YOUR COMPANY IS LOOKING FOR START-UP FINANCING!
STARTUP FUNDS FOR BUSINESS IN CANADA / FUNDING BUSINESSES
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
Startup funding in Canada provides entrepreneurs with the ' propeller' they need to achieve business start-up financing that makes sense for entrepreneurs requiring start-up financing that achieves ownership goals.
Yes, you can try the venture capital/angel investors route/government grants, etc but be aware that financing is mostly applicable to .01% of companies in Canada! Let's dig in.
DO BANKS IN CANADA FINANCE THE START UPS?
As we've suggested in the past typically business owners gravitate to the bank when they are envisioning the capital they need to start their business. The bottom line is that bank loans for small and medium-sized businesses in Canada always present a challenge to those looking for business capital - getting a business loan at an interest rate and terms and conditions that make sense for your business can be an uphill battle depending on how much money you need and the personal credit criteria demanded by most financial institutions - sometimes more so for a high growth company as ironic as that might seem.
The mission though, should you choose to accept it! is to understand the criteria Canadian chartered banks impose on a new business -they are looking for, unfortunately, firms with track records, cash flows, and acceptable owner equity. That’s a tad difficult when you are in start-up mode.
WHAT ARE BUSINESS FINANCING ALTERNATIVE IN FINANCING A START UP?
So are there alternatives? Absolutely. It's all about ensuring that you and any prospective lender, alternative or traditional, have the incoming working capital cash flows to make debt or operating commitments positive.
Although many businesses can claim to have started with no cash flow the general consensus is that an owner equity commitment is required.
WHAT IS THE CANADIAN VERSION OF THE 'SBA' LOAN
In Canada, our version of the U.S. Small business program is called the 'SBL ' loan. That brings a solid partner to your startup venture - the Canadian government via a guaranteed loan.
WHAT IS THE DOWN PAYMENT REQUIRED IN A GOVERNMENT LOAN
If you have reasonable personal credit history and at least a minimum of 10% permanent equity in your business you're a solid candidate for a ‘BIL ' loan.
HOW IMPORTANT IS CREDIT HISTORY IN FINANCING STARTUPS
It's critical in start-up financing to understand that a traditional (bank) or alternative lender will want to know the business owner's personal credit history. In Canada, the ' magic ' score at a credit bureau to be approved for traditional financing is 650.. ie ' good credit ' at those credit bureaus.
ARE BUSINESS PLANS NEEDED FOR STARTUP FUNDING
A solid business plan and cash flow is also a prerequisite for start-up funding. That document will demonstrate to lenders how you will handle suppliers, tackle operational expenses, and handle term and operating obligations. 7 Park Avenue Financial business plans meet and exceed the requirements of banks and commercial lenders
WHAT ARE THE KEY SOURCES OF FINANCING IN A NEW BUSINESS
Because start-up businesses don’t have access to all the cash they needed financing sources must be considered.
They include:
Personal resources
Govt small business loans ' SBL' The government of Canada small business loan is one of the most popular methods of financing new businesses
A/R financing
Tax Credit Finance - ' SR&ED'
Start-Up Working Capital Cash Flow Term Loans
PO/Supplier Financing
WHAT IS THE INTEREST RATE FOR STARTUPS?
The type of financing you need, as well as the amount, will dictate the rate/terms/structure
While interest rates are significantly higher for start-up alternative finance they are a substitute for giving up equity so early on in the venture. One of our associates refers to it as ' renting equity', and it's an interesting term.
GIVING UP EQUITY IS NOT DESIRABLE
Private equity firms and 'VCs' will of course take a significant amount of ownership for any investment made - and truth be told most startups and small businesses in the long term don't remotely qualify for equity start-up funding.
4 KEY POINTS IN SUCCESSFUL EARLY STAGE FINANCING
Do we have a shortlist for startup financing? We do, and it would include:
Assessing personal equity
Ensuring you have a solid business plan and cash flow
Consider both alternative and traditional sources of capital
Utilize 3rd part resources such as your accountant/lawyer/ financial advisor / key supplier
CONCLUSION
The entrepreneurial dream is alive and well in Canada if you want to start a business- and in fact, is a key part of economic development in Canada. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who will ensure you know the rules when it comes to achieving startup success in Canada.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
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