YOUR COMPANY IS LOOKING FOR SOURCES OF FINANCE!
SOURCES OF FINANCING
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
Phone = 416 319 5769
Unlock your business's full potential with the right financing - discover tailored solutions that fit your unique needs and fuel your growth.
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Financing Options For A Business 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”
Financing Options for a Business: Canadian Guide
Financing sources in Canada from various financial institutions for Canadian businesses must sometimes seem like a matter of truth or fiction for Canadian business owners and their financial managers.
That is the feeling we get from clients talking to us at 7 Park Avenue Financial as they balance debt and equity options.
So if those sources of business finance exist (THEY DO!), let’s look at what is available for the commercial borrower, hopefully eliminating some of the ‘turbulence’ associated with the search for business funding.
When all those ‘angel investors’ and venture capitalists have abandoned you, it’s time for some real-world financing.
SOURCES OF BUSINESS FINANCE
We will focus primarily on sources of capital that essentially are available immediately for borrowers when it comes to business financing in Canada - they include:
Trade Credit From Suppliers
Bank Solutions
Equipment Lessors
Lending institutions are crucial in providing these business financing options, each with specific requirements and benefits.
DIRECT WORKING CAPITAL FINANCING
Working Capital Providers:
Non-Bank Asset Based Lines Of Credit
Short and Intermediate-Term Working Capital Loans
Working capital financing is crucial for businesses to maintain smooth operations and manage day-to-day business expenses. Various options are available.
When considering working capital loans, it is essential to calculate the monthly payments to ensure they fit within your business's cash flow.
GOVERNMENT BUSINESS ASSISTANCE
Government loans for businesses are also available, primarily via the Canada Small Business Financing Program sponsored by Industry Canada through various financial institutions.
In addition to loans, government grants are also available under various programs from both federal and provincial regimes.
Never forget to investigate Canadian government assistance in pandemic or non-pandemic times!
At 7 Park Avenue Financial, we focus on business funding, but it is important to note that government business grants are also available under various programs from both federal and provincial regimes.
DON'T FORGET SUPPLIER RELATIONSHIPS
Businesses should never forget that supplier/vendor financing is one of the best and cheapest forms of capital and cash flow.
Why? It is much easier to obtain, is rarely, if ever, ' secured' or ' collateralized ‘and typically carries no interest penalty.
You should not forget that delaying payment to suppliers is a ' cash flow positive 'strategy, but you should never want that strategy to deteriorate your relationship with a key vendor.
Furthermore, the cost of not taking a payment discount must also be measured if your firm has cash. The bottom line is that small business financing can be external or internal!
So why is prompt payment to a supplier/vendor such a key cash flow/profit variable? You can check with your accountant, but let’s say you bought 10k of product from a supplier and successfully negotiated a 2% NET 60 payment term.
Calculating the discount foregone and the proceeds from using the money, you might find that’s an 18% savings rate—so if you can borrow for less than that, you are ahead of the game.
The bottom line is that you should never underestimate the power of supplier financing from a payment and cash flow perspective as you market your goods and services.
DOES YOUR FIRM QUALIFY FOR BANK FINANCING?
While a bank loan might be a first-choice financing source for small businesses, many firms looking for SME Commercial Finance solutions will often find they don’t qualify for some or all of the funding they need to run and grow the company.
Bank business lines of credit are low-cost and flexible. Still, they require appropriate bank collateral and an understanding that there might be restrictions on your financials regarding additional borrowing from others, etc.
DEBT FINANCING
QUALIFICATIONS FOR BANK FINANCING IN CANADA
Suppose your company meets bank cash flow, ratio, and covenant requirements. In that case, banks are certainly the lowest-cost and excellent source of intermediate capital for loans on equipment, fixed assets, and a revolving line of credit.
Credit unions are nonprofit financial cooperatives that offer competitive loan options with potentially lower interest rates and fees than traditional banks.
WHAT IS THE MOST POPULAR FORM OF ALTERNATIVE BUSINESS FINANCING OPTIONS THESE DAYS?
One of the most popular forms of finance, growing constantly in popularity, is A/R financing. Why? It provides significant capital without additional equity and allows you to avoid long-term debt.
Essentially, you are monetizing your current assets, ie accounts receivables. In addition to A/R financing, personal investment from the business owner’s savings or assets can also provide necessary capital without incurring debt.
Yes, A/R finance has a higher cost, and we spend a lot of time speaking to clients about the fact that the old stigma of A/R factoring disappears daily. The old alternative is fast becoming the new traditional for businesses in Canada.
The benefit of A/R Finance also includes the fact that your sales, in effect, become an ATM, generating true cash as you sell products/services. This type of business finance is also an effective way to manage seasonal bulges in your business.
FINANCING INVENTORY
Inventory financing is typically done with a bank line of credit but is even more effective in conjunction with a non-bank asset-based line of credit.
Good inventory financing strategies are available if your firm has quality products; good inventory turns and is not of a perishable type - i.e. food.
FINANCING NEW ASSETS
Equipment financing is a solid use of intermediate financing—although not a ‘business loan’ per se. It allows you to avoid significant cash outlays, replenish assets and technology, obtain financing approval more efficiently, and pay for assets over their useful economic life.
