Business Financing Capital Funding | 7 Park Avenue Financial

Tweet

 

 

YOUR COMPANY IS LOOKING FOR  BUSINESS FINANCE SOLUTIONS!

CAPITALS SOURCES AND SOLUTIONS

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?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

 

BEST FINANCING OPTIONS FOR A BUSINESS

 

 

  

BUSINESS FUNDING IN CANADA & BUSINESS FINANCING SOURCES  

 

Business financing solutions in Canada clearly demonstrate that the types of loan and cash flow financing successful businesses need are clearly not equal in value and accessibility to business owners and financial managers. There are numerous types of business financing. Here's why, so let's dig in!

 

THE CHALLENGE  OF MANY SMALL BUSINESSES TO FIND FINANCING  AND SOURCES OF FINANCE IN CANADA

 

Any company borrowing for funds for business money will usually encounter some difficulty in taking on debt financing/business loans when there is an economic downturn, pandemics included!

 

NOT ALL BUSINESS FINANCING SOLUTIONS ARE EQUAL!

 

Whether it's financing startups, small businesses, or mature companies, those challenges to sourcing business capital/loans can be even more overwhelming. In challenging times the ability to source debt capital is very challenging and time-consuming and the ability to work with an external business financing advisor is often recommended unless of course you and your own team are exceptionally qualified and have the management time to source capital.

 

Capital Funding will usually mean a combination of financing for day-to-day operations as well as long term finance needs. That final capital structure will be a combination of debt and equity, with lenders expecting a return on their capital and owners hoping to achieve a proper return on investment - ' ROI '.

 

FINANCING YOUR BUSINESS / FUNDING REQUIREMENTS AND SOURCE OF FUNDS

 

Funding a business and acquiring assets for your business, whether that be equipment, buildings, rolling stock, and investments in technology - i.e. computers, software, etc typically should be acquired through proper debt instruments such as loans, leases, mortgages, etc.

  

 

  

CAPITAL SOURCES & SOLUTIONS

    

 

Matching the useful economic life of these assets to the proper finance solution is the goal! The amount of debt you take on to acquire these assets will force a dilution effect on the owner equity in the business - again pointing out the need for the right amount ... and type... of debt.

  

 

  

TRADITIONAL BANK LOAN SOLUTIONS

    

 

Banks and commercial funding companies in Canada are the two leading sources of business capital/debt financing and typically provide the basic funding needs you to require to run... and grow the business - although often not suited to early-stage firms - Financing costs for bank loans are of course an expense and lower the overall pre-tax profit of your business - no secret there.

 

Business owners and financial managers should always be testing the cost of their debt to allow the company to move forward with the right goals around its costs of borrowing and return to shareholders/owners.

 

  

BUSINESS FUNDING & BUSINESS FINANCING SOURCES  

 

Many industries are very 'capital intensive ' and require a much larger amount of capital as compared to service industries, so depending on your industry, as well as what ' stage of growth ' your company is in will be the key drivers around types of short term and long term finance.

 

The ability to diversify your finance solutions is often recommended by experts; might be at the start-up stage or in times of high growth. When business challenges occur that diversification allows you to consider alternative sources of financing.

 

In recent years many new finance solutions in alternative financing compete aggressively with traditional financing via Canadian chartered banks. It is safe to say that any type of financing, either conventional or alternative has different benefits and disadvantages that must be weighed by owners around interest rates/interest payments, raising capital, etc when the challenge is to finance projects

 

What Are The Best Finance Solutions  For Your  Business

 

Many different types of business finance solutions exist for Canadian small businesses  - the challenge revolves around your ability to ensure you're pursuing the right type of loan or financing solution and accessing repayment terms your firm can meet -

 

At 7 Park Avenue Financial many firms we work with are in the ' startup funding ' stage; new business funding for owners who have committed some of their personal capital and are looking for additional financing to start/bootstrap the business. Entrepreneurs consider every source of capital, even tapping that ' friends and family ' and ' Angel ' investors.

 

Some consider the venture capital route which is very time-consuming and expensive and typically not appropriate for the majority of startups. Those ' VC ' type deals seem most common in the technology/software area/biotech area. Often a large amount of equity must be given up by founders to receive substantial financing.

 

  

GOVERNMENT FINANCING PROGRAMS? THE BEST WAY FOR HOW TO FINANCE A START-UP BUSINESS FOR A BUSINESS OWNER / ENTREPRENEUR 

 

Occasionally government grants and government programs around VC capital equity financing might be available. Companies going the VC route will have considerable pressure to quickly get to a hyper-growth stage allowing investors to recoup their investment via some sort of exit strategy. The reality is that venture capital firms and the true venture capitalist are the smallest portion of the Canadian business landscape for equity capital funding.

 

The Business Development Bank is also a potential solution for some forms of financing around small business loans, particularly term loans and working capital loans focused on economic development in Canada by virtue of their government charter as a federal crown corporation. In some cases, a provincial crown corporation might be able to provide the funding you need as an alternative to what BDC offers. A bdc working capital loan is often a very viable solution if your firm meets lending requirements.

