YOUR COMPANY IS LOOKING FOR BUSINESS BORROWING!
THE SMALL BUSINESS INTEREST RATE ON LOANS CONUNDRUM - SOLVED!
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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?
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
Borrowing interest rates and the financing rate for a bank business loan or other commercial financing forms are often a disconcerting issue for Canadian owners and financial managers. Talking to clients, we're often explaining (defending?) the costs associated with different types of borrowing. So... The (not so) frightening truth ... Let's dig in.
2 TYPES OF BORROWING
We can quickly break down our subject into 2 categories - consumer/retail borrowing and business funding. We're talking solely about business funding here. We can further break that down into a bank business loan or financing that Canada's commercial finance companies provide. And by the way, a lot of those business financing firms, non-bank in nature, are subsidiaries of U.S. firms in many cases.
THE CURRENT LOW INTEREST RATE ENVIRONMENT
Almost always, and certainly, currently, business bank rates are at an all-time low. Should this be a surprise to the Canadian business owner/financial manager? Not really, as it's simply the spread between what the bank is paying us on our deposits versus their profit requirement on the mark up of those rates.
TERMINOLOGY CAN BE CONFUSING IN BUSINESS CREDIT
Confusion reigns supreme quite often because there are many bank products and services that all come with their own lingo - base rate, ancillary costs (our favourite!!) etc.
THE BANK RATE / BANK PRIME RATE
Behind the entire bank, pricing is the policy by the Bank of Canada as it pertains to the banks borrowing and lending with the government and themselves. That’s, fortunately, a subject for another day.
IS YOUR BUSINESS BORROWING SHORT TERM OR LONG TERM
When it comes to business financing and small business loans transactions from banks or commercial finance firms can be short term or long term in nature. In a perfect world, the banks themselves want to pay us, consumers, low short term rates and lend these funds out on a long term basis at higher rates - just common sense.
WHAT IMPORTANCE IS OVERALL CREDIT QUALITY IN BUSINESS BORROWING
How does your firm have input into what rates you will be charged for revolving facilities, asset monetization, or term loans? It's simply all about credit quality. So being credit worth as it pertains to being profitable, having a historical borrowing record, having solid financials, or being in business a long time counts.
THE COST OF FINANCING OUTSIDE TRADITIONAL BANKING
Thousands of firms borrow outside of the banking system for business needs. Here solutions for working capital and asset monetization abound - they 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
Purchase Order Financing
Short Term Working Capital Loans/ Merchant Advance/ Business Credit Card - Good personal credit history and credit score is required
Securitization
ALTERNATIVE LENDING RATES
In non-bank financing, rates are higher typically because the finance firm takes on more risk, and transactions are more structured. That might include deposits, outside collateral, warrant plays, etc. Borrowing rates and terms and conditions and banking for business will always require some due diligence and additional expertise on behalf of the Canadian business borrower.
CONCLUSION
Don't let interest rates on business loans be confusing and impeding your business growth via financing options available. Your business in fact does have an input into rates. First of all simply because Canadian business financing is competitive, and your ability to demonstrate growth, prospects, good mgmt, and assets will turn the odds of better borrowing rates in your favour.
Small business financing for small businesses and any firm in the SME / SMB sector seIf is always a challenge.
If you're focused on the truth in bank business loan and borrowing rates in Canada seek, including options for commercial loans seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you map the road to the lowest cost/maximum benefit.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
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