YOUR COMPANY IS LOOKING FOR BUSINESS REVOLVING CREDIT FACILITIES!
SMALL BUSINESS LINES OF CREDIT TO MANAGE YOUR CASH FLOW
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the most significant 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
Suite 301
Oakville, Ontario
L6J 7J8
Getting a business credit line loan in Canada can make Canada's business owner / financial manager feel somewhat ' highly fuzzy. ‘ It's easy to understand as commercial loans in Canada, specifically revolving credit facilities, come in different shapes and sizes! Let's dig in.
WHY DOES YOUR BUSINESS NEED A LINE OF CREDIT?
A credit line is needed for most businesses as it relates to ' operating cycles.' Those cycles are driven by seasonality, the level of current assets in a company ( inventory and receivables ) and the overall timing related to inflows and outflows in small businesses such as yours. It is important to differentiate between term loans and working capital, leading to a mismatch of financing.
THE ' STATEMENT OF CASH FLOWS' TELLS YOUR TRUE CASH STORY!
While many business owners are somewhat purposely unfamiliar with Page 3 of their financial statement (the ' statement of cash flows ‘), this is perhaps the most telling document about their business. It's a classic case of what we old school types call ' where got/ where gone '!
2 REASONS FOR A LINE OF CREDIT?
So why do commercial loans for a credit facility make sense for a business? Two words basically - Grow / Operate...
DOES THE BANK SATISFY ALL YOUR CURRENT BUSINESS FUNDING NEEDS?
The natural corporate loans ' go-to ' for most owners, entrepreneurs, and financial managers for a business bank loan is our Canadian chartered banks related to a business credit line loan. The criteria for approval are simple - but sometimes simply hard to achieve. They include profits, positive cash flows, and your business's overall financial performance related to the balance sheet. That relates to the owner/owners balance sheets as banks emphasize outside collateral and personal creditworthiness of ownership of the firm.
The credit line at a bank will almost always have a limit, and it becomes the responsibility of owners/managers to ensure the continual drawing down. Repayment of the loan is handled satisfactorily.
In some cases, a bank might consider converting a part of the credit line into a term loan.
AN ALTERNATIVE BUSINESS CREDIT LINE VIA ASSET BASED LENDING!
One healthy alternative in business bank loans (What? There are Alternatives?!) to that bank facility is a non-bank asset-based credit line. These facilities allow your business to borrow, under one roof, funds against a combination of A/R, inventory and equipment. And while bank credit lines are rigid and reviewed typically annually, the Asset credit facility can quickly fluctuate according to your needs and sales growth.
MATCHING SHORT TERM OBLIGATIONS WITH SHORT TERM FINANCING!
It is always important for the company to use these types of loans judiciously. They should rarely be used to purchase assets or make long-term investments in the business. That’s a classic mismatch of the intended use.
WHAT ARE SOME SUBSETS OF ASSET BASED LOANS? PROTECT YOUR BUSINESS FROM UNEXPECTED CASH SHORTFALLS WITH ANY OF THESE SOLUTIONS
We have called these ' subsets ' of a credit line - These are niche borrowing facilities specifically tailored to your firm's or industry's specific needs.
They include:
Inventory financing
Factoring/ Confidential Receivable Financing
Purchase Order/ Supply Chain finance
SR&ED tax credit monetization
Royalty financing
Sizes of borrowing will always vary specifically to a firm's needs, and actual finance charges and the interest rate on small business loans will depend on whether your firm has chosen a traditional or alternative financial source. Most solutions will come with a fixed rate or variable rate - you decide what is best for your firm, subject to credit approval .
Some firms in the early and start-up stages will benefit from the Government of Canada Small Business Financing Program - a government-guaranteed loan that funds assets, leasehold improvements, and real estate. Owners of small business always focus on interest rates, and the interest rate in the 'SBL LOAN' is desirable. This business loan comes with no prepayment penalties and flexible terms and conditions that include a limited personal guarantee - A good credit score and personal credit history is required to access the program and achieve the reasonable commercial loan interest rate that comes with the program.
The govt loan funds equipment, leasehold improvements and real estate are not a cash loan or a line of credit. The most common loan amount cap under the program is 350k, but real estate can be funded to 1 Million dollars.
To apply for a loan under the government program, you must have a proper business plan and reliable cash flow projections. 7 Park Avenue Financial business plans meet and exceed bank and commercial lender requirements.
That limited personal guarantee is a good way to protect yourself from additional liability in bank loans for businesses. At 7 Park Avenue Financial, we always coach our clients to make a strong effort to separate your business and personal financial life.
CONCLUSION
If achieving business credit lines in the world of small business financing that makes sense for your firm is at the top of your ' TO DO ' list, seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your short term borrowing needs and small business loans that suit your business needs. Talk to us about your business funding needs in business credit and business loan rates suited to your business credit profile.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
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