YOUR COMPANY IS LOOKING FOR ALTERNATE FINANCING SOLUTIONS!
Alternative Finance For Small & Medium Sized Businesses
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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?
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7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Alternative sources of business finance provide vital funding solutions when traditional methods fail to meet the needs of modern enterprises.
Struggling to secure business funding? Discover the innovative alternatives that can fuel your growth.
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer ALTERNATIVE SOURCES OF BUSINESS FINANCE & solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
Canadian Business Financing with the intelligent use of experience
ALTERNATIVE SOURCES OF BUSINESS FINANCING IN CANADA
Alternative sources of finance in Canada. Ever wondered what they are?
We can tell you they are ' alternative’ and not ' traditional ‘, but that's not telling the whole story. Those alternative financing solutions, generally non-bank, can substitute for conventional financing and, here's a surprise: sometimes complement it! Business owners are looking for financing alternatives to the banks.
The alternative financing marketplace is taking off - some experts term it ' debanking '! Let's explain.
EXPLORING ALTERNATIVE FINANCE - NEW PATHS TO BUSINESS SUCCESS
Securing traditional financing in today's rapidly evolving business landscape can be daunting for many entrepreneurs. Alternative sources of business finance offer a lifeline, providing diverse and innovative funding options that cater to businesses' unique needs. Understanding these alternatives can empower business owners to make informed decisions, ensuring their enterprises thrive even when conventional financing falls short.
THE RISE OF ALTERNATIVE FINANCING SOLUTIONS IN CANADA
An article in America's leading business magazine caught our eye recently. It said business owners should cheer for alternative lending sources because they took up the slack during the 2008 global meltdown.
And that’s when, of course, business credit froze. And can we agree not to even talk about COVID-19 and the pandemic and economic issues around that?
It's no surprise that Canadian businesses found themselves in the same boat, often unable to finance inventory, grow sales, etc. Start-up financing sources are usually even more of a challenge for the entrepreneur.
SURVIVING THE CREDIT CRUNCH
Your firm can take numerous courses of action between traditional and alternative lending to help alleviate ' the crunch '. These might include alternate pricing strategies, favourably negotiated supplier terms, new owner equity, etc. Great strategy, but sometimes just not enough!
While most Canadian businesses think of ' the bank ' when it comes to financing, the reality is that it's a brave new world out there. One-on-one lending relationships are much less important nowadays, and many larger financial institutions focus on fees, not credit lines.
Alternative Sources of Business Finance: A List of Key Funding Options for Your Company
So, what are some of those alternative funding options and sources of finance? They might include:
A/R Financing
Inventory Loans
Access to Canadian bank credit
Non bank asset based lines of credit
SR&ED Tax credit financing
Equipment / fixed asset financing
Cash flow loans
Royalty finance solutions
Government Of Canada Small Business Loan Program - The Guaranteed federal business loan
Merchant Advance / Short Term Working Capital Loans
Some solutions are long-term, while many provide immediate access to business capital, cash flow and working capital funding for sales.
AN EXAMPLE OF ALTERNATIVE FUNDING OPTIONS AT WORK - THE SR&ED PROGRAM
Let’s provide a couple of examples of how alternative sources of finance either coexist or replace more rational financing in Canada.
A clear example might be the tax credit. In Canada SRED (SR&ED) tax credits provide billions of capital to new, emerging, and established corporations. This program benefits new and established businesses seeking to leverage tax credits for capital.
In general, we can very comfortably say that the tax credits, which many companies book as a ‘receivable’ when filing them, are not financeable by our Chartered banks. Some will argue that, but we stand behind our comment. So, the ability to finance a tax credit claim outside of your
ASSET-BASED LENDING TO THE RESCUE
In many cases, alternative lenders provide financing solutions that completely replace bank financing - mostly when ‘the bank says no’, which they are sometimes wont to do! In that case, receivable financing and asset-based lines of credit fund companies anywhere from 100k to 100 Million dollars! To show you an extreme, even if your firm is in CCAA bankruptcy proceedings, it can quite efficiently be financed by alternative financing - for example, the ABL solution. It is all about funding of the balance sheet.
KEY TAKEAWAYS
- Invoice Financing: Using unpaid invoices to secure immediate funds to improve cash flow without waiting for customer payments.
- Merchant Cash Advances: Receiving a lump sum of capital in exchange for a percentage of future sales or receivables.
- Asset-Based Lending: Securing a loan using the company’s assets, such as inventory or accounts receivable, as collateral to obtain needed capital.
- Equipment Financing: Acquiring funds specifically for purchasing business-related equipment, allowing businesses to spread the cost over time while using the equipment to generate revenue.
- Tax Credit Financing: Leveraging tax credits, such as R&D credits or renewable energy credits, to obtain upfront capital, enhancing cash flow and reducing financial burdens.
CONCLUSION
While medium-sized firms and others explore venture capital and other public company-type financing, these simply are inappropriate for the vast majority of Canadian SME's.
For a business finance solution that matches your needs, call 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor.
FAQ
What are alternative sources of business finance?
Alternative sources of business finance include crowdfunding, invoice financing, asset-based lending, sale-leasebacks, and merchant cash advances, offering diverse options beyond traditional bank loans.
What is invoice financing?
Invoice financing allows businesses to secure immediate funds by selling their unpaid invoices to a lender, improving cash flow without waiting for customer payments.
How can venture capital benefit my business?
Venture capital provides startups and high-growth potential businesses with capital in exchange for equity, helping to scale and expand operations.
What are the benefits of peer-to-peer lending?
Peer-to-peer lending connects borrowers directly with individual investors via online platforms, offering flexible terms and potentially lower interest rates than traditional loans.
What are the risks of alternative business finance?
While alternative finance offers flexibility, risks include higher interest rates, potential loss of equity, and reliance on continuous cash flow.
How do I choose the correct alternative financing option?
Exploring alternative financing options as a business finance source, the business owner considers factors like funding amount, repayment terms, cost, and your business's specific needs.
How does revenue-based financing work?
Revenue-based financing involves receiving upfront capital in exchange for a percentage of future revenue until the investment is repaid. It is a great way for Saas-type companies to raise funds versus an asset finance solution.
What is the role of CDFIs in business finance?
Community Development Financial Institutions (CDFIs) provide affordable financing to underserved communities, supporting small businesses and local economic growth.
How do alternative financing options differ from traditional loans?
Alternative financing options offer more flexibility and faster approval processes and cater to businesses that may not qualify for conventional bank loans and who desire flexible repayment terms.
What types of businesses benefit most from alternative finance?
Small business owners, startups / early stage and those with unique financing needs or challenges securing traditional loans can benefit from alternative finance lending solutions.
Why is it important to explore alternative sources of business finance?
Exploring alternative finance options provides businesses diverse funding solutions, helping them navigate financial challenges and seize growth opportunities.
