Business Loans & Working Capital Financing Options For New Or Smaller Canadian Companies
Canadian chartered banks, usually by virtue of their 'relationship' with business owners and entrepreneurs are in a position to pass on valuable financing tips and information on business loans and working capital for start up or smaller firms. Although the banks are a solid source of such information the banks themselves, by virtue of their charters and credit policies, are unable to directly satisfy the financing needs of the customer.
Business owners are often therefore encouraged by banks to 'self finance 'the venture via equity or owner capital and commitment. It is clearly a misconception that banks play a key and major role in the financing of new ventures. Possibly the only exception to this statement is the fact that the banks offer up, in their role as administrators, the Government Small Business Loan, which is a Canadian federal government program providing loans up to, in some cases 500,000.00$ for purchase of real estate, business assets, or leasehold improvements. (The more typical loan amount maximum is 350,000.00$)
We may or may not agree with Canadian banking policies on start up and young venture financing, we should however appreciate the banks stance - they are lending out our capital at very low rates, with potential to lose the entire investment if your firm can't repay loans and financing.
How can the small or newer business succeed in financing options? Businesses of the size that we are discussing need thousands, literally millions of dollars of financing to fuel their growth in Canada. In our commentary that we are providing it is important to note that as companies develop along the 'stage of development 'timeline they of course have much more access to traditional bank and private equity financing. We are primarily talking about earlier stage companies, who may be still developing products and services and may not be yet profitable as they start delivering and billing for those products and services.
So what are the immediate challenges of firms that are unable to provide traditional financing and what are, more importantly, some immediate solutions?!
The challenges tend to be painfully obvious to the Canadian business owner or financial manager that has worked to get traditional bank and equity financing. They are as follows:
Perceived industry or product risk
No collateral
Uncertain financial projections
Limited Performance history
How can the Canadian business entrepreneur overcome these very traditional roadblocks and challenges? There are a number of ways.
First of all, all alternative methods of financing should be pursuing. Alternative financing methods are most non dependent on the above noted risks and challenges. Those alternative methods of financing might include:
*Business Angels or strategic partners (think suppliers!) for short term arrangements
*Equipment Lease financing
* Sale leasebacks on equipment already purchased and paid for
*Asset based lending arrangements that provide working capital facilities against initial receivables, inventory, and purchase orders (These facilities don't have the same requirements as banks)
* Sr Ed Tax Credits - Customer who have filed claims can finance those claims for cash
* Invoice / Receivable Financing - Immediate cash for your firm's receivables (these facilities can be of any size)
In summary, newer or smaller firms fall into the ' void ' area of financing, where very few traditional financing strategies can be implemented, at a time when cash flow and working capital are most critical.
Business owners should review non alternative strategies which can be of great assistance in early growth periods - Stan Prokop is the founder of 7 Park Avenue FInancial.
Windsor Ontario Asset Based Lending
Wondering if an asset based loan is what your business needs to grow?
7 Park Avenue Financial can help you navigate the ins and outs of asset based lending in Windsor Ontario. Our professional expertise and years of experience in the financial industry will allow us to work closely with you and discover how asset based lending can work for your business and move it forward. Don’t take our word for it – take a look at our proven track record! In only two months during 2008, we originated over a million dollars in financing for our clients alone.
How did we do it? We approach lending in a different way, one that puts you and your business first. We want to hear what you have to say, and learn about the needs and goals of your business. After talking with you, we’ll work to find the best asset based loan for your business, because we know that each business is different and deserves a unique solution. Pre-packaged financial solutions simply can’t offer that.
Why jeopardize your business’s assets by settling for a loan that may not work for you? 7 Park Avenue Financial believes that personalized service is the only approach to our work – service like this cannot be mass produced! We’re proud of our expert team of professionals who will utilize their resourcefulness and creativity in coming up with a plan that helps your business.
We want to be the first choice for your business financing needs. Our competitive edge is experience, and we’ll use that experience to obtain the best asset based loan for you.
Let’s bring your business’s lending challenges to the table and help to secure the reliable, functional loan you need. Together, we can make a difference in your business. To learn more about how we can do this, please give us a call today.
