YOU ARE LOOKING FOR BUSINESS FINANCING TO FUND YOUR BUSINESS!
The Insider's Roadmap to Securing Business Capital For Canadian Companies
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 FINANCING OPTIONS?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
The Business Owner's Toolkit for Effective Funding
"Securing the right business funding is a transformative step for any SME, unlocking doors to growth, innovation, and long-term success."
"Struggling with business financing? Discover the key to unlocking your company's potential with our expert funding guide!"
Business Funding: A Guide for SMEs
Introduction to Business Financing Challenges
It sometimes seems that when you're bigger things always seem a bit easier - not always but most of the time.
That’s why when you are looking to fund your business and you're a small to medium-sized business owner or financial manager knowing which firms and finance companies are appropriate to deal with seems like a challenge. And business banking from a borrowing perspective seems like a huge challenge.
Business funding is a crucial aspect for small to medium-sized enterprises (SMEs) looking to start, sustain, or expand their operations. Navigating through various financing options, from traditional bank loans to government loans and alternative lending solutions, presents both opportunities and challenges.
Understanding the nuances of each funding avenue, preparing effectively for financial presentations, and aligning with the right financial institutions are pivotal steps in securing the necessary capital.
Real-World Advice on Business Funding Options
And another thing, if it’s not all the time, it’s sometimes, because at certain points in your company's growth and history, you are looking for business funding of some sort. What are the options - who can you turn to? Never fear... real-world advice is here!
Exploring Key Business Financing Solutions Banks and Commercial Credit Unions: A Primary Source of Funding
Business financing to either start or grow your business is available in a variety of ways and solutions. Let's examine 5 key topic areas.
The number 1 solution, as perceived by many business people is banks and commercial credit unions. However, perception is certainly not always a reality as many have discovered. However, if you are in a position to demonstrate to the bank that your own pockets (i.e. your own money!) are committed to the business then they are certainly a good place to start.
The Best Bank for Your Business Needs
Want to know who we think is the absolute best bank in town? We’re sure you do, and here’s the answer, its one that houses a banker who is committed to growing and understanding your business.
Government Co-Sponsored SBL Loan Program
One of the best programs for new as well as established businesses offered by the bank is co-sponsored by the government, it’s the SBL loan program, providing you with great rates, terms and structures, and even limited personal liability for the financing.
Major Changes To The Canada Small Business Financing Program
The Canada Small Business Financing Program (CSBFP) has undergone significant changes, particularly in terms of loan amounts, terms, and conditions. Here's a summary of the key updates:
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Maximum Loan Amount: The maximum loan amount has been raised to $1.15 million. This includes $1 million for term loans (with up to $500,000 for equipment and leasehold improvements, and $150,000 for intangible assets and working capital costs) plus an additional $150,000 for lines of credit.
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Term Loans:
- New financing classes include intangible assets and working capital costs.
- The maximum loan term has been extended to 15 years.
- The period for financing eligible expenditures increased from 180 days to 365 days before loan approval.
- Interest rates for term loans are capped at prime + 3%.
- A registration period for term loans has been extended to six months from the first disbursement.
- Security requirements have been updated, with specific guidelines for various types of loans.
- Default procedures have been simplified, requiring only a demand for repayment.
- Documentation requirements for claims have been reduced from 100% to 75% of the principal amount.
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Line of Credit:
- A new line of credit product has been introduced for working capital costs.
- The maximum term for a line of credit is 5 years.
- Options for renewal, conversion to a term loan, or repayment with a conventional loan are provided.
- Interest rates for lines of credit are capped at prime + 5%.
- Security requirements and default procedures have been updated similarly to term loans.
- Lenders no longer need to provide proof of payment for expenditures but must submit an attestation form signed by the borrower.
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Other Changes:
- Guarantors can be released or modified if the loan is in good standing, without the previous requirement of having repaid 50% of the principal.
- Amendments have been made to accommodate changes in appraisal, security, loan amounts, terms, and regulatory compliance.
- Provisions for transferring loans between lenders and borrowers have been adjusted.
- Additional clarifications have been made to the regulations, reducing redundancy and removing outdated references.
These changes aim to enhance the flexibility and accessibility of financing for small businesses in Canada. Talk to 7 Park Avenue Financial about the government loan program.
Understanding Government Grants and Programs (H3)
Point # 2 -There isn’t a day when we don’t get a call asking us for some assistance on government grants. There are probably hundreds, if not more, of government grant programs - our own opinion is that they are often difficult to qualify for and at the same time chances of approval on non-repayable funds is, suffice to say, slim. We will add though that the SR&ED program is probably the best program in this area, although it's not a grant per se. Check it out though if you feel you qualify.
