Alternative Sources Of Financing Business Loan Finance 7 Park Avenue Financial

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Business Loan Alternatives:  Eliminating the Curiosity Gap On Alternative Sources Of Financing in Canada
What Scares You About Alternative Financing?









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Oakville, Ontario
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Alternative financing sources in Canada seem to sometimes conjure up images of the unknown to Canadian business owners/financial managers. Is there anything to really be afraid of when considering this method of business loan finance? Hardly. Let's dig in.



The ongoing struggle for businesses in the small and mid-market size to secure financing for their firms leaves many more options to explore these days. It's the rise of alternate forms of financing as benchmarked to traditional Canadian chartered bank financing.


One kind of hybrid example is always worth exploring - it’s alternative finance but offered by the banks. We're referring to the Govt guaranteed business loan program, which offers term loans to borrowers who otherwise cannot access a loan based on bank traditional criteria. Well worth examining.


Alternative lenders are essentially commercial finance firms that are not funded like our banks, i.e. deposits. They are therefore ' unregulated' and operate under their own risk and lending models. More often than not, these firms specialize in offering financing for certain types of loans or working capital solutions.


Here is a list of various forms of alternate finance:


A/R Receivable Financing


Inventory Finance


SR&ED Tax Credit Financing


Working Capital Loans


Equipment financing - Sale-leaseback


Non-bank Asset-based business lines of credit


Sales/Royalty financing


Purchase Order Financing



All of the above solutions offer tremendous flexibility in how funding can be derived. Naturally, that flexibility will almost always come with higher finance costs. Because lending standards are less restrictive than the banks, it allows your firm to access the finance it needs.


Really the best way to look at these forms of financing is to consider the fact that they are heavily ' asset ' based and much lighter on things such as covenants and other restrictions. Traditional lending has almost always focused on pure cash flow generation.


For firms with bank financing but suddenly find themselves in some form of distress or business challenge, the alternative finance vehicle is a tremendous way to refinance your business when a work out with the bank cannot be established.


One key factor to assess when you’re e considering business loan finance of an alternate nature is to ensure you understand any reporting requirements.  Essentially that reporting becomes the ' communication vehicle ' between yourself and the lender. In many cases, that reporting can also work positively to help identify additional or other types of financing you might need. Being ' self aware ‘in your overall financial condition is important, and a disciplined reporting system helps that cause.


In summary ,  ensure you are ' self aware ' of your businesses's overall financial health. If you're looking to explore alternative financing sources,g seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you eliminate the curiosity gap in choices .


' Canadian Business Financing With The Intelligent Use Of Experience '

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Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil