YOUR COMPANY IS LOOKING FOR BUSINESS FINANCE SOLUTIONS!
YOUR GUIDE TO FINANCE GROWTH / ASSET FINANCE WORKS!
UPDATED 05/10/25
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing businesses today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CONTACT US:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Email = sprokop@7parkavenuefinancial.com
BUSINESS FINANCE SOLUTIONS IN CANADA
Business financing in Canada, even when you're wildly profitable, is always still a challenge for owners/financial managers.
On that scale of 1-10, how comfortable are you that your firm has access to and knowledge of the best financing solutions for your business operations?
It's all about growing your business and meeting financial obligations, and asset-based financing solutions from the right finance provider just might be the answer, so let's dig in.
The Funding Dilemma: Unlocking Growth Through Strategic Financing
Problem: Canadian business owners frequently struggle to identify and secure appropriate financing sources, often relying on limited options that may not suit their specific business needs.
This financing gap leads to missed growth opportunities, cash flow constraints, and the inability to capitalize on market advantages when they arise, potentially allowing competitors to gain ground.
Solution: Let the 7 Park Avenue Financial team show you how understanding the full spectrum of business finance sources available specifically for Canadian enterprises, owners can leverage the right funding options to fuel sustainable growth while maintaining financial health.
WHAT IS ASSET FINANCING / TYPES OF ASSET FINANCE
Asset financing is the use of your balance sheet in monetizing assets for cash flow and working capital needs when traditional financing is not available.
Typical balance sheet items that are financed include receivables, inventory, and fixed assets.
Occasionally, real estate might be in the mix. The ability to collateralize these assets allows a firm to fund operations as needed via solutions from financial services providers such as 7 Park Avenue Financial.
ASSET FINANCE OPTIONS
Asset-based financing is different from traditional bank loan-type financing in that it's almost solely about the assets and the ability to derive cash from those assets.
While business plans and cash flow projections are still always important, and more so when it comes to traditional bank loans, there is less reliance placed by the asset-based lender on those items, given the total focus on asset values and the ability to liquidate those assets.
Clients always ask us about the differences in asset finance when compared to bank loans - essentially all about the assets that are used as collateral for the business.
While banks place heavy emphasis on high-quality financials and cash flows, as well as the need to potentially have business owners provide outside collateral and personal guarantees.
‘Cash flow is tight ' is the common term we hear when we talk to customers struggling with their sales goals. Ironically, as we've hinted, it even gets tighter when sales and profits are strong.
( Spoiler alert - that's because you're building current assets such as receivables and inventories, as well as acquiring new assets and technology )
UNDERSTANDING ASSET FINANCING
Sometimes it's almost as if there's a ' leak' in your funds as the owner/financial manager struggles to put financing in place. The clues are often in your financial statements, but are sometimes difficult to pin down for some.
Those cash flow and working capital shortages can put a huge strain on the business, often straining relationships with suppliers and lenders, such as your bank.
It sometimes makes a lot of sense to get a third-party outside opinion on your current financial position. That's when unlocking valuable business finance techniques can pay off to cover off the short-term and intermediate funding needs.
ASSET FINANCE ADVANTAGES - THE VALUE OF ASSET FINANCE
It's no secret that a major focus of business is to increase sales. As important, though is the need to ensure you understand what in fact is happening to your overall cash flow. What we're really talking about is your ' operating cash flow ' and what ' drivers ' are in fact increasing or decreasing that cash.
IS MY BUSINESS ELIGIBLE
In many cases, it's always best to use longer-term financing for acquiring new assets and technology. By the way, even business software can be financed! Your overall profit situation as well as your profit margins will often help drive what financing your firm is eligible for.
FINANCING THE COMPANY'S BALANCE SHEET ASSETS
Also, the types of assets your firm carries on the balance sheet and understanding their size and quality will often also drive the finance solutions you need are eligible for via asset finance companies
ASSET BASED LENDING
Assets that can be monetized include:
Receivables / Accounts Receivable Invoice Financing / Confidential Receivable Finance - popular financing methods used by thousands of firms
Inventory -
Equipment Leasing / Asset Refinance / Vehicle Asset Finance / Sale-Leaseback Asset Refinancing of a valuable asset, such as company-owned real estate/funding capital expenditures
Tax Credits
Purchase Orders / ' PO Financing '
Solutions such as A/R financing, inventory loans, equipment leasing, sale-leasebacks, and SR&ED tax credits can all be ' cash flowed' into immediate liquidity.
By the way, these solutions tend to be 'non-bank' in nature and predominantly available through commercial finance companies or alternative lenders.
GOVERNMENT BUSINESS LOANS
Newer businesses are often eligible for the Government of Canada Small Business Loan (the new loan maximum is $ 1,000,000.00) and require a modest personal savings injection. Government agencies such as Industry Canada sponsor the program for government funding programs.
KEY DIFFERENCES IN SHORT-TERM FUNDING AND LONG-TERM FUNDING NEEDS
Asset-based business credit lines are used for short-term day-to-day funding of a business, allowing your company to meet payroll, product and purchase goods, etc.
