YOUR COMPANY IS LOOKING FOR DEBT FINANCE SOLUTIONS!
ACCESSING SHORT TERM DEBT AND WORKING CAPITAL
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
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Debt financing in Canada, whether it's short term loans, asset financing, and other traditional and alternative finance forms of short term financing require some solid understanding of who's involved and what's involved. Let's dig in.
DEBT FINANCING WITH OPTIONS
Business owners and financial managers feel a lot more comfortable taking on debt ( versus raising equity ) when they understand they have negotiating ability while at the same time recognizing that there are terms and other requirements that come with debt as well as long term debt obligations, especially when it involves bank loans.
THE DEBT VERSUS EQUITY QUESTION ALWAYS ARISES !
As we have noted debt is the opposite of your other form of capital - that's equity of course. While no one form of financing is all perfect all the time debt finance via short term loans, etc. has significant advantages. The bottom line on that is, of course, that using debt properly allows the owner /manager to grow the company with appropriate leverage. And that's without giving up the ownership you forsake in considering equity dilution.
FOCUS ON REPAYMENT ABILITY AND CASH FLOW
When looking at a debt solution one other advantage is that there is always an end in sight via repayment, cash flow assessment, etc. - again our bottom line is you can plan on retiring debt a lot more easier than equity takeouts.
WATCH THOSE RATIOS AND COVENANTS
One solid way for the business owner/financial manager to look at debt asset finance solutions is to assess them from the point of view of restrictions - i.e. what they can and can't do by utilizing the covenants and ratio requirements that come with any single form of debt - for example, a senior term loan with a bank.
INVESTIGATE ALTERNATIVE SOLUTIONS
We're big supporters of hybrid type solutions; one good example is asset based lines of credit that may or may not contain a term loan component. While you do take on ' debt ' at the same time you have corresponding assets such as inventory, equipment and accounts receivable that offset the entire obligation and help you to fund accounts payable and other short term obligations typically due within one year or less. Some owners might even agree to a small equity component to a debt deal that makes sense for their business. In corporate terms, this is known as a warrant/option, etc. It's all about financing the balance sheet in the majority of alternative finance solutions.
Larger companies have access to numerous other tools such as commercial paper, etc., commanding of course the best interest rate. Their business operations and credit rating can easily access traditional financing at the lowest cost.
SECURED LOANS VERSUS UNSECURED FINANCING
While debt financing can be secured or unsecured. Whatever the case it's always going to come down to your cash flow - historical, present, and thank god... projected! That cash flow will often be the key component in the bank or commercial finance company's decision to grant business credit. If debt is unsecured we can only say that the ownership/management better be able to prove good credit quality. Unfortunately, unsecured debt typically is only being achieved by firms with great combinations of cash flow, clean balance sheets and healthy profits. Best interest rates are achieved when your balance sheet and cash flow is demonstrable in the ability to service debt.
3 WAYS TO ENSURE APPROVAL OF DEBT FINANCING
Canadian firms that can accurately demonstrate and project sales, asset quality and turnover of current assets are always in a better position to take on any form of business debt. The lender will of course make their own assumptions on the quality of your overall business credit situation.
DON'T CHASE THE WRONG FINANCING
If we had to identify one mistake our clients often made it's that they chased the wrong financing sources for the type of long term debt, working capital, or asset monetization they really need. Talk about a false start in a business that's both expensive and time-consuming when searching for unrealistic equity financing possibilities.
CONCLUSION
If you want to isolate the identify the types of long term debt financing via a short term loan or other methods of business finance seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your finance needs.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
7 Park Avenue Financial/Copyright/2021/Rights Reserved
