The Next Best Thing ? Alternative Finance Non Traditional Financing !

YOUR COMPANY IS LOOKING FOR ALTERNATIVE FINANCE!

Business Lending: Alternative Lenders Versus Traditional Lenders!

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Financing & Cash flow are the biggest issues facing business today

ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

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EMAIL - sprokop@7parkavenuefinancial.com

7 Park Avenue Financial

South SheridanExecutive Centre

2910 South Sheridan Way

Oakville, Ontario

L6J 7J8

Email = sprokop@7parkavenuefinancial.com

alternative finance non traditional financing 7 park avenue financial

Not everyone these days is totally clear on the term of alternative finance, so let's recap some non-traditional financing alternatives that just might make sense for your business financing needs. And to quote ourselves you just might find that alternative, in some cases, is the ' new traditional '!

WHAT IS ALTERNATIVE LENDING & NON-TRADITIONAL FINANCE IN CANADA?

That's a question we get a lot these days here at 7 Park Avenue Financial - and that answer is pretty simply - It's simple financing solutions that provide funding to Canadian business without the involvement of Canadian banks. There are a solid handful of different types of financing funded by 'niche ' lenders in specific areas of business funding needs through debt /loan and cash flow finance solutions. Interest rates on business loans/funding differ in non-bank financing and are typically higher than traditional bank funding based on a firm's overall credit profile. In a small number of situations, many firms have achieved better rates through non-traditional financing but that is not the norm.

IS THE BANK YOUR ' GO TO' SOLUTION

The first thought that comes into a small business client's mind when they think of the need for business capital? Of course, it’s the Canadian chartered banking system. But thousands of business owners and financial managers quickly find that while somebody seems to be qualifying for those loans and other bank facilities it isn’t them!

We don’t want to weigh in too heavily on why the banking solution isn’t always totally available for your business - it’s just a fact that the Canadian banks manage risk very well! But when you qualify boy are those rates attractive!

We will add one more point about the banking system in Canada, which is simply that while your small business might in fact qualify, your needs, ironically, may be deemed too small or too large. How ironic.

THIS BANK ALTERNATIVE IS IN FACT THE BANK !

So that allows us to move on to a discussion on alternative financing vehicles that might just work for your firm. One of those is in fact a bank alternative that is non-bank nature. It's the Government Guaranteed SBL loan program. Although it’s facilitated by a bank the majority of the loan is guaranteed under the INDUSTRY CANADA loan program, allowing you to tap into rates, terms and structures that are attractive.

To access the SBL program you need to seek a bank employee who is aware and comfortable with the program. And the other qualification is simply a loan package that covers off the basics, which isn’t hard as you might think. Your financials, a business plan, and some backup documentation and you are off to the races.

Another solid form of alternative financing is Asset-based lending. These are non-bank commercial credit facilities that secure, into a business line of credit :

4 Asset Categories in the ABL Credit Line

A/R

Inventory

Equipment

Real estate (if applicable to your company )

Almost any firm (with assets!) qualifies for ABL lines of credit - including manufacturing firms, service companies, technology companies, etc. Most facilities start at the 250k range and there is pretty well no limit on the upper end of an asset-based deal. Oh, and by the way, some of the largest corporations in Canada use this ' alternative ' finance vehicle to run their business. Apparently (to quote us!) alternative is the new traditional for them.

Other forms of alternative finance? You just might be surprised. They include:

A/R Financing

Inventory Loans

Non bank asset based lines of credit

SR&ED Tax credit financing

Equipment / fixed asset financing

Cash flow loans

Short Term Working Capital Loans / Merchant Cash Advances

Royalty finance solutions

CONCLUSION

Whether your firm is new, a growing small business or an established firm business finance needs will always emerge. Bank traditional finance is not always available to all firms. Many firms turn to non-traditional financiers if only for the reason that flexibility and quicker access to financing is a priority. No secret that the cost of financing is always top of mind for the business owner. We have already noted that alternative finance providers typically have a higher cost of borrowing for the Canadian business owners - part of that reason is the simple fact that non-bank lenders are not regulated in the same manner as our Canadian chartered banks - for example, they do not take deposits and then lend those funds out. Having said that we note that alternative finance providers are more competitive than ever, given that the world is currently in a ' low rate environment '

In some cases, non-bank lenders do not insist on a personal guarantee, or if they do not a significant amount of emphasis is placed on that guarantee. That's a huge differentiator from Canadian banks.

The issue of credit limits is a significant one in bank borrowing - alternative finance providers distinguish themselves by touting that your borrowing grows as your company grows. It's all about your assets and sales and the value and growth of those two respectively.

Alternative lending in Canada has brought forms of financing to the Canadian business owner previously unavailable - competing directly with Canadian bank solutions. While some are short-term in nature many of these types of funding are a bridge back to bank finance solutions at some point down the road in your company credit profile. Different types of companies specialize in certain niches of Canadian business finance needs.

Seek out and speak to a trusted credible and experienced Canadian business financing advisor on how alternative finance can work for your firm... and you just might find that alternative is the new traditional!