YOUR COMPANY IS LOOKING FOR FINANCING ALTERNATIVES!
ALTERNATIVE LENDING / BUSINESS LENDING SOLUTIONS IN CANADA
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?
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 Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
OBTAINING ALTERNATIVE FINANCING FOR YOUR BUSINESS
As a business owner, chances are you have experienced the challenges of finding alternative financing. We all know that it can be difficult to find funding for your startup or to grow your company when banks may not offer what type of financing your firm needs.
A NEW TREND IN FINANCING?
At first glance, alternative lending may seem like the latest financial trend. But don't let that fool you; it's been around for a while and is here to stay! Alternative lenders have lots of benefits but their speed and ease of application should be at the top of your list when considering them as an option.
There is no shortage of potential sources of capital; however, many business owners don't know where to start. Let's dig in on the most popular options in today's marketplace and provide tips on how best to navigate these new routes for business owners looking for financing their enterprises.
When it comes to ' Alternative Finance' in Canada, could it be that all that glitters is, in fact, gold? We suppose that is just our way of saying that the Canadian business owner and the financial manager could well do to appreciate loans and alternative lending financing alternatives that might do the trick... today! Traditional bank loans and business loans are ' under attack,' and that's a good thing for the SME borrower. Small and medium-sized businesses propel the economy, we are told, and these firms need business funding.
We don’t think we can find too many business folks that admit that there is a whole new landscape in Canadian business, especially since the 2008 Apocalypse... aka the global meltdown in corporate and bank finance that curtailed the possibilities of a funding option for thousands of businesses.
WHY ALTERNATIVE LENDING
Alternative lending is in many ways the future of business funding in Canada. In an era where banks are tightening their grip, alternative lenders have become more and more popular for businesses to find financing without going through a traditional bank or credit union.
Alternative lending has opened doors for small business owners by providing new avenues outside of conventional banking systems as well as into other financial services not offered at most banks - some good examples being:
P O Financing
Tax Credit Finance
Recurring Revenue Financing
and others!
NEW ALTERNATIVES HAVE EMERGED IN CANADIAN BUSINESS FINANCING LENDING OPTIONS
That change has literally forced business / financial people to search out new alternatives and choices in financing their business versus traditional bank loans. So while traditional financing became more restrictive... alternative financing became... you guessed it... more popular.
It is important to note that interest rates are higher in the alternative lending space in Canada - but rates have come down due in part to the low-interest-rate environment. Those higher interest rates produce access to capital that companies might not otherwise achieve. Small business owners are expected to have decent credit scores also and credit history, although that is not often the key driver in most approvals.
That is not to say that Canadian traditional sources, i.e. our banks, arent out there looking for new business ... they are... it's interesting for us to watch it from the outside because invariably, they are simply competing with each other to take business away from each other that is already in place. That’s little consolation for start-ups and high-growth companies, as you can imagine.
One common criticism of Canadian traditional financing, aka banks, insurance companies, etc., is that it takes time. Nothing happens quickly in these highly regulated institutions. That is where non-traditional finance is viewed as simply viewed as more ' nimble. '
9 TYPES OF ALTERNATIVE LENDING SOLUTIONS
The business owner and finance manager that needs quick-term loans, equipment loans, and business credit lines have several solutions via alternative lenders and various finance vehicles. If we had to summarize them, we could say they were:
1. NON- BANK ASSET-BASED LENDERS / LINES OF CREDIT
2.LEASING COMPANIES / EQUIPMENT FINANCING
3.CAPTIVE FINANCE FIRMS
4.MEZZANINE FUNDERS
5.TAX CREDIT FUNDERS - The SR&ED advance funding loan is one of the many innovative tools that can help Canadian companies access their tax credit faster. Your company has immediate access to funds within this type of financing, and as such no longer needs to wait for months before seeing any return from its investment in research & development.