Specific Focus of Grant Programs
Grant programs are often targeted to very specific cultural or environmental issues, and many come with strings attached, such as matching funds only, etc.
The Importance of Being Prepared (H3) Business Preparation for Financing
So focus on getting sources of capital to borrow, not give you!
Point # 3 - Talk to a Boy Scout. That’s because that organization's motto of ' BE PREPARED' runs very true in business. Your ability to present yourself, your background, and your historical, present and future financials are critical to obtaining business financing from finance companies and banks in Canada. Many clients seem either overwhelmed with how to do this properly or quite honestly just aren’t qualified. We are all experts in our area of expertise, right?
Solid professional assistance from your accountant or Canadian business financing advisor is steps away, and at a nominal cost, all things considered.
Understanding the Lender's Perspective (H3)
Tip # 4 - We all know what's in it for us when we borrow funds in a banking or non-banking facility. But what's in it for the lender? Never forget that point. Finance companies in Canada are based on risk and reward. Most business owners don’t realize that business financing in Canada is available from a rate of 3% per annum to 3% per month. All types of assets can be financed or monetized. Companies in bankruptcy proceedings can even borrow at low rates. It’s all about the assets, the rate of return, and how you put together your business funding request.
The Importance of Owner Equity in Business Financing (H3)
Tip # 5 - Always is prepared to deliver on some level of owner equity, i.e. your own contribution to the business. That can be via a cash injection, retained earnings in the business, or assets that aren’t already collateralized.
Key Takeaways
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Equity financing involves selling a portion of your business to investors for capital, often bringing additional expertise but diluting ownership. Debt financing means borrowing money to be repaid with interest, keeping full ownership but increasing financial liability.
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Creditworthiness Assessment: Lenders and investors evaluate a business's creditworthiness based on financial history, cash flow, and profitability. This assessment determines funding availability and terms, making it crucial for businesses to maintain healthy financial records.
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Funding Stages: Recognizing the different stages of business funding - seed, startup, growth, expansion, and maturity - is vital. Each stage has distinct funding needs and suitable financial sources, from angel investors in the early stages to IPOs in later phases.
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Investor Expectations: Understanding investor expectations, including their desired return on investment and involvement level, aligns business goals with investor interests, fostering productive relationships and strategic growth.
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Government Incentives: Awareness of government grants, tax incentives, and subsidized business loans is crucial. These often overlooked sources can provide significant financial support with favourable terms, especially for businesses in specific industries or regions.
Conclusion: Empower your business with the right funding
So, Canadian business financing. It comes in many forms.
Receivable financing
Equipment finance
Working capital cash flow loans
Asset based lending
Purchase order financing
Franchise financing
Tax credit finance ( SR&ED tax credits ) The Sr&ed program offers funding for r&d
Call 7 Park Avenue Financial, a trusted Canadian business financing advisor on how to fund your business growth, and which finance companies and banking partners are appropriate for you.
FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION
What are the benefits of business funding for small businesses?
Business funding provides essential capital for growth, business expansion, and operational stability. It enables small businesses to innovate, compete, and scale effectively in their markets.
How does equity financing differ from debt financing in business funding?
Equity financing involves exchanging company ownership shares for capital, while debt financing means borrowing money to be repaid over time, usually with interest.
What role do government business grants play in business funding?
Government grants for small business funding and other federal and provincial funding programs can offer financial support without the need to repay, often targeting specific industries for economic development or initiatives and can significantly aid in business development. Certain small business grants for funding support can help fund upfront project costs and job creation for Canadian businesses.
What factors influence a lender's decision in business funding?
Lenders typically assess a business's credit history, cash flow, profitability, and business plan to gauge repayment ability and overall financial health.
What are the risks associated with business funding?
Engaging in business funding, especially through loans, carries risks such as increased debt burden, potential loss of equity, and financial strain if the business underperforms.
How important is a business plan in securing funding?
A comprehensive business plan is crucial in securing funding as it demonstrates the business's viability, strategy, and potential return on investment to lenders and investors.
What is the impact of personal credit on business funding?
Personal credit can significantly impact business funding, especially for small businesses and startups, as lenders often consider personal credit history in their assessment.
What is the best way for a small business to approach business funding?
The best approach involves thorough research on funding options, preparing a solid business plan, and consulting financial experts to align funding choices with business goals.
How can a business improve its chances of getting funded?
Improving creditworthiness, presenting a clear and realistic business plan, and understanding the specific requirements of different funding sources can enhance funding prospects.
What are the common mistakes to avoid in business funding?
Common mistakes include underestimating the required capital, overlooking alternative funding sources, and failing to understand the terms and conditions of funding agreements.
