YOUR COMPANY IS LOOKING FOR DEBT FINANCING SOURCES!
Business Loans & Business Financing Canada
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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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'The entrepreneur funding challenge '
Debt financing sources in Canada. Most business owners and financial managers would agree that a little creativity can sometimes go a long way in helping a business achieve the stability and financial resources a business needs to succeed.
Whether it's Canada business loans or monetizing assets on the balance sheet it's all about business financing and sourcing the right business capital needs when it comes to financing a business in Canada. By the way, we aren't talking about venture capitalists / equity financing, but instead just ' real world ' finance for SME COMMERCIAL FINANCE concerns.
Whether it's government loans or a financing program from a commercial lender business capital is always needed.
Let's take a quick ' tour ' around some of those sources which include term loans, leases, and some other less known types of financing.
DIFFERENT FORMS OF DEBT WILL ADDRESS DIFFERENT FINANCE NEEDS
The reality is of course that different sources of debt meet different needs when it comes to business funding for , so you need a sense of the ' lay of the land' when you're evaluating solutions.
It's also all about not ' wasting time ' and there is no better example of this in Canada than spending a lot of time, and in some case dollars in pursuing Chartered bank financing in Canada that will not happen.
CANADIAN CHARTERED BANKS
Canada's chartered banks are the backbone of Canadian business finance. They are trusted proven providers of capital... if, and it’s a huge if, you can meet their criteria. However in fast-moving or tough economies, while the banks would, in fact, be the best solution for your business, the reality is that on occasion they aren't suited to very specific needs.
Are there some quick ways to evaluate your ability to positive secure bank debt? There definitely are, and if you feel you can meet 4 - 5 key criteria then you should absolutely pursue Chartered bank debt in Canada, for small businesses and established firms.
What are those criteria then? Simply speaking they are profits, assets and collateral, sound operating ratios, repayment with outside collateral ( personal net worth issues, etc.), and finally your ability to summarize all that, typically in the form of a business plan or executive summary.
2 KEY BANK REQUISITES - COLLATERAL AND CASH FLOWS!
Banks look for positive cash flow. When you line up ' cash flow lenders' with ' balance sheet lenders ' banks typically are in the cash flow line up, required a positive cash flow ratio of typically 1.25: 1.
When it comes to collateral required for loans banks focus on the more liquid ones, such as receivables and verifiable inventory (not always inventory though).
Operating and liquidity ratio calculations play a key role in bank loans. They include leverage via debt to equity calculations, our aforementioned cash flow ratio, working capital ratios, etc. Whether your firm is a new business or an established firm owners must understand their financials.
PERSONAL GUARANTEES
You can absolutely be expected to be asked for a personal guarantee when it comes to bank debt financing in Canada. Other sources of financing may also include personal guarantees, but they play less of a role in final approval.
You have to be able to summarize a bank proposal effectively. This can be done via a Canadian business financing advisor, your accountant, or some other third party. It’s critical to put forth a realistic financial and operating document that demonstrates repayment and viability.
OTHER SOLID SOURCES OF DEBT FINANCING VIA A BANKING OR COMMERCIAL BUSINESS FUNDING SOURCE
Other sources of debt financing for business loans include
1.Asset-based lenders
2.Lessors
3. The government SBL program - aka ' The Canadian Government Small Business Loan ' - a solid way to consider funding to start a business - Loans, not bdc grants ( they are not grants ) are also a solid quasi-government solution. Some business owners will also pursue business grants through a federal government or provincial program - at 7 Park Avenue Financial we have always found this pursuit is both time consuming and often not successful
4. Cash flow loans / Small business loans
CONCLUSION
It's clear that it becomes a case of identifying what you need, and what you realistically can qualify for. For example funding for business startup scenarios are always more challenging and heavy reliance is placed on the credit history and net worth of the borrower.
Different commercial funding companies have specific solutions for certain industry needs outside of Canadian chartered banks, and price their solutions accoridngly with potentially higher interest rates than banks. The business owner must choose between cost of capital and access to capital !
Small business funding will probably always be a challenge by its nature. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in identifying sources of debt finance and loans in Canada that make sense... specifically for your firm, whether its start up funding Canada - or ongoing business needs to profit and grow your company.
