YOUR COMPANY IS LOOKING FOR BUSINESS FINANCE 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
Suite 301
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Email = sprokop@7parkavenuefinancial.com
Small Business Financing Solutions In Canada
Business loan needs in Canada that are sought by entrepreneurs/owners/ financial mgrs basically come down to two separate categories - revolving credit facilities and working capital term loans.
There are important aspects to types of business loans when financing working capital and considering the option to borrow funds. Understanding them is critical to financial success in accessing business capital.
ARE YOU LOOKING FOR A LUMP SUM TERM LOAN OR A WORKING CAPITAL TYPE FACILITY?
So when do term loans make sense for the business owner (spoiler alert - they don't always)? ! Owners are always concerned and want to understand the business loan interest rate, which varies based on numerous factors such as size, type of loan, security, repayment term, etc. Let's dig in.
BUSINESS CAPITAL NEEDS REQUIRE PLANNING!
Companies with good planning and ongoing access to funds will always focus on what amount of money is required to complete a project - that might involve growing the business or developing new products, services, and markets. The challenge to financing planned growth is ensuring you don't put operating capital at risk - hence the need for new financing solutions and flexible repayment terms tailored to your particular company or industry needs.
CONSIDER THE CANADA SMALL BUSINESS FINANCING PROGRAM FOR A FEDERALLY GUARANTEED LOAN!
In most cases, you will want financing that is complementary to credit facilities already in place. Many firms find themselves in a situation of being able to take on large new contracts, orders and clients in new markets - that will require an investment in your inventories and services provided. Companies taking advantage of the Government SR&ED program want to ensure they can recoup their funds in their investment as quickly as possible.
( Note - SR&ED Financing is available to eliminate the waiting involved in having the government approve your refundable tax credit claim.
WHAT IS A WORKING CAPITAL LOAN?
Working capital loans are financing used to fund a company's day-to-day operations, including payroll, marketing activities, research and development projects, supplier purchases, etc. It replaces cash that the company consumes in activities such as carrying investments in receivables and inventories. Cash flow type loans that inject permanent or temporary working capital into the business differ from an operating loan/business line of credit facility, which has no fixed repayment but revolves according to the businesses' needs, and its operating capital requirements.
The key aspect of a term loan is the concept of ' fixed payments.’ That defined payment and fixed interest rate make it easy for the owner/mgr to play for repayment through cash flow.
Your ability to pay the loan is essentially judged around a careful analysis by both you and the lender. That analysis typically comes from careful inspection of your cash flow projections. However, We note that a full prepayment might come with some penalty as the lender assumed the loan would travel its full course! In certain cases, some form of prepayment may be allowed at certain times during the loan if, in fact, it's amortized over several years.
WORKING CAPITAL LOANS FOR STARTUPS
Working capital loans for startups are also a challenge for small projects or, in some cases, business acquisitions. In many cases, financing achieved for start ups will heavily emphasize the personal credit history of the business owner/owners. An early-stage company can generally not achieve an unsecured working capital loan and pertains mostly to established firms.
GOVERNMENT FINANCING PROGRAMS
The Government Of Canada Business loan is an excellent term loan type structure for startups, early-stage companies. The franchise industry often uses it as a method for successfully buying a franchise. It is not a working capital/cash type loan but is a loan with fixed repayments through proper financial institutions.
The government small business loan is utilized heavily for financing franchises, and in some cases, interest payments can be deferred temporarily. A good business plan is required - 7 Park Avenue Financial prepares business plans for clients that meet and exceed bank and commercial lender requirements. The application process is always easier when you use 7 Park Avenue Financial's expertise. You can receive funds more quickly with flexible terms than you might think!
DOES YOUR BUSINESS NEED TO ACQUIRE ASSETS OR REFRESH TECHNOLOGY?
As we said, the key to understanding your needs around a working capital or business term loan is the use of its proceeds. In some cases, it is used to acquire an asset such as equipment - we would note that need can also be accomplished via equipment lease financing in Canada. The whole issue of ' lease versus buy ' is a subject for another day, as there are merits to both.
The optimal use of a working capital term loan is when its proceeds generate more cash flow or profits. That's when it's critical to understand asset life and have a good handle on your projected cash flow.
COMMERCIAL LOAN INTEREST RATES
How do commercial lenders ' price ' the cost of fixed-term loans? It's simply a matter of risk and cash flow assessment. Rates will fluctuate with the term and amount of the loan relative to your overall credit risk profile and the general quality of your financial statements.
Typical requirements in getting a commercial business loan/term loan might vary but often include the business financials, historical bank statements showing inflows and outflows, and information on the business owners, which is in the small to medium enterprise (SME) area. Some smaller businesses rely on business credit cards to access quick funding instead of their business bank account.
Term loans can range in amortizations of 1 year to 3-5 years if your cash flow warrants a longer term.
USES OF WORKING CAPITAL LOANS
What are some common uses of working capital term loans and working capital finance: They might include:
Leasehold improvements / new locations / company moves
Reducing payables
Marketing initiatives
Inventory build-up
Purchasing new assets
R&D
CONFUSION AROUND BUSINESS LOAN TERMS
Small businesses / medium-sized businesses typically have a constant need for cash for short-term needs, and long-term business needs to grow their products and services.
At 7 Park Avenue Financial, we can forgive clients for potentially being confused around the terminology used in business loans/working capital/term loan financings by Canadian banks and financial loan companies. Business owners should also be aware they need a good credit score and personal credit history when borrowing from traditional sources of capital such as banks.
CONCLUSION
Often used terms are SBL loans, short-term working capital loans, merchant advance loans ( quick business loans ), short-term online loans, etc.
FAQ: FREQUENTLY ASKED QUESTIONS
How do you qualify for a business loan?
Most financial institutions will ask for collateral to ensure that a business's everyday operations remain sound. This is why it can be difficult to find financing without the right qualifications and relationships with lending partners. When looking at a business for collateral, lenders will look at the financial statements that reflect your company's cash flow and the experience of owners or managers to understand what kind of leadership is involved with lending decisions for a business loan.
Click here for the business finance track record of 7 Park Avenue Financial
