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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?
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7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
"The way to get started is to quit talking and begin doing." - Walt Disney
Obtaining a business loan requires action. Planning and preparation are crucial; securing financing requires initiative and expertise.
Unlock your business potential with the right financing. Discover how to navigate the complex world of business loans and fuel your company's growth.
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Business Loans 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”
Obtaining a Business Loan: Canadian Business Financing Loans in Canada
Business loan chances of success in Canada can be significantly improved by understanding the various options different financial institutions offer.
This knowledge transforms the ‘amateur’ into the ‘pro’ when it comes to working capital and financing your business for innovation and expansion in the Canadian marketplace. Let’s dig in.
SMALL BUSINESS LOANS FOR YOUR CASH FLOW NEEDS
Although larger corporations, both private and public, don’t often require owners’ guarantees, that certainly isn’t the case in the SME COMMERCIAL FINANCE area.
Calculating monthly payments is crucial to manage cash flow effectively. The actual issue of the guarantee and the business owner/owners’ personal credit history will affect both rate and overall approval potential in most traditional financing ( aka ‘ the bank ‘ ).
UNDERSTANDING THE DIFFERENCE BETWEEN PERSONAL CREDIT AND BUSINESS CREDIT - TIP: FOR SMALL BUSINESSES, THEY ARE PRETTY WELL THE SAME!
Business owners are encouraged to ensure they can convey their personal financial issues to protect themselves and get financing approval at good rates.
When applying for their first business loan, small business owners often face challenges such as maintaining a strong personal credit score and proving management skills.
It is common for owners to avoid pledging personal assets - in effect, separating their business and personal finances - and that’s a good thing!
The concept of ‘ Collateral ‘ is critical to business loan success. In many cases, it’s either a key ‘ requirement ‘ or, in some cases, a ‘ driver ‘ of successful capital resolution.
MANAGING THE DIFFERENCE IN TYPES OF BUSINESS ASSETS
It’s important to differentiate between different types of assets - in some instances, it’s fixed assets/equipment; in other cases, your collateral is your working capital accounts.
A business line of credit can be a useful financing option for managing working capital. These are receivables, inventory, and any tax credits that might be financeable.
(The most common tax credit financed is the SR&ED refundable tax credit).
Don’t forget that purchase orders and contracts are financeable under the right circumstances, allowing access to further working capital.
THE CANADA SMALL BUSINESS FINANCING PROGRAM MIGHT BE THE SOLUTION YOU ARE LOOKING FOR
What type of business loan finances new or existing assets? It could be a bank term loan, a government-guaranteed Small business loan, or even a bridge loan supported by hard assets.
An equipment lease is not a ‘ loan ‘ per se but always finances hard assets, including technology. The Government Small business loan provides up to $1.1M in asset and leasehold financing to thousands of businesses in Canada every year.
This program can also benefit existing businesses looking to expand or enhance their operations. Let 7 Park Avenue Financial help you through the application process for government loans.
RECOMMENDED WORKING CAPITAL AND CASH FLOW FINANCING SOLUTIONS FROM 7 PARK AVENUE FINANCIAL
And those ‘Current Assets’ on your balance sheet. Financing of those should be done via:
A/R Financing
Bank revolving credit lines
Asset-based non-bank business lines of credit
SR&ED Tax credit financing
Various financial institutions, including banks and online lenders, are crucial in providing working capital and cash flow financing solutions.
Ensure you understand the interest rate, structure, and repayment terms surrounding any financing possibilities—that is critical. They are all designed to help your firm access the business capital you need.
If there is one ‘tip‘ around loans, it understands the concept of cash flow. Proving you have positive cash flow allows you to be eligible for unsecured cash flow loans.
Business plans you might prepare to show your business’s merits of loan financing must emphasize cash flow generation and repayment ability.
Business owners should be able to demonstrate a good credit score and personal credit history. A 7 Park Avenue Financial business plan meets and exceeds the requirements of Canadian banks and commercial lenders.
SPEND TIME ON UNDERSTANDING THE TYPE OF SMALL BUSINESS FUNDING YOU NEED
Recognizing and identifying the financing your firm is eligible for is key to capital funding success. Evaluating different business loan options based on qualifying criteria and business needs is crucial.
It also saves a lot of wasted time. Identifying the right ‘ traditional’ or, in some cases, ‘ alternative ‘ lender in a timely and credible fashion is key.