It's important to differentiate between long-term funding needs and liquidity required for funding daily operations.
Case Study: The Benefits of Business Finance Sources
When a Burlington-based manufacturing firm faced a pivotal growth opportunity through a major contract, they encountered a classic business dilemma.
The conventional bank loan they sought would cover only 60% of their expansion needs, requiring equipment purchases and hiring additional staff before revenue would flow from the new contract.
Instead of limiting their growth to match available traditional financing, the company implemented a diversified business finance strategy. The company secured equipment financing directly from suppliers for specialized machinery, utilized the Canada Small Business Financing Program for building modifications, factored the first contract invoices to fund initial inventory purchases, and established a working capital line of credit for ongoing operations.
This strategic combination of business finance sources allowed the company to accept the full contract without diluting ownership through equity investment. The company successfully expanded production capacity by 40%, hired 12 new employees, and increased annual revenue by $2.1 million within 18 months.
CONCLUSION - BENEFITS OF ASSET FINANCE
Stop letting limited financing options suffocate your business potential—discover funding solutions you never knew existed.
Asset finance solutions allow your business to focus on the balance sheet and sales to obtain loans tailored to the needs of the business.
Typical uses of asset-based loans are short-term liquidity, such as lines of credit and bridge loans. Asset-based lenders have a different perception of a company and its overall credit profile versus the lending parameters of traditional Chartered bank financing in Canada.
If you want to know how asset finance works and the types of asset financing solutions available, as well as the advantages of this type of financing, talk to the 7 Park Avenue Financial team.
Want to avoid making ' bad decisions' in the financing of your business?
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with your capital and cash flow needs to secure funding around your industry business model.
FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION
What are the three types of business financing?
Types of business financing include debt finance solutions as well as owner equity/retained earnings - A hybrid type of financing is the asset monetization solutions . Debt financing comes from Canadian chartered banks, government loans, or third party commericla finance firms and asset based lender who finance assets on a company's balance sheet
What is meant by asset financing?
Asset financing is the monetization of a company's assets on the balance sheet, such as receivables and inventory, used to fund ongoing working capital needs. Lenders collateralize the assets to allow a company to borrow funds against those assets.
What is Finance Leasing?
Finance leasing is equipment leasing based on a capital lease / ' finance lease' , or lease-to-buy solutions for business assets. An operating lease is in effect, a short-term rental type of equipment lease and differs from asset ownership as the leasing company has a residual interest in the asset when it comes off lease. Companies get the use of assets and pay for them asset. Companies secure finance via capital leases or operating leases for assets they need to run and grow their business.
What financing options are available for seasonal businesses in Canada?
Financing options for seasonal businesses include flexible lines of credit, merchant cash advances, and inventory financing. These options provide the adaptability needed for cyclical operations, allowing you to access capital during slow periods and repay during peak seasons. Industry-specific lenders familiar with seasonal fluctuations in sectors like tourism, agriculture, and retail often offer customized terms that align with your business cycle.
How can I qualify for a small business loan from Canadian financial institutions?
To qualify for a small business loan from Canadian financial institutions, you need a strong credit score (typically 650+), a detailed business plan, at least two years of operation history, positive cash flow demonstrated through financial statements, sufficient collateral to secure the loan, and a reasonable debt-to-income ratio. Most lenders will also require personal guarantees from business owners. Preparation is key—gather your documentation, address any issues in your credit report, and consider starting with the financial institution where you already have a business relationship.
When should I consider alternative financing instead of traditional bank loans?
Consider alternative financing when your business has limited operating history, when you need funding faster than banks can provide, if you've been rejected for traditional loans, or when your business model doesn't fit conventional lending criteria. Alternative financing options like merchant cash advances, revenue-based financing, or equipment leasing may offer more flexible qualification requirements and faster funding timelines. These options are particularly valuable for businesses with strong revenue but limited assets or imperfect credit histories.
Why do lenders place such importance on cash flow when evaluating financing applications?
Lenders prioritize cash flow when evaluating financing applications because it directly indicates your ability to make regular loan payments regardless of profitability on paper. Strong cash flow demonstrates operational efficiency and financial stability beyond simple revenue figures. A business might show profits but still struggle with timely loan repayments if cash is consistently tied up in inventory or accounts receivable. Lenders analyze your cash flow patterns to assess risk and determine appropriate loan amounts and terms that align with your business's actual financial capacity.
What documentation do lenders require when applying for business financing in Canada?
Lenders require comprehensive documentation when applying for business financing, including business and personal tax returns for the past three years, financial statements (balance sheet, income statement, cash flow statement), a detailed business plan with projections, bank statements, proof of business registration, commercial lease agreements, existing loan documents, accounts receivable and payable aging reports, and personal financial information for all business owners. Government-backed loans may require additional industry-specific documentation or proof of eligibility for designated programs.
Which business finance sources offer the fastest access to capital for urgent needs?
For urgent capital needs, merchant cash advances typically offer the fastest funding, often within 24-48 hours.These faster financing options generally carry higher costs than traditional financing, so they're best used for truly urgent situations where the opportunity cost of waiting outweighs the premium paid for expedited funding.
