alternative funding options sources of financing

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Sources of financing in Canada can of course include alternative funding options that are typically non bank solutions.  What are some of these finance solutions, When do these make sense for your firm, what are the costs, and how do they work? Let's dig in.

 

A company can find itself in need of alternative financing for many reasons. Whatever the situation may have been the end results seems more often than not to always come back to issues revolving around sales, profits, and cash flows. So at that point it of course still needs to ‘pay its bills' as well as hopefully grow.

 

What then are some of the actual sources of alternative finance and where do they come from. In some cases they might be obvious  commercial financing vehicles ; other times owners might not consider less obvious sources of financing which might include working with vendor/suppliers , landlords which are uniquely part of the cash flow and creditor/debtor relationship.

 

We could call those internal type relationships and solutions; but when it comes to external solutions they are as follows:

 

Commercial financing companies

 

Insurance Companies

 

Specialized divisions of Canadian chartered banks

 

Government and Crown Corporation financing

 

Asset based lenders

 

Equipment financing firms

 

Mezzanine lenders

 

 

If your firm can work with any or a combination of these entities the following solutions are potentially available:

 

Receivable Financing

 

Govt Small Business Loans

 

Working Capital term loans from Canada's Crown Corp Bank

 

Inventory financing

 

Tax Credit Monetization (primarily SR&ED Bridge loan Financing)

 

Asset based non bank business lines of credit (Typically called ' ABL Financing')

 

Unsecured cash flow/mezzanine loans

 

In order to access these types of financing your firm must be in a position to demonstrate it has some long term viability despite whatever your recent circumstances might be. The ability to show some strong management expertise and to address why your own particularly industry is viable is also key.

 

In certain cases we've met with clients who have been asked by their bank   to terminate the bank/client lending relationship. Typically the client is now in a specialized category called ' SPECIAL LOANS ' and banks typically provide some form of reasonable notice that new financing sources will be required for your company.

 

We feel business owners are somewhat naive in thinking that they can replace one Canadian chartered bank with another when their firm is in some sort of financial distress or challenging situation. 

 

We would point out that in today’s more conservative commercial lending environment that it’s difficult to replace financing for a fairly healthy company, let alone one that is experienced challenges.

 

If you are looking at options that will ' stand up ' for your company in areas of financing investigate  those options by seeking out and speaking to a trusted, credible and experienced Canadian business financing advisor who can assist you with alternative funding options that make sense.

 

' Canadian Business Financing With The Intelligent Use Of Experience '