YOUR COMPANY IS LOOKING FOR ALTERNATIVE FINANCE!
Business Lending: Alternative Lenders Versus Traditional Lenders!
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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 SheridanExecutive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Email = sprokop@7parkavenuefinancial.com
"Exploring alternative financing strategies can revolutionize the way businesses secure the funding they need for growth and stability."
"Struggling to finance your business? Discover how alternative financing can open new doors!"
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer ALTERNATIVE FINANCING OPTIONS & solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
Strategic Funding: How to Choose the Right Alternative Financing
INTRODUCTION
Not everyone these days is totally clear on the term of alternative finance versus traditional financing options, so let's recap some non-traditional financing methods that just might make sense for your business financing needs. And to quote ourselves you just might find that alternative, in some cases, is the ' new traditional '!
WHAT IS ALTERNATIVE LENDING & NON-TRADITIONAL FINANCE IN CANADA?
That's a question we get a lot these days here at 7 Park Avenue Financial - and that answer is pretty simply - It's simple financing solutions that provide funding to Canadian business without the involvement of Canadian banks and those traditional bank loans.
There are a solid handful of different types of financing funded by 'niche ' lenders in specific areas of business funding needs through debt /loan and cash flow finance solutions. Interest rates on many alternative financing options and business loans differ in non-bank financing and are typically higher than traditional bank funding based on a firm's overall credit profile. In a small number of situations, many firms have achieved better rates through non-traditional financing but that is not the norm.
IS THE BANK YOUR ' GO TO' SOLUTION
The first thought that comes into a small business client's mind when they think of the need for business capital? Of course, it’s the Canadian chartered banking system. But thousands of business owners and financial managers quickly find that while somebody seems to be qualifying for those loans and other bank facilities it isn’t them!
We don’t want to weigh in too heavily on why the banking solution isn’t always totally available for your business - it’s just a fact that Canadian banks manage risk very well! But when you qualify boy are those rates attractive?
We will add one more point about the banking system in Canada, which is simply that while your small business might in fact qualify, your needs, ironically, may be deemed too small or too large. How ironic.
THIS BANK ALTERNATIVE IS IN FACT THE BANK !
So that allows us to move on to a discussion on alternative financing vehicles that might just work for your firm. One of those is in fact a bank alternative that is non-bank nature.
It's the Government Guaranteed SBL loan program. Although it’s facilitated by a bank the majority of the loan is guaranteed under the INDUSTRY CANADA loan program, allowing you to tap into rates, terms and structures that are attractive.
To access the SBL program you need to seek a bank employee who is aware and comfortable with the program. And the other qualification is simply a loan package that covers off the basics, which isn’t hard as you might think. Your financials, a business plan, and some backup documentation and you are off to the races.
Another solid form of alternative financing is Asset-based lending. These are non-bank commercial credit facilities that secure, into a business line of credit :
4 Asset Categories in the ABL Credit Line
A/R
Inventory
Equipment
Real estate (if applicable to your company )
Almost any firm (with assets!) qualifies for ABL lines of credit - including manufacturing firms, service companies, technology companies, etc.
Most facilities start at the 250k range and there is pretty well no limit on the upper end of an asset-based deal. Oh, and by the way, some of the largest corporations in Canada use this ' alternative ' finance vehicle to run their business. Apparently (to quote us!) alternative is the new traditional for them.
Other forms of alternative finance? You just might be surprised. They include:
A/R Financing - financing outstanding invoices
Inventory Loans / Purchase Order Financing
Non bank asset based lines of credit - business lines of credit that compete with traditional banks
SR&ED Tax credit financing
Equipment / fixed asset financing
Cash flow loans
Short Term Working Capital Loans / Merchant Cash Advances
Royalty finance solutions / Short term working capital loans
KEY TAKEAWAYS
Asset-Based Lending
This financing strategy allows businesses to borrow money based on the liquidation value of assets on the balance sheet. They secure loans with assets like real estate, inventory, or equipment, providing lenders with a safety net.