What advantages do specialized industry lenders offer compared to general financial institutions?
Specialized industry lenders offer significant advantages through their deep understanding of your business model and industry-specific challenges. These lenders can structure financing solutions that align perfectly with your operational cycle, recognize the value of industry-specific assets, and often maintain relationships with key suppliers and distributors in your sector. Their specialized knowledge means they can accurately assess risks that general lenders might overestimate, potentially resulting in better terms and approval rates for businesses that traditional banks might consider too risky.
Why should established businesses reassess their financing structure periodically?
Established businesses should reassess financing structures periodically because as your business evolves, so do available financing options and your qualification profile. Regular reassessment helps identify opportunities to refinance at better rates, consolidate multiple obligations into simpler structures, or transition from startup-oriented financing to more advantageous long-term arrangements. This process often reveals that financing secured during earlier business stages may no longer be optimal, potentially freeing up cash flow through restructuring or renegotiating terms based on your improved business performance and credit profile.
How does the application process differ between traditional and alternative business financing?
The application process for traditional financing typically involves extensive documentation, in-person meetings, detailed business plan review, and underwriting periods of 4-12 weeks with approval rates below 30% for small businesses. Alternative financing generally features streamlined online applications, limited documentation requirements focused on revenue rather than credit history, algorithmic assessment rather than manual underwriting, and funding decisions often within days with approval rates exceeding 60%. Traditional processes emphasize thoroughness and relationship-building, while alternative financing prioritizes speed and accessibility, though usually at higher cost.
When is it appropriate to personally guarantee a business loan?
Personal guarantees are appropriate when your business lacks sufficient operating history or assets to secure financing on its own merits, when seeking preferential rates that lenders only offer with additional security, or when your business structure (like a new incorporation) has limited credit history. However, you should carefully consider the specific terms, including whether the guarantee is limited or unlimited, and assess your personal financial capacity to cover obligations if business revenues falter. As your business establishes stronger credit and financial history, renegotiating to remove personal guarantees should become a priority to separate personal and business financial risk.
How do different business finance sources impact your company's financial statements and ratios?
Different finance sources impact your financial statements in distinct ways that affect how investors, lenders, and analysts view your business. Debt financing appears as a liability on your balance sheet, increasing leverage ratios but allowing you to maintain ownership percentages. Equity financing from entities such as angel investors, private equity and ownership stakes from venture capital firms strengthens your balance sheet by increasing the equity portion without creating repayment obligations, though it dilutes ownership versus your own money injection from personal resources. Revenue-based financing may be structured as income sharing rather than debt, potentially creating more favourable financial ratios. Understanding these impacts is crucial for maintaining optimal financial health metrics that influence future financing options, including equity capital.
- Business funding via Debt financing impacts debt-to-equity ratios and reduces net income through interest expenses
- Equipment financing can improve cash flow while spreading major expenses across the useful asset life
- Operating leases may keep certain obligations off your balance sheet, improving debt ratios
- Factoring converts receivables to cash, improving liquidity ratios, but potentially at high effective costs
- Equity financing to raise capital improves solvency ratios but dilutes earnings per share and ownership control of common and preferred stock.
What common mistakes do business owners make when selecting financing options?
Business owners frequently make critical financing mistakes, including focusing exclusively on interest rates while ignoring fee structures and prepayment penalties that significantly impact total financing costs. Many choose inappropriate financing types, like using short-term loans for long-term investments or equipment loans for working capital needs. Overextending through excessive borrowing based on optimistic projections creates vulnerability during downturns. Failing to compare multiple options leads to suboptimal terms, while neglecting to read the fine print often results in unexpected restrictions that limit business flexibility. Addressing these common errors leads to more strategic financing decisions.
- Mismatching financing term length with the lifespan of what's being financed
- Overlooking hidden costs and fees beyond the stated interest rate
- Securing inadequate funds from debt capital companies and debt funding amounts that fail to fully address business needs
- Neglecting to anticipate how financing and interest payments might affect tax situations
- Failing to build relationships with multiple funding sources before urgent needs arise
- Government grants may /venture capitalists and other equity funding sources often be inappropriate for certain needs to raise funds
Citations on Business Finance Sources
- Business Development Bank of Canada. (2024). "Canadian Business Financing Trends 2024." BDC Research Report. https://www.bdc.ca/research
- Statistics Canada. (2023). "Survey on Financing and Growth of Small and Medium Enterprises." Government of Canada. https://www.statcan.gc.ca/financing-survey
- Canadian Federation of Independent Business. (2024). "Access to Financing: Barriers and Opportunities." CFIB Research Paper. https://www.cfib-fcei.ca/finance-report
- Export Development Canada. (2024). "Financing Global Expansion: A Guide for Canadian Businesses." EDC Knowledge Center. https://www.edc.ca/financing-guide
- Deloitte Canada. (2023). "Alternative Lending Landscape in Canada: Market Analysis." Financial Services Industry Report. https://www2.deloitte.com/ca/financial-reports