A good analogy is that you wouldn’t go to a fast-food restaurant expecting ‘ Haute cuisine ‘ food and service.
KEY TAKEAWAYS
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Loan types: Familiarize yourself with term loans, lines of credit, and Canadian Government SBL loans
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Credit requirements: Lenders evaluate personal and business credit scores
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Financial documentation: Prepare accurate statements and projections for assessment
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Collateral: Understand how assets secure loans and reduce lender risk
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Repayment terms: Analyze interest rates, payment schedules, and loan duration
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Application process: Learn about required documents and typical timelines
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Loan purpose: Clearly define how you’ll use the funds to benefit your business
CONCLUSION - BUSINESS LOANS AND BUSINESS FINANCING
If you want to change ‘amateur’ to ‘pro’ status around your business needs regarding business loan and asset finance solutions, call 7 Park Avenue Financial.
We're a trusted, credible and experienced Canadian business financing advisor who can assist you with capital needs. Understanding the criteria and options available when seeking a bank loan is crucial for making informed decisions.
FAQ
What are the main types of business loans available?
Business loans come in various forms, including term loans, lines of credit, Canadian Government SBL loans, equipment financing, and invoice factoring. Each type serves different purposes and has unique terms, so it's essential to choose the one that best fits your business needs.
How can I improve my chances of getting approved for a business loan?
To increase your approval odds, focus on improving your credit score, preparing a solid business plan, gathering all necessary financial documents, and demonstrating a strong cash flow. Additionally, consider offering collateral and having a clear purpose for the loan.
What documents are typically required when applying for a business loan?
Lenders usually require financial statements, tax returns, bank statements, business licenses, and a detailed business plan. You may also need to provide collateral information, personal financial statements, and legal documents related to your business structure.
How long does the business loan application process usually take?
The timeline for obtaining a business loan can vary widely depending on the lender and loan type. Traditional bank loans may take several weeks to months, while online lenders can sometimes provide approval within days. Due to additional requirements, Canadian Government SBL loans typically have a longer processing time.
What factors do lenders consider when evaluating a business loan application?
Lenders assess various factors, including credit scores, business revenue and profitability, time in business, industry outlook, collateral availability, and the purpose of the loan. They also evaluate your debt-to-income ratio and overall financial health to determine your ability to repay the loan.
What is the difference between secured and unsecured business loans?
Secured loans require collateral, such as property or equipment, which the lender can claim if you default. Unsecured loans don’t require collateral but often have higher interest rates and stricter eligibility requirements due to the increased risk for the lender.
How does my personal credit score affect my business loan application?
Your personal credit score plays a significant role in business loan applications to get a business loan , especially for new or small businesses. A higher credit score demonstrates financial responsibility and can lead to better loan terms and increased approval chances.
Can I get a business loan for a startup or new business?
While it can be challenging, obtaining a loan for a startup is possible. Canadian Government SBL microloans, business credit cards, or alternative lenders are options. A strong business plan, good credit, and some form of collateral can improve your chances of approval.
What is a Canadian Government SBL loan, and how does it differ from traditional bank loans?
Canadian Government SBL loans are partially guaranteed by the Canadian government / Industry Canada, reducing lenders' risk. They often offer more favourable terms, such as lower down payments and more extended repayment periods, than traditional bank loans. However, they typically have stricter eligibility requirements and a longer application process. You can also buy an existing business with a government loan.
How do interest rates for business loans compare to personal loans?
Business loan interest rates are generally higher than personal loan rates due to the increased risk associated with business lending. Rates can vary widely based on loan type, lender, creditworthiness, and market conditions.
What role does cash flow play in the business loan approval process?
Cash flow is a critical factor in loan approval as it demonstrates your ability to repay the loan. Lenders analyze your business’s cash flow statements to assess your income stability and ensure you can manage loan payments alongside other financial obligations.
How can I determine the right loan amount for my business needs?
To determine the appropriate loan amount, assess your business needs, consider your repayment capacity, and calculate the potential return on investment. Create detailed financial projections to ensure the loan amount aligns with your growth plans and cash flow capabilities.
What are some common reasons why business loan applications get rejected?
Common reasons for loan rejections include poor credit scores, insufficient cash flow, lack of collateral, inadequate time in business, and incomplete or inaccurate application information. Understanding these factors can help you address potential weaknesses in your application before submitting it.
