YOUR COMPANY IS LOOKING FOR BUSINESS FINANCING CHOICES!
HOW TO FINANCE YOUR BUSINESS 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 FINANCE 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
"The best time to plant a tree was 20 years ago. The second best time is now. The same applies to business financing." - Adapted from Chinese Proverb
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Business Funding and working capital solutions – Save time and focus on profits and business opportunities
7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”
BUSINESS FINANCE OPTIONS
How much are Business Financing Options worth to the Canadian business owner/ financial manager?
Top experts agree it’s quite a bit, so let’s provide the owner/manager with some privileged ' backdoor entry' into some critical information and finance sources for your business in Canada. Let's dig in.
Exploring Business Funding Options
DEBT AND EQUITY AND YOUR CAPITAL STRUCTURE
Knowing where your capital is coming from (term debt or operating cash flow) is a top concern for most business owners, whether in start-up or growth mode.
Addressing high growth potential is key. Different levels of capital are needed depending on the type of business and industry.
Different financing structures like mezzanine financing can involve equity interest, providing lenders with a potential stake if loan terms are unmet.
It goes from one extreme to the other: capital-intensive businesses or high cash flow/working capital needs based on investments in receivables, inventory, technology, etc.
DID YOU KNOW?
- 26% of Canadian small businesses cite access to financing as a major challenge
- 68% of business owners attempt traditional bank financing first when considering small business finance options
- Alternative lending grew 40% year-over-year in Canada
- Average business loan approval rate: 27% at big banks
- Online lenders approve 56% of business loan applications
SME FINANCE CHALLENGES
There can be no discussion of Canadian business financing in Canada without discussing the pros and cons of chartered bank financing for commercial loans and operating lines of credit.
While large credit-worthy corporate borrowers have unlimited access to bank capital, the challenge for businesses in the SME / STARTUP sectors is much greater.
Industry Canada plays a crucial role in providing grants for businesses focused on science and research and facilitating access to debt financing for small businesses through guaranteed loans. The focus is on the owners' personal credit history, collateral, length of time in business, etc. Talk to 7 Park Avenue Financial about the government-guaranteed small business loan.
ARE BANKS THE SOLUTION FOR THE SMALL BUSINESS LOAN YOU NEED
Very few transactions in SME banking are done around inventory financing, equipment finance, and equipment lease needs.
Applying for a small business loan requires proper preparation and documentation, which can be a significant hurdle for many entrepreneurs.
While some banks have their independent leasing divisions, the great rates and structure they require necessitate you moving your entire banking relationship over to them, which is often undesired or impractical.
BUSINESS OWNER INFORMATION / BACKGROUND/EXPERIENCE
Business owners in start-up or SME (Small to medium enterprise) sectors should always know their credit history status. Banks and other lenders often immediately disqualify borrowers with unsatisfactory personal credit histories. TIP: Credit bureau scores of 650+ are typically desired.
DO YOU HAVE A BUSINESS PLAN OR CASH FLOW PROJECTION? THEY ARE IMPORTANT
One of the great mistakes business people make is not having a growth plan.
Often, that revolves around having a solid business plan and cash flow forecast, the latter being more important in some ways. Knowing when you will need more financing is a valuable commodity in business.
ARE YOU CHASING UNREALISTIC SOURCES OF FINANCING?
Because many business owners don’t understand their alternative financing options, they spend a lot of time chasing equity financing or venture capital, which dilutes ownership stake.
If you are starting your own business, it is crucial to understand the challenges of securing funding. Understanding how private equity groups, angel investors, and VCs work will save you a ton of time and help you realize that only 1% of all transactions submitted in this sector get financed.
In many cases, personal savings are not available to raise funds to fund further equity needs when a traditional bank loan isn’t available.
Do we even need to mention that giving up equity in the early stages of your business dilutes ownership and future returns on your work and investment?
Hopefully not.
UNDERSTANDING BUSINESS FINANCING OPTIONS
Understanding your business finance options is crucial for small businesses to make informed decisions about their financial future.
With various financing options available, evaluating each option’s pros and cons is essential to determine the best fit for your business. Business financing can broadly be categorized into debt, equity, and alternative funding.
Debt financing involves borrowing money that must be repaid over time, typically with interest. This includes traditional bank loans, lines of credit, and equipment financing.
Equity financing, on the other hand, involves raising capital by selling your business shares to investors, such as venture capitalists or angel investors. While this can provide significant funds, it also means giving up a portion of ownership and control.
Alternative financing options have emerged as popular choices for small businesses, offering more flexible repayment terms and easier access to capital.
These options include crowdfunding, invoice financing, and peer-to-peer lending. By understanding these various business financing options, small businesses can choose the most suitable method to support their growth and financial stability.
SOURCES OF CANADIAN BUSINESS FINANCING / BUSINESS LOANS - WHAT TYPE OF FINANCING WORKS FOR YOUR COMPANY
What are the alternative sources of capital for business short-term and long-term needs?