Inventory Financing
This approach helps companies obtain loans based on their existing inventory intended for sale. It is particularly beneficial for retailers or wholesalers who need to manage cash flow and sustain operations without selling off their stock prematurely.
Purchase Order Financing
This financing option provides businesses with the capital to pay suppliers upfront for confirmed purchase orders. It bridges the gap for companies that have the orders but lack the funds to fulfill them, thus facilitating smooth operation and growth.
Invoice Financing
Companies use this method to improve cash flow by borrowing against amounts due from customers. It provides immediate funds based on outstanding invoices, crucial for businesses needing quick capital.
Merchant Cash Advances (MCA)
This quick funding solution allows businesses to borrow against future sales. Although it can be costly, it offers a vital cash flow solution for businesses unable to secure traditional loans.
CONCLUSION - EXPLORING ALTERNATIVE FINANCING OPTIONS
Whether your firm is new, a growing small business or an established firm business finance needs will always emerge.
Bank traditional finance is not always available to all firms. Many firms turn to non-traditional financiers if only for the reason that flexibility and quicker access to financing is a priority. No secret that the cost of financing is always top of mind for the business owner.
We have already noted that alternative finance providers typically have a higher cost of borrowing for the Canadian business owners - part of that reason is the simple fact that non-bank lenders are not regulated in the same manner as our Canadian chartered banks -
For example, they do not take deposits and then lend those funds out. Having said that we note that alternative finance providers are more competitive than ever, given that the world is currently in a ' low rate environment '
In some cases, non-bank lenders do not insist on a personal guarantee, or if they do not a significant amount of emphasis is placed on that guarantee. That's a huge differentiator from Canadian banks.
The issue of credit limits is a significant one in bank borrowing - alternative finance providers distinguish themselves by touting that your borrowing grows as your company grows. It's all about your assets and sales and the value and growth of those two respectively.
Alternative lending in Canada has brought forms of financing to the Canadian business owner previously unavailable - competing directly with Canadian bank solutions.
While some are short-term in nature many of these types of funding are a bridge back to bank finance solutions at some point down the road in your company credit profile. Different types of companies specialize in certain niches of Canadian business finance needs.
Call 7 Park Avenue Financial, a trusted credible and experienced Canadian business financing advisor on how alternative finance can work for your firm... and you just might find that alternative financing methods are the new traditional!
FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION
Are merchant cash advances a good idea for alternative funding for small businesses?
Merchant cash advances provide quick funding based on future revenue or credit sales but come with high costs, suitable for short-term needs.
What role do government grants play in business financing?
Government grants provide funds that don't require repayment, making them ideal for startups in specific industries or regions focusing on innovation.
How does trade credit benefit a small business?
Trade credit and strategic partnerships allow businesses to buy goods and services on account, paying the supplier at a later date, which helps manage cash flow.
What is revenue-based financing and how does it differ from a traditional loan?
Revenue-based financing allows businesses to pay back a loan from a portion of their ongoing revenues, offering more flexibility than fixed loan payments in business financial planning.
Is equipment financing applicable to any industry?
Equipment financing is available across various industries to established businesses, providing funds specifically to purchase necessary equipment with financial management around acquiring long-term assets under economic challenges around conserving capital.
How do microloans support small businesses?
Microloans as alternative funding options and peer-to-peer lending solutions to improve cash flow offer smaller amounts of financing for a business's financial health to businesses that may not qualify for larger loans, typically benefiting startups and small-scale entrepreneurs.
What differentiates venture capital from traditional loans?
Venture capital firms, private equity, and angel investors not only provide funding but also strategic guidance and access to a network when a company wants to raise funds , unlike traditional loans which involve periodic interest payments and a focus on creditworthiness. Venture capital firms invest with a long-term exit strategy to maximize their investment returns.
How can a business qualify for merchant cash advances?
Businesses need to demonstrate a consistent volume of credit card sales to qualify for merchant cash advances from online platforms, making them suitable for retailers and restaurants.
