YOUR COMPANY IS LOOKING FOR BUSINESS FINANCING ALTERNATIVES
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
Term Loans. Cash Flow Solutions for working capital. Business owners and financial managers focus on working capital whilst sometimes not determining whether the business financing solution is a longer-term focus.
TERM LOAN OR CASH FLOW FINANCING?
We first need to point out the differences between a business term loan and a receivable financing/working capital type financing solution.
WHAT IS A TERM LOAN
Business loans of a term loan nature tend to be fixed payments. They will bring what we will call permanent working capital into your business. The nature of these loans is that they tend to be 'fixed' in term, payments, and rates. Your business can acquire a working capital business loan in a couple of different ways.
IT'S ALL ABOUT YOUR CASH FLOW TO SERVICE THE LOAN
The transaction can be facilitated purely on a 'cash flow 'basis. If the lender feels your firm has the cash flow to support the loan a loan will be created around that belief. Your historical and current financial statements (as well as your projections) should validate that your cash flow can meet the payment requirements of the loan.
CASH FLOW LOANS CAN BE SECURED OR UNSECURED
The cash flow term loan can also be achieved in two other ways; it can be structured around what is known as a mezzanine or subordinated debt basis, or via a sale and leaseback of your assets or real estate. Some business owners feel it feasible to consider a 2nd commercial mortgage on their property, as an alternative to not having to sell the real estate to bring cash back into the firm.
RECEIVABLE FINANCING/ FACTORING
We've covered the term loans portion of a cash injection into your firm. Another popular alternative is a 'factoring solution'. This solution is becoming increasingly popular in Canada. We point out that the factoring solution should generally be viewed as an interim solution - our experience is that a firm factors their receivables for a year or so prior to regaining a traditional financing status with the bank for a true margined operating line of credit.
THE COST OF ALTERNATIVE FINANCING IS HIGHER BUT PROVIDES ACCESS TO NON-BANK CAPITAL
To any Canadian business owner that currently factors their assets, it is abundantly clear that the costs and processes are significantly more burdensome than a Canadian chartered bank facility - however, they do work, and they work for your firm now! when you need it.
WHY RECEIVABLE FINANCING WORKS
Canadian business considers Accounts Receivable Financing solutions when they have capital and debt ratio issues in their business. On many occasions, the customer has a bank relationship and you need to simply augment that relationship with a factoring scenario for additional capital. The essence of this issue is that you are in fact 'maxed out at the bank, notwithstanding your good relationship with them.
WHAT IS THE BEST TYPE OF A/R FINANCING
Business owners quickly find out that banks have limits! Many people don't understand that a properly constructed factor/AR facility can compliment, and not necessarily replace a bank facility. You should seek the advice of a trusted, credible, and experienced financial advisor or intermediary in this regard. At 7 Park Avenue Financial our preferred and recommended solution for our clients is in fact a CONFIDENTIAL A/R FINANCING that allows you to bill and collect your own receivables, financing them only when you need to.
A/R Financing is a much better solution for new and start-up businesses, and if your firm is not in a 'death spiral ', but simply experiencing temporary financial losses or one-time setbacks then factoring is a solid solution.
CONCLUSION
In summary, business loans for working capital are either fixed / term scenarios or working capital facilities based on current assets such as receivables and inventory. The Canadian business owner must assess his or her needs in that context and choose the right facility that works now, for their business.
Small businesses as well as large companies are always seeking loans in Canada to fund daily operations and grow their companies. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your options on the correct type of financing for your needs.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
7 Park Avenue Financial/Copyright/2020/Rights Reserved