Exploring trim business financing options outside of traditional banks is crucial, especially for startups and those with poor credit, as it can significantly improve a business's chances of success.
They include:
A/R Financing
Inventory Loans
Access to Canadian bank credit/bank loan solutions
Non bank asset based lines of credit
SR&ED Tax credit financing
Equipment / fixed asset financing - payments are treated as a business expense
Cash flow loans
Royalty finance solutions
Purchase Order Financing
Short Term Working Capital Loans/ Merchant Advance/Credit cards ( Credit history of the owner is important )
Securitization
The interest rate on any type of financing will vary based on the amount of funding needed, overall credit quality, and your ability to demonstrate payback via sales, assets, and cash flow.
For small businesses, debt financing needs should ensure cash flows can cover them.
KEY TAKEAWAYS
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Credit requirements drive approval likelihood.
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Cash flow demonstrates repayment ability
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Collateral reduces lender risk significantly
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Time in business affects available options
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Industry type influences financing terms
ALTERNATIVE FINANCING OPTIONS
Alternative financing options have become increasingly popular among small businesses, offering flexible repayment terms and easier access to capital.
These options include crowdfunding, invoice financing, and peer-to-peer lending. Crowdfunding allows businesses to raise small amounts of money from many people, typically via online platforms.
Invoice financing enables businesses to sell their outstanding invoices to a financial institution at a discount, providing immediate cash flow without waiting for customer payments.
Peer-to-peer lending connects businesses directly with individual lenders through online platforms, often resulting in faster approval and more favourable terms.
These alternative financing options can provide small businesses with the necessary funds to grow and expand without traditional bank loans.
They offer flexibility and accessibility, making them an attractive choice for businesses that may not meet the stringent requirements of traditional financial institutions.
KEY TAKEAWAYS
- Credit requirements drive approval likelihood
- Cash flow demonstrates repayment ability
- Collateral reduces lender risk significantly
- Time in business affects available options
- Industry type influences financing terms
CONCLUSION
Whether your company is early stage or established and looking for traditional or alternate finance strategies for business needs, call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with your finance sources that make business financing options sense.
Even today's most successful companies have faced challenges in securing funding and have learned the importance of adapting and learning from their experiences.
FAQ
How do flexible payment terms benefit my business cash flow?
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Aligns with revenue cycles
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Preserves working capital
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Reduces financial stress
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Enables strategic planning
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Supports seasonal fluctuations
What advantages do alternative lenders offer compared to banks?
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Faster approval process
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Less stringent requirements
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Innovative funding solutions
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Specialized industry knowledge
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Technology-driven efficiency
How can equipment financing improve my business operations?
What benefits does invoice financing provide?
How does working capital financing support growth?
What documentation is typically required for business financing?
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Financial statements
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Tax returns
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Bank statements
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Business plan
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Legal documents
How do lenders evaluate business loan applications?
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Credit history review
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Cash flow analysis
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Industry assessment
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Collateral evaluation
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Management experience
What are common financing rejection reasons?
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Poor credit history
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Insufficient cash flow
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Limited business history
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Inadequate documentation
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Industry risks
HOW DO YOU PREPARE FOR BUSINESS FINANCING?
Securing business financing requires meticulous preparation centred on three critical elements: a compelling business plan, a robust credit history, and organized financial documentation. The business plan must articulate your venture's essence, incorporating thorough market analysis, detailed financial projections, and specific fund allocation strategies. This comprehensive approach demonstrates your business's viability, strategic foresight, and commitment to success to lenders and investors. By presenting clear goals, actionable strategies, and potential ROI calculations, entrepreneurs significantly enhance their chances of obtaining necessary funding while
What security requirements exist for different financing types?
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Traditional loans require hard assets
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Equipment loans secure against equipment
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Invoice financing uses receivables
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Cash flow loans need strong revenues
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Personal guarantees often required
HOW DO YOU MANAGING BUSINESS EXPENSES
Managing expenses is critical for small businesses to maintain a healthy cash flow and ensure long-term success. Effective expense management involves regularly evaluating your business expenses and implementing strategies to reduce costs and optimize financial resources. By closely monitoring your expenditures, you can make informed decisions that support your business’s economic health.
HOW DO YOU EVALUATE BUSINESS EXPENSES
Evaluating business expenses involves identifying areas where costs can be reduced or optimized. Review your financial statements to get a clear picture of your current spending. Look for unnecessary expenses that can be eliminated or reduced. For example, consider renegotiating contracts with suppliers, switching to more cost-effective service providers, or implementing energy-saving measures to reduce utility bills.
Implementing cost-saving measures can significantly impact your bottom line. Regularly evaluating your business expenses ensures that you use your financial resources efficiently and make the most of your available funds. This proactive approach can help small businesses maintain a healthy cash flow and achieve long-term success.
