Unlocking Financial Potential: Working Capital Loan Companies Guide | 7 Park Avenue Financial

Tweet

YOUR COMPANY IS LOOKING FOR CANADIAN WORKING CAPITAL LOAN FINANCING!

Solve Your Business Cash Crunch: Working Capital Loan Companies to the Rescue

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the biggest issues facing businesses 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

Struggling to keep your business afloat due to cash flow challenges? Discover how working capital loan companies can provide the financial support you need to thrive.

7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer  WORKING CAPITAL LOAN  solutions that solve the issue of cash flow and working capital  – Save time and focus on profits and business opportunities

INTRODUCTION 

Working capital loan companies play a key role in the financial landscape of businesses, offering tailored and customized solutions to address cash flow needs and operational requirements for the day-to-day funding of a business -

Solutions in cash flow financing provide lifelines to businesses, ensuring smooth operations and growth opportunities. Accessing timely working capital is not just a necessity but a strategic advantage for businesses aiming to survive and expand.

Clients we meet with often want to know if they require additional working capital financing for their overall business growth and survival.


They also, as prudent business owners, want to know what alternatives are available for financing consideration. The difference between a company's current assets and its current liabilities is called net working capital -  that's the working capital ratio, and understanding that relationship is critical!

UNDERSTANDING WORKING CAPITAL LOANS IN CANADA

Let's answer question # 1 first – we can some facetiously say that the answer will be similar to your lawyer's answer to most questions – you may need a working capital facility or loan to meet financial obligations, or you may not...!

What do we mean by that? The key issue in working capital financing is understanding what it is, why it is needed, and what alternatives you have as a Canadian business owner or the financial manager to access that additional capital at interest rates that make sense for your firm as it relates to internal cash flow for small business owners.

Maintaining the company's everyday operations is key for any business owner / financial manager as you extend trade credit to clients. As you negotiate payment terms with clients those financial gaps can become more obvious.

UNDERSTANDING YOUR NEEDS - WHAT ARE THE BEST WORKING CAPITAL LOANS FOR YOUR BUSINESS?

Let’s get back to our key point, which is simply that we need to first understand what working capital is.

We can go by the textbook definition, which is simply going to your balance sheet, take current assets, subtract current liabilities – and voila! You have your working capital amount.  Let’s bore down a bit and truly understand this number and what it really means to your firm on a day-to-day basis.

 
WORKING CAPITAL FROM THE ACCOUNTING PERSPECTIVE SIMPLIFIED 

 

Your current assets are of course your inventory and receivables; your current liabilities are your payables and what you have upcoming in loan and lease payments every day.

As a business owner, you know that these numbers change every day and that as your business grows you require a larger investment in accounts receivable, inventory, and a buffer of cash on hand for miscellaneous issues,  accounts payable, and of course emergencies, etc.

Small businesses have a constant challenge to avoid negative working capital scenarios. Capital expenditures for long term assets are best sourced through equipment leasing/equipment loan strategies.


Now let’s examine a very key point that will help you understand the thrust of our message. Higher working capital is preferable, but if your inventories and receivables aren’t turning then higher works against you, because you have built up assets that aren’t turning, and it cost you money to build up those receivables and inventory.

 

 THREE OPTIONS TO ASSESS CASH FLOW NEEDS 

So the reality is that you have three options in assessing your working capital financing needs. They are as follows:


1. Focus on higher turnover of receivables and inventory – and stretch your payables as long as you can so as not to lose your valued supplier relationship


2. Monetize your working capital in a more efficient manner – i.e. negotiate an operating line of credit with your bank based on receivable and inventory margining – Alternatively supercharge your current assets by what is known as an asset-based lending facility


3. Consider a permanent working capital term loan – this is a long term, generally 3-5 years cash loan that is repaid in specific installments. Essentially you are committing long-term working capital into the business which will help alleviate growth needs.


So in summary, what is our bottom line? It is simply that you need to understand what working capital is – you need to determine if you can generate working capital internally or externally, as per our options # 2 AND # 3 above.

 KEY TAKEAWAYS 

  
CONCLUSION - BENEFITS OF WORKING CAPITAL FINANCING  

Fun fact -  Roughly half of the businesses that start today will be out of business within five years. The challenge? Financing is used for working capital, but if you borrow the money then it will be a liability in your business and could make the business unprofitable.

Want to avoid that?

Call 7 Park Avenue Financial,  a trusted, credible and experienced advisor in Canadian working capital solutions and you will be on the way to increased sales and profits via a proper business financing strategy.

  
FAQ: FREQUENTLY ASKED QUESTIONS / MORE INFORMATION