YOUR COMPANY IS LOOKING FOR WORKING CAPITAL SOLUTIONS!
WORKING CAPITAL LOANS / BUSINESS LOANS
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing businesses 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
WORKING CAPITAL BUSINESS LOANS AND CASH FINANCING
Commercial business loan solutions and asset monetization from working capital companies.
It all comes down to some good working capital loan chemistry if you want to avoid the kind of cash flow armageddon that besets many firms that we read about in the business papers every day.
Working capital loans is the business financing of various forms that allows business owners to cover day-to-day operating costs for business funds, as well as address any bulge financing that might be needed around seasonality in the business or industry. Common sources of working capital finance include short-term working capital loans, business credit lines, government loans that now include working capital components, and accounts receivable financing solutions - aka ' factoring'
WHY DOES YOUR BUSINESS NEED A WORKING CAPITAL FINANCE SOLUTION?
In business it's all about timing - so it's important to identify when you need a cash flow solution to finance daily or temporary expenses - all those basics such as payroll, purchasing inventory, and generally meeting your obligations around current liabilities such as accounts payable.
KEY POINT - Its critical to never use short-term funds to finance long-term assets or growth objectives, that is mismatching of funds often leads to financial disaster- As we have noted many industries have a seasonal or cyclical component to their industry, that is when cash flow is needed most - when finances are in the inevitable ' cash flow crunch'.
CASH FLOW SURVIVAL
There is no better subject that the Canadian business owner or financial manager can focus on when it comes to improving your chances of business survival. Funding daily operations for your business needs is always job 1!
MANAGING AND FINANCING ASSETS IS KEY
And it always comes down to only a few core competencies that you must master, namely collecting your receivables as they come due, managing those payables with your preferred vendors, and turning your inventories, if applicable, over properly. It's all about asset turnover and the effective use of business resources.
One of our favourite writers described your balance sheet recently as the place where all the dead bodies are buried.
EFFECTIVE TURNOVER IN CURRENT ASSETS AND CURRENT LIABILITIES - SHORTENING THE OPERATING CYCLE
What did he mean by that - simply that that’s where business mistakes tend to accumulate - old inventory, 90 days + receivables, and payables and accruals that arent recognized properly.
WHAT ARE THE MAIN TYPES OF WORKING CAPITAL LOANS / BUSINESS COMMERCIAL CASH FLOW LOANS
Cash flow financing solutions can help your business fill the funding gap to cover operations - The good news is there are several types of Canadian business financing solutions.
Those solutions include short and long-term working capital term loans, business lines of credit, government of Canada loans under the Canada Small Business Financing Program, as well as asset-based lending solutions such as accounts receivable financing/factoring.
Term loans are installment-type lump sum loans extended by traditional financial institutions, such as banks, or alternative lenders in the asset-based lending industry. Loan amortizations range from 12 months to 5-year terms with interest rates that are commensurate with the type of the loan and overall credit quality.
Business credit lines allow a company to draw down on funds inside a revolving credit facility as they need cash - These facilities will often have a credit limit based on the assets collateralized under the facility - Banks and asset-based lenders are the most common providers of this type of financing.
Recent changes to Canadian government business loans allow both start-ups and established businesses to access working capital credit facilities at competitive rates and terms. Recent changes to the SBL Loan program allow borrowers to include cash flow financing as a part of the loan facility.
Accounts receivable financing/factoring allows a business to generate immediate cash flow as the business sells its product and services - Companies who are unable to obtain all the bank financing they require from most financial institutions such as banks are the most common users of this method of financing - That ability to receive cash immediately outside of traditional loan requirements makes a/r financing/ factoring a business finance solution used by thousands of companies in Canada.
FINANCING SALES VIA EFFECTIVE A/R FUNDING SOLUTIONS
One of the best ways to aggressively generate cash flow is to ensure you have a proper financing vehicle in place for your A/R. That might be a Canadian chartered bank line of credit, or in some cases, it might be a receivable financing solution from an impendent commercial finance firm. In certain cases also A/R finance might be a ' subset' of an asset-based line of credit. All of these solutions allow you to monetize balance sheet assets into cash flow/working capital needs.
The business owner/ manager in the SME sector can be forgiven for viewing the cash flow/working capital loan situation in his or her company as complex. The bottom line, a whole bunch of things need to happen to ensure proper business survival.
INVENTORY FINANCE
Inventory is probably an even touchier subject - it's really easy to lose more sales opportunities and larger contracts and orders because of your improper management and financing of inventory. It's a fine line of course because you want to keep the investment you need to make in inventory (and A/R) low but be able to satisfy all your revenue creation needs.
KEY TAKEAWAY - CANADIAN BUSINESS FINANCING SOLUTIONS
Ways to monetize and properly finance working capital are both traditional and alternative, and diverse. A lot of the choices you can make to finance your company really revolve around what stage your business is in when it comes to borrowing power.
That will dictate whether small businesses can access:
A/R Financing
Short Term Working Capital Loan / Merchant Cash Advances Good credit score is required for these unsecured loans via online lenders
Inventory Loans
Access to Canadian bank credit / Small business loans
Non bank asset based lines of credit
SR&ED Tax credit financing
Equipment / fixed asset financing
Cash flow loans
Royalty finance solutions
Government Of Canada Small Business Loan Program - The Guaranteed federal business loan
CONCLUSION - BEST WORKING CAPITAL LOANS
Business owners should focus on understanding their cash flow financing alternatives when it comes to choosing the right business finance solution -
Borrowers should be prepared to provide key information that is relevant to their business needs - that will include items such as financial statements, interim statements if available, a business plan if one if required and information about business owners, business owners personal credit history, etc, Cash flow projections around debt payments are always valuable.
Financing should be in the form of term loans or revolving facilities - determine which one best suits your needs around key issues such as repayment, flexibility, loan duration, and type of lender - ie traditional or alternative.
All of these will get you to the goal line. But it’s simply a case of knowing how and when as it comes to working capital loan financing and any debt financing for that matter.
As a small business owner, you want to expand your business. Speak to 7 Park Avenue Financial , a trusted, credible and experienced Canadian business financing advisor who can assist you with commercial business loans from working capital companies that address your firm’s particular needs. It's a great way to avoid cash flow Armageddon!
FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION
What do companies use working capital for? Understanding working capital loans
There are differnet types of working capital that come with different user needs. Working capital management is all about asset turnover that will often help a company identify the best sources of working capital. Asset monetization is the essence of working capital uses - a company's ability to buy inventory , and meet day to day operational costs with a focus around accounts receivable collections which become a source of cash - Traditional banks and credit unions, as well as alternative lenders offer different types of working capital financing at annual percentage rates that differ based on term and overall credit quality - Short term access to funds drives the proper working capital funding solutions.
Which industries have high working capital?
Retailers have high working capital needs as they do not have accounts receivables per se and require high levels of inventory that must turn over to generate cash flow for the company's everyday operations. Service-based industries require less working capital than asset-intensive type industries that require high investments in inventory, receivables, and fixed assets required to run the business.
Why is working capital important?
Working capital management is a key metric for small business owners, including the largest corporations - Using formulas such as the working capital ratio a company can measure efficent use of assets. When it comes to how does a working capital loan work its all about understanding the relationship of sales to balance sheet assets such as accounts receivables and inventories.
Click here for the business finance track record of 7 Park Avenue Financial
