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Financing & Cash flow are the biggest issues facing business today
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7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Email: sprokop@7parkavenuefinancial.com
Alternative Business Lending: Financing Solutions
Are Business Finance Solutions for Canadian Businesses a Necessity?
Whether it’s a term loan, chartered bank financing, or choosing from alternative lending vehicles, top experts agree that while you might be able to survive temporarily without profits, finance solutions and access to cash flow are critical.
For small business owners struggling with bad credit, an alternative business loan can be a viable option versus traditional lenders. It offers quicker application processes, fewer paperwork requirements, and higher approval rates than traditional financial institutions.
Contrary to your opinion, there’s no secret society about access to solid business financing choices. Let’s investigate alternative financing options.
Breaking Free from Banking Barriers: Your Path to Business Growth
Canadian businesses face increasingly rigid traditional lending requirements, leaving growth opportunities untapped and immediate capital needs unmet. This financial gridlock makes entrepreneurs miss crucial business opportunities and struggle with cash flow challenges.
Let the 7 Park Avenue Financial team show you how Alternative Business Lending provides a dynamic solution, offering flexible terms, rapid approvals, and innovative funding structures tailored to your business's unique needs.
2 Uncommon Takes on Alternative Funding
- The rise of hybridized lending models combining traditional and alternative financing
- Alternative lenders are better positioned to serve niche industries due to specialized risk assessment models.
The Goal: Healthy Business
Of course, the goal is “health,” i.e., a healthy business for a business owner, that comes from managing your assets, financing them, giving your clients credit terms, and accessing business credit.
Understanding Financial Structure
It’s key to understand how others view the “financial structure” of your business. For instance, if you have a lot of debt but are still viable, you will reasonably be expected to pay significantly more than the interest charged by Canadian banks via alternative lending options, which often have varying minimum credit score requirements ranging from 550 to 660.
When you think about it, how you manage your assets is really how you make your money.
Evaluating Alternative Lending Solutions
Knowing how to evaluate different financial solutions, including alternative business loans, comes with numerous benefits — the ability to know you can meet day-to-day obligations and to assess growth based on cash, not profit. (There’s a difference!)
The Critical Nature of Working Capital and Cash Flow
Working capital and cash flow access only become critical when you need them! Whether it’s external factors such as a recession or internal issues specific to your company and industry, your inability to access credit puts your company on the precipice.
An alternative lender can provide flexible and quicker financing options, offering a streamlined approval process and less stringent eligibility criteria, which can be crucial for growing enterprises facing funding challenges.
What is Alternative Lending?
Definition and Explanation of Alternative Lending
Alternative lending refers to any loan or financing option not provided by a traditional bank or credit union. This type of lending has become increasingly popular in recent years, as it offers a more flexible and accessible way for small businesses and individuals to access capital.
Alternative lenders use technology to streamline the application and approval process, making it faster and more efficient than traditional bank loans. They also often have more lenient eligibility requirements, making it easier for businesses with poor credit or limited collateral to qualify for a loan.
Benefits of Alternative Lending
Alternative lending offers a range of benefits that make it an attractive option for small businesses. One of the primary advantages is the speed of funding.
Unlike traditional bank loans, which can take weeks or even months to process, alternative lenders can often approve and disburse funds within 24-72 hours. This rapid access to capital can be crucial for businesses needing to seize time-sensitive opportunities or manage unexpected expenses.
Another key benefit is flexibility. Alternative lenders typically offer various financing options, including merchant cash advances, invoice factoring, and lines of credit.
This allows businesses to choose a solution for their needs and cash flow patterns. Additionally, the repayment structures are often more adaptable, with revenue-based repayments that align with the business’s income, reducing the strain during slower periods.
Accessibility is also a significant advantage. Traditional bank loans often have stringent eligibility criteria, including high minimum credit scores and substantial collateral requirements.
In contrast, alternative lenders focus more on the business’s performance and potential, making it easier for businesses with poor credit or limited assets to secure funding. This inclusivity opens up opportunities for a broader range of businesses to access the capital they need to grow and thrive.
Alternative Lenders vs. Traditional Bank Loans
Several key differences stand out when comparing alternative lenders to traditional bank loans. Traditional bank loans are known for their rigorous application processes, often requiring extensive documentation, high minimum credit scores, and significant collateral.
