YOUR COMPANY IS LOOKING FOR THE BEST BUSINESS FUNDING SOLUTIONS!
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?
CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Email = sprokop@7parkavenuefinancial.com
Business financing options are essential for entrepreneurs seeking to fund their ventures and achieve sustainable growth.
Struggling to find the right funding for your business? Discover the best financing options available today!
FINANCING OPTIONS FOR CANADIAN BUSINESSES
An action plan is the best way to address the challenges of finding the best financing options for a business and loan funding alternatives in Canada.
If a business constantly struggles with its loan funding needs, a sense of mediocrity sets in - that's not a good thing. The importance of accessing good business capital and financing options for a business, whether debt financing or cash flow solutions from a financial institution or an alternative lender, can't be overemphasized - it's all about running, growing and expanding your company via options for corporate financing. Let's dig in.
Having business financing options is crucial for securing the capital needed to fuel your business's growth and innovation. From traditional bank loans to innovative alternative financing solutions, each financing option presents unique benefits and challenges that must be carefully evaluated to align with your business goals.
THE CHALLENGE OF BUSINESS FINANCE & COMMERCIAL LENDING
While the company's goal seems simple—i.e., access business capital—that journey is potentially complex. Potentially, there's a lot of turbulence, such as issues in your industry, competition, and your financial state.
You may have already explored family and friends, crowdfunding, angel investors, etc. Small business owners quickly realize they are not candidates for dealing with venture capitalists and solutions tailored to public companies. These lenders may even want significant control of your firm. So, debt and equity financing becomes a non-event very quickly.
There are only two types of financing around your capital structure—debt or equity. When businesses borrow via debt or cash flow financing solutions, they avoid equity dilution in their ownership and can increase return on investment. Solid debt funding and asset monetization for cash flows will eliminate the need for new or equity financing, diluting your ownership.
FACTORS CONTRIBUTING TO BUSINESS FINANCING SUCCESS
What, then, are key factors that will ultimately affect your success/failure in accessing business finance solutions? They include the actual resources you have on your balance sheet, the amount of capital that owners have committed to the business, and the knowledge that business owners/managers possess about sourcing and closing on funding needs. The fundamentals will always be the same whether alternative lending or traditional financing.
SHORT TERM FINANCING VERSUS LONG TERM FINANCE SOLUTIONS
It's important to note that funding solutions can be short-, intermediate-, or long-term when it comes to financing for a business. Choosing the wrong funding for the wrong timeline will have owners/financial managers hitting major roadblocks quickly. The goal should always be simple - access capital at the best cost and ensure you haven't overlooked new financial innovations that abound in the marketplace. And sometimes, it's a case of looking at a temporary solution versus a total solution.
How can the business take a hard look at its current financial position? It's all about the basics - taking a hard look at current payables, understanding your day's sales outstanding /DSO and inventory turns ( if applicable )and figuring out how much debt you can take on. That's if debt is the solution - in many cases, monetizing assets on your balance sheet gets you to the goal line.
BANK REQUIREMENTS AROUND RATIOS/COVENANTS
In many cases, your current lenders may not be able to work with you on new financing—that might be because your firm can't meet those ' financial ratios' and ' covenants' that banks and other senior lenders seem to focus on totally. In many cases where we meet new clients, current financing arrangements are in a state of default, either technically or informally via broken relationships. It's time to move on.
THE START UP FINANCE CHALLENGE
The question of how to finance a startup business often comes up among our new clients. Financing start-up ventures is also challenging in the realm of traditional banking. Entrepreneurs find that when it comes to funding of small business start-ups for any business, including the popular franchise industry, the entrepreneur will invariably feel challenged. The SBL loan is also an excellent loan for buying a company in Canada for purchases in the 1 Million dollar range.
When it comes to types of business financing, the Canada Small Business Loan Program is a solid solution for asset categories financing the program:
Equipment
Leasehold Improvements
Real Estate
The program is not a line of credit for businesses but a standard term loan with an amortization of up to 5 years. It comes with good rates and attractive repayment options. The limited personal guarantee issue is also a popular aspect of the program! The business loan interest rate is only a couple of points over the prime rate in Canada.
WHAT IS ALTERNATIVE BUSINESS FUNDING?
Alternative financing solutions have become very popular in Canada, emerging dramatically after the 2008 recession and financial crisis. Canadian businesses' ability to source financing from non-bank lenders was, and is, vital to accessing business capital.
