria to evaluate creditworthiness and mitigate potential risks. They may also require collateral or personal guarantees to secure loans and minimize the lender's exposure to default risk.
How do credit unions compete with business banking in Canada?
Credit unions in Canada compete in business banking by leveraging their unique advantages and offering tailored solutions to meet the needs of small and medium-sized enterprises (SMEs). Instead of focusing solely on profit, credit unions prioritize member satisfaction and community involvement, which resonates with many businesses seeking personalized service and local support. They compete by offering personalized service, a local focus, competitive rates and fees, innovative products and services, and technology adoption.