A huge portion of all businesses in North America leases both new and used equipment. Utilizing personal savings can also be a viable option for financing new assets, allowing business owners to maintain control and minimize debt.
What is the bottom line in Canadian business financing options? Understanding what sources are available for what maturity can eliminate the turbulence that comes with business finance challenges. It's as simple as that.
KEY TAKEAWAYS
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Traditional bank loans offer established businesses competitive interest rates and favourable terms.
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SBL Government guaranteed loans provide government-backed financing with lower down payments and flexible requirements - and includes eligibility for start up and early stage companies
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Invoice financing allows companies to borrow against unpaid customer invoices, improving cash flow.
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Business lines of credit offer flexible access to funds as needed, which is ideal for managing working capital.
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Angel investors provide early-stage funding in exchange for equity, often bringing valuable expertise.
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Venture capital firms invest substantial amounts in high-growth potential startups, accelerating expansion.
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Crowdfunding platforms enable businesses to raise funds from numerous small investors or pre-sell products.
AN UNCOMMON TAKE ON FINANCING OPTIONS FOR A BUSINESS
Leveraging intellectual property as collateral for business loans is an innovative approach that allows companies to unlock the value of their intangible assets.
This method enables businesses, particularly those in technology, media, or creative industries, to secure funding based on the strength of their patents, trademarks, or copyrights. By assigning a monetary value to these assets, companies can access larger loan amounts or more favourable terms than they might through traditional collateral.
This strategy provides a unique financing solution and highlights the importance of protecting and developing intellectual property as a critical business asset.
CONCLUSION
Financing Options For a Business encompasses diverse funding solutions designed to meet companies' specific needs at various growth and development stages.
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success, assisting you with your needs for financing sources in Canada to run and grow your company.
Small businesses in Canada need all the help they can get, whether you are an established business, medium-sized, or a start-up / new business. Financing options via 7 Park Avenue Financial are always available if you're prepared to investigate.
FAQ
What are the main advantages of securing business financing?
Key benefits of business financing include access to capital for growth, improved cash flow management, and the ability to seize new opportunities. Compared to equity financing, it can also help maintain ownership control.
How can business financing impact a company's long-term growth?
Business financing can fuel expansion, fund research and development, enable equipment purchases, and support marketing efforts. These investments can increase revenue, market share, and overall business value.
Are there financing options available for businesses with less-than-perfect credit?
Yes, alternative lenders, invoice financing, and certain Government SBL business loans from a participating financial institution cater to businesses with less-than-perfect credit. These options may have higher interest rates but can provide necessary funding when traditional loans are unavailable.
What factors should be considered when choosing a financing option?
Consider the purpose of the funds, repayment terms, interest rates, collateral requirements, and potential impact on business ownership. Also, evaluate your business's current financial health and future projections.
How can a business prepare to apply for financing?
Prepare a solid business plan, organize financial statements, improve your credit score, and gather necessary documentation. Research different lenders and their requirements to increase your chances of approval.
What role does personal credit play in securing business financing?
Personal credit often plays a significant role, especially for new or small businesses. Many lenders consider the business owner's personal credit history when evaluating loan applications, as it can indicate financial responsibility.
How does seasonality affect business financing options?
Seasonal businesses may benefit from specific financing options like lines of credit or revenue-based financing. These solutions provide flexibility to manage cash flow during off-peak periods and capitalize on busy seasons.
Are there industry-specific financing options available?
Yes, many industries have tailored financing options. For example, construction companies might use progress invoicing, while restaurants could benefit from specific equipment leasing programs.
What are the potential risks of taking on business debt?
Taking on debt carries risks such as cash flow strain from repayments, potential loss of collateral, and reduced flexibility in business operations. It's crucial to carefully assess the company's ability to manage debt before proceeding.
How does inflation impact business financing decisions?
Inflation can affect interest rates, borrowing costs, and the real value of debt over time. During periods of high inflation, fixed-rate loans may become more attractive, while the eroding value of money could benefit borrowers in the long term.
What is the difference between debt and equity financing?
Debt financing involves borrowing money that must be repaid with interest, while equity financing involves selling a portion of ownership in the business. Debt financing allows you to maintain control but requires regular payments, whereas equity financing doesn't require repayment but dilutes ownership.
How do interest rates affect various financing options?
Interest rates significantly impact the cost of borrowing across different financing options. Higher rates increase the overall cost of loans and lines of credit, potentially affecting cash flow and profitability. Lower rates make borrowing more affordable, potentially opening up more business financing opportunities.
What role do financial projections play in securing business financing?
Financial projections are crucial in securing business financing as they demonstrate the company's potential for growth and ability to repay loans. Lenders and investors use these projections to assess the business's financial health, revenue potential, and overall viability, helping them make informed decisions about providing funding.
ABOUT 7 PARK AVENUE FINANCIAL
7 Park Avenue Financial originates traditional and alternative financing and asset-based financial services providers that offer lease financing, cash flow and working capital financing, and business acquisition loans.
The company works closely with clients to develop key business strategies based on their unique needs. The company is committed to providing the highest level of customer service and innovation to help businesses succeed.
Combining our experience and solutions, we help our clients achieve profitable cash flow and debt financing and streamline the process with a full range of credit offerings.