 

One other source of business capital for new, small business, and more traditional businesses, including franchises, is the Government of Canada Small Business Loan program, providing up to   $ 1,000,000.00 of debt for three specific categories of assets: Equipment, Leaseholds, and Real Estate. Many business owners/entrepreneurs aren't familiar with the Canadian govt small business loan program. As in other types of small business financing, a good credit score for the owners is required.

 

We can call it the ' bread and butter ' in terms of the phrase ' government loans'. The limited personal guarantee is also a key feature of the program! For startups beginning production or for growing medium-sized businesses this is an excellent form of capital. Applicants should be able to demonstrate relevant experience to access proper available funding.

 

Talk to 7 Park Avenue Financial about which financial institution is best suited for your government loan business venture needs, as not all financial institutions participate in the program - The program has a lower personal investment requirement compared to more traditional financing - allowing borrowers, not to over-rely on their retirement accounts, home equity, etc - It makes sense to also be properly prepared via a solid business plan and conservative and realistic cash flow projections around management expertise.

 

Clarification is required here because it's not the gov't that funds the loans, it's Canadian banks with the loan guarantee in place from the federal gov't. For Canadian business owners, timing is pretty well ... everything when accessing capital!

 

 

DETERMINING HOW MUCH FUNDING YOU WILL NEED

 

That’s why with careful preparation of your submission a loan can be approved in a matter of days Getting back to our theme of ' timing is everything ' an even more accessible solution is the working capital term loan. Often provided on an ' unsecured ' basis these loans are based primarily on the cash generation within your business bank account. There is a lot less paperwork required and funding can occur within days.

 

Many businesses, particularly in the SME sector (small to medium enterprise) require purchase order funding solutions when they receive orders and contracts far over their normal financing capabilities.

 

P O Financing allows companies to access new markets and larger customers, enhancing revenue growth. Most times even international orders of almost any magnitude can be financed if your firm has a qualified buyer and a legitimate supplier. Because of that most firms also require a business credit line, in some cases called an ' ABL ' line. These revolving facilities are provided by traditional financiers such as banks, and, somewhat unknown to most, commercial finance companies often referred to as 'asset-based lenders '.

 

What information is required to assess your firm’s qualifications under most types of business financing? It's not as complex as it might seem. Traditional applications often include just financial statements, but can also be augmented by a business plan or financial projections. Canadian banks are typically the first 'go-to ' for many entrepreneurs, and a lot of time can be spent on finding a bank, and banker, that can meet your specific needs given many lenders focus on cash flow, in particular traditional financial institutions.

 

Borrowers find out very quickly that banks are looking for well-performing firms that have sales, assets, clean balance sheets, and profits. Those attributes, combined with a solid business plan and cash flow projection will typically lead to financing success with a bank.

 

Canada's crown corporation non-bricks and mortar bank under the federal government for entrepreneurs will also provide solid financing solutions. In certain cases your firm might be a strong candidate for cash flow loans, often called 'mezzanine finance; with the loan secured solely by those predictable cash flows, you must be able to demonstrate. New businesses and franchises are solid candidates for government loans.

 

These loans are often viewed as the interim bridge between debt and equity. Both working capital term loans, as well as short term cash flow loans, are very popular in current times. Any company showing good growth is a candidate for a cash flow loan either traditional in nature, or of the type offered by a multitude of short-term working capital lenders.

 

The latter type of loan is typically a one-year loan and is based on a simple formula of 15-20% of your annual sales. With these loans rates are higher as lenders are looking for higher rates of return given the loans are not collateralized.

 

In all cases, you should be prepared to demonstrate the type of collateral that requires financing (which might include just your sales), management experience, and a solid understanding of how business loans or cash flow facilities will be repaid or revolve. We have demonstrated there are numerous sources of funding for businesses.

 

  

CONCLUSION - BUSINESS FINANCING CAPITAL FUNDING SOLUTIONS /CANADA  

 

Venture capitalists, or an angel investor not available for you? Access to those very wealthy individuals rarely is for most companies, including start ups ! Careful time and consideration must be given to the type of financing your business needs - different costs and risks are associated with every type of financing providing capital for a business's success your services/new products, etc

 

So yes, it’s true, not all business financing solutions are equal when it comes to benefits or qualifications. Speak to 7 Park Avenue Financial about our advisory financing services, we're a trusted, credible and experienced Canadian business financing advisor and we'll work with you to determine your exact needs and potential solutions to growing your business profits around existing and new projects.

 

  

 

FAQ: FREQUENTLY ASKED QUESTIONS / MORE INFORMATION / OTHER RESOURCES  

 

  

What is self-funding?  

 

Self-funding is an investment strategy where the company itself invests in its own business. Self-funding is when you use your own money and the money of family members or friends.

 

 What is capital funding? 

Click here for the business finance track record of 7 Park Avenue Financial