YOUR COMPANY IS LOOKING FOR ASSET FINANCING FOR THE STARTUP!
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
Oakville, Ontario
L6J 7J8
Fax = 905 829 2653
Start Up business financing in Canada. We are often asked by clients how assets can be financed in the startup funding at an early stage. One obvious solution is generally not achievable, and you may have not considered one other option... which... works! Let's dig in on the type of financing you need when borrowing money at the early stages of a business.
BORROWED CAPITAL AND PERSONAL CAPITAL
Canadian entrepreneurs who have committed some of their own personal capital to a business will almost always need to add additional financing and business funding to any new business launch. One of the most obvious asset financing ' go to's' versus bank loans in Canada is equipment financing.
EQUIPMENT FINANCING SOLUTIONS
But can equipment leasing satisfy the needs of business owners if a business is new, in start-up mode, or very early stages of revenue generation? The answer? More often than not... it can't.
FAST FLEXIBLE APPROVALS FOR FINANCING A STARTUP
So why does the equipment lease solution not work for a start up. The answer to that lies in the approval process and criteria of Canadian lessors. That's because historical and present cash flow is often a key part of the approval criteria for an asset loan. Notwithstanding the fact that an asset is also the collateral a very large emphasis is placed on ' cash flow ' analysis for transactions that are deemed no longer ' small ticket'.
THE CASH FLOW CALCULATION LENDERS USE
By the way, although it might be a mystery to some as to how the lessor calculates that cash flow it shouldn’t be, so in effect potential lessees can pre-qualify themselves by understanding that cash flow analysis formula. The lessor will more often than not take you net income, add depreciation, and that amount must typically cover 12 months of your lease payment in a positive manner, with hopefully some leftover for other needs. So now you know!
But all our discussion here has not provided an answer for the entrepreneur who needs assets to finance a business in start-up mode.
THE CANADA SMALL BUSINESS FINANCING PROGRAM
So one solution that we constantly recommend to clients is a Canadian Small business loan, formally called the BIL or CSBF program. We throw in our own acronym. The ' SBL '.
When traditional financing requires strong outside collateral or other compensating matters the SBL loan requires only your ' promise to pay '. Oh, and by the way, that promise is even limited to some extent, as the guarantee required is only 25% of the total financing you receive.
5 KEY BENEFITS OF THE GOVERNMENT OF CANADA SMALL BUSINESS LOAN
1.Competitive rates
2.Long amortizations if needed - (5-7 years)
3.Limited 25% Personal guarantee of owners
4.No prepayment penalty
5.No outside collateral required
Loans from the Government of Canada Crown Corporation for entrepreneurs are also available.
WHAT ASSETS DOES THE GOVERNMENT GUARANTEED LOAN FINANCES
All business assets, including technology assets and software, as well as even ' leasehold improvements, can be financed under the program. Frankly, you can even buy an existing business also under the same program.
Sometimes the obvious just doesn't work in business. So while the experts tell us that over 80% of all businesses in Canada utilize lease financing startup firms can rarely achieve the financing they need in this manner.
CONCLUSION
We have shown that in addition to personal investment in your start up, your so-called' down payment' or personal equity investment there are numerous non-traditional sources of capital including friends and family, angel investors, a crowdfunding platform, business credit cards etc. There are some challenges in using so-called ' love money ' in that it may improperly mix personal and business relationships.
Many entrepreneurs choose the venture capital route, which in the opinion of 7 PARK AVENUE FINANCIAL is for the very smallest portion of eligible start ups and involves many aspects that the owner/entrepreneur may not be ready for, including of course the equity position that those venture capitalists demand. More often than no VENTURE CAPITAL is geared towards high technology, biotech, fintech, etc which eliminates many firms. Additionally, you must be able to satisfy the high growth demands of this type of equity investor.
In some cases your firm might be involved in research and development, allowing you to take advantage of SR&ED financing for long-term potential high growth in revenues.
Numerous local ' business incubators ' can assist you in potentially identifying local resources for the start-up, as well as access to potential grants.
A business plan is always critical for many startups. 7 Park Avenue Financial business plans meet and exceed the requirements of banks and commercial lenders. Owners of small businesses should also ensure they have a positive personal credit score, typically in the 650 range - that is one issue that may affect any interest rate.
Over the long term ensure you are understanding working capital requirements for a line of credit that your business will need for the high growth potential you strive for as you market your products or services.
Consider the very viable SBL solution and seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you ' win' the startup financing challenge.
Click here for the business finance track record of 7 Park Avenue Financial 
Stan Prokop 7 Park Avenue Financial/Copyright/2021