This can make it challenging for small businesses, especially those with limited credit history or assets, to qualify.
In contrast, alternative lenders offer a more streamlined and accessible approach.
The application process is typically faster and less cumbersome, often completed online with minimal paperwork. Alternative lenders also tend to have more lenient eligibility requirements, focusing on the business’s overall performance and potential rather than just credit scores and collateral.
Repayment structures also differ significantly. Traditional bank loans usually have fixed monthly payments, which can be a burden during periods of low cash flow.
Alternative lending options, such as merchant cash advances and revenue-based financing, offer more flexible repayment terms that adjust based on the business’s income. This can provide much-needed relief during slower months and help maintain a healthier cash flow.
Ultimately, the choice between alternative lenders and traditional bank loans depends on the business's specific needs and circumstances.
Alternative lending solutions can be a highly effective option for those requiring quick access to capital, flexible repayment terms, and more lenient eligibility criteria.
Managing and Financing Assets
As we have stressed in the past, it’s about managing assets and equipment financing to acquire essential business assets such as machinery, vehicles, and technology.
Business owners and financial managers in the SME sector should be pleased that even the largest corporations place a major focus on cash forecasting, financing, and asset management.
Financial Solutions Available to Canadian Businesses
The range of financial solutions available to Canadian businesses might be larger than you think, including various lending options such as an alternative loan.
Common solutions available to your firm include:
Accounts Receivable (A/R) Financing
Inventory Loans
Access to Canadian Bank Credit
Non-Bank Asset-Based Lines of Credit
SR&ED Tax Credit Financing
Equipment / Fixed Asset Financing
Cash Flow Loans
Royalty Finance Solutions
Purchase Order Financing
Short-Term Working Capital Loans / Merchant Advance
Securitization and Invoice Financing
Government Loans
CASE STUDY:
A Maritime manufacturer faced a sudden opportunity to fulfill a major contract, traditional banks couldn't move fast enough. Through alternative business lending, they secured $250,000 in Purchase Order Financing -
Results:
- Contract secured on time
- Revenue increased by 147%
- 12 new jobs created
- Production capacity doubled
- ROI achieved in 4 months
The flexible repayment structure aligned with their cash flow cycle, allowing them to manage growth without straining operations.
Key Takeaways
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Speed of funding drives alternative lending success, with most decisions made within 48 hours.
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Flexible qualification criteria focus on business performance rather than personal credit.
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With a business line of credit, borrowers only pay interest on the drawn amount, providing genuine flexibility for business funding.
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Revenue-based repayment structures adapt to your business cash flow
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Technology-driven applications simplify the entire funding process
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Risk assessment models evaluate real-time business data instead of traditional metrics
Conclusion
While 45% of Canadian businesses face rejection from traditional banks, Alternative Business Lending is transforming the financial landscape with approval rates exceeding 70%
Call 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor who can assist you with your business capital needs from both traditional and alternative lenders.
FAQ
How do fast business funding options accelerate growth opportunities?
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Approval within 24-48 hours
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Immediate access to working capital
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Capture time-sensitive opportunities
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Flexible funding amounts from $10,000 to $500,000
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No lengthy bank paperwork required
What makes non-bank business loans more accessible?
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Focus on business performance over credit scores
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Multiple funding options are available, including invoice financing
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Simple online application process
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Less stringent documentation requirements
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Transparent approval criteria
How does alternative financing adapt to seasonal business cycles?
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Revenue-based repayment structures
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Flexible payment schedules
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Customized lending solutions
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Cash flow-based underwriting
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Quick refinancing options
Where can Canadian businesses find reliable alternative lending solutions?
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Online lending platforms
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Fintech companies
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Alternative financing marketplaces
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Industry-specific lenders
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Peer-to-peer lending networks
Why choose short-term business funding over traditional loans?
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Faster approval process
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Lower total cost of capital
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No long-term debt obligations
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Minimal impact on credit score
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Bridge funding availability
How quickly can I access alternative business funding?
Alternative lenders typically provide funding within 24-72 hours after approval.
What documentation do I need to apply?
What are the qualification requirements for short term working capital loans?
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Minimum 6 months in business
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Monthly revenue of $10,000+
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Credit score considerations vary by lender