6.RECEIVABLE AND INVENTORY FINANCIERS / INVOICE FACTORING & FINANCING SOLUTIONS (FACTORING) - Invoice financing is the process of selling your unpaid invoices to a factoring company in return for a percentage advance. The structure and fees can vary depending on what you negotiate with the factoring company, but typically it’s a fixed payment or percentage-based arrangement.
7.SUPPLY CHAIN P.O. FINANCE FIRMS
8. MERCHANT CASH ADVANCES / ONLINE LENDERS / BUSINESS CREDIT CARD SOLUTIONS
With a merchant cash advance, you can receive a lump sum loan of up to $150,000 in funding that is then repaid regularly based on your business's sales. Unlike traditional debt financing such as loans and bank lines of credits which are repayable at set times or dates regardless of the state of your company’s finances, this type of loan repayment depends solely upon how well you do financially from a revenue perspective.
This makes it an attractive option for businesses who see themselves experiencing fluctuations in profits over time (such as those dealing with seasonality in their business.
9. SHORT TERM LINE OF CREDIT / WORKING CAPITAL LOANS
LET'S NOT FORGET GOVERNMENT LOANS VIA THE CANADA SMALL BUSINESS FINANCING PROGRAM
The Industry Canada, Small Business Financing Program assists the little guy. This term loan is a bank loan available to help small businesses succeed in a tough economy by providing them with financial assistance for any needed business needs. The SBL loans program works with financial institutions such as Canadian banks and credit unions to provide the funding necessary, so they don’t need to shoulder all responsibility themselves.
Loan eligibility is determined on specific guidelines depending on what type of business you run, as well as other factors like credit score and down payment; however, there are some basic requirements regardless: your company must have revenues under 10 Million dollars to apply - Let the 7 Park Avenue Financial team walk you through the actual loan applications and benefits of the program including a lower interest rate than you might expect!
The SBL loan can be repaid without penalty.
A good personal credit score and business experience are required for government loans or any traditional financial institution. Don't be deterred by the application process, and let the 7 Park Avenue Financial team walk you through the process.
UNDERSTANDING THE ALTERNATIVE FINANCE DIFFERENCE
On balance, it sometimes seems to us that fewer people in traditional institutional financing can make credit decisions. Or is it just that we don’t seem to have access to them on a direct basis?
Maybe that is just us. Alternative finance lenders have to understand assets and being nimble almost 100% of the time when it comes to helping and serving the needs of small businesses. Your company may often be asked for a business plan and cash flow projection, and at 7 Park Avenue Financial, we prepare many of those for our clients.
ASSET-BASED ALTERNATIVE FINANCING FINANCES THE BALANCE SHEET
Financing alternatives and loans from non-traditional lenders typically revolve around the balance sheet. If you have assets that can be valued and generate cash, simply speaking... they can be financed by the alternative lender. Naturally, not every asset on the balance sheet can be properly financed.
Goodwill is a good example of that. And it's also to match the right amount of alternative financing with your asset category, whether it be current assets that are monetized daily for cash flow or longer-term fixed assets that require specific lease financing or bridge loan strategies.
CONCLUSION - TYPES OF ALTERNATIVE FINANCE FOR SMALL BUSI NESS
Small businesses continue to face financial challenges. Whether it's a pandemic or economic factor, the ability to access business funding is a challenge!
Funding your business can be a complicated but necessary process. With so many different options, how do you decide what works? Depending on where your company falls along, this timeline will determine whether it needs debt-based lending versus raising money through other means such as monetizing assets.
Our bottom line today - simply that you just might be surprised as to how much real ' glitter ' is shining in funding options via alternative financing vehicles. As with any business decision, companies considering alternative finance loans should do their homework.
FAQ: FREQUENTLY ASKED QUESTIONS
What is alternative lending?
Alternative lenders are a source of lending outside traditional banks in Canada. They offer loans that range from short-term loans to longer-term business credit lines for larger sums than what many small and medium-sized businesses could obtain from banks.
Click here for the business finance track record of 7 Park Avenue Financial