THE BEST FINANCING OPTIONS FOR A BUSINESS
What are, in fact, the solutions available to your business from the viewpoint of operational financing or growth financing? Traditional and nontraditional alternative lenders and their finance solutions include:
A/R Financing - Invoice factoring and accounts receivable factoring is by far the largest and most utilized part of the alternative finance marketplace in Canada - Our recommended solution is Confidential Receivable Financing, which allows firms to bill and collect their receivables and generate instant cash flows as they generate revenues
Inventory Loans
Access to Canadian bank credit—Business credit and a line of credit available from Canadian chartered business banks offer the lowest cost of capital and access to unlimited business financing for firms that qualify. Small business owners need to familiarize themselves with requirements around good credit scores, tax returns, proper financial statements, and the ability to prove positive cash flow for debt repayment.
Non-bank asset-based lines of credit - these are not lump sum loans repayable by installment, but instead offer a revolving line of credit based solely on assets and sales and paid by on a drawdown basis as you need funds and collect outstanding invoices.
SR&ED Tax credit financing
Mezzanine Financing - unsecured cash flow loans based on historical cash flows
Equipment / fixed asset financing - Financing for equipment needs is often best done via an equipment lease versus a business loan with other credit ramifications - Talk to the 7 Park Avenue Financial team about why 80% of North American businesses utilize lease finance.
Cash flow loans / Term loans / Short term working capital loans / Merchant Cash Advances / Business credit cards - these financing services are structured to have a payback within a 12 - 24 month period via regular installments - Talk to 7 Park Avenue Financial to make sure you use effectively these higher-cost solutions
Royalty finance solutions - Revenue financing
Government Of Canada Small Business Loan Program - Guaranteed federal business loans and one of the best financing solutions for entrepreneurs. BDC loans via Canada's BDC bank are also popular and complementary to many other financing types.
A financing business plan might often be required for the type of funding you require. 7 Park Avenue Financial business plans meet and exceed bank and commercial lender requirements. Lenders want a well-thought-out plan with solid, realistic cash projections and repayment ability.
CONCLUSION
While Canadian banks will always offer the lowest source of funding, best business interest rates, and flexible financing terms, many Canadian businesses cannot meet bank credit requirements regarding issues such as clean balance sheets, profits, cash flow, personal guarantees, and outside collateral that might be required when personal credit history isn't sufficient.
Alternative commercial finance companies have provided numerous lending options for the business owner/financial manager to consider. Many subsets of ASSET-BASED FINANCE, such as short-term working capital loans, factoring, equipment leases, and cash flow loans, can provide quick and effective business funding and place less reliance on financial statements versus a focus on sales revenues and actual business assets.
Major firms such as MORGAN STANLEY have commented on how alternative finance has optimized business financing via technological solutions, online portals, etc.
Many business owners look to the government, and at 7 Park Avenue Financial, we have had tremendous success in securing Guaranteed govt business loans and SR&ED bridge loan funding for our clients. More and more businesses feel that alternative finance has reduced the funding gap that has emerged in traditional business finance.
KEY TAKEAWAYS
Traditional Bank Loans: These loans are provided by banks and require a strong credit history and collateral. They offer lower interest rates and long repayment terms, making them a reliable option for established businesses.
Venture Capital: Investors provide capital to startups with high growth potential in exchange for equity. This option is suitable for businesses with innovative ideas and significant scalability.
Crowdfunding: This method involves raising small amounts of money from many people, typically via online platforms. It’s ideal for businesses with solid community or customer engagement.
Small Business Grants: Non-repayable funds governments or organizations provide to support specific business initiatives. These grants are highly competitive but can provide substantial support.
Angel Investors: Wealthy individuals who provide capital to startups in exchange for ownership equity or convertible debt. They often bring valuable expertise and networking opportunities.
CONCLUSION - SMALL BUSINESS FINANCING OPTIONS & ELIMINATING FINANCING RISK
Small businesses know that a business loan or bank loan search is challenging. If you're looking for advice on choosing the best business financing option and to move from 'mediocre' to highly desirable in loan funding needs from start-up to more established businesses, call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can help you put that action plan in place for the type of financing you need to grow sales of your products and services. When financing companies for small businesses, let our team earn the right to be your trusted partner in loan and funding solutions.
FAQ
What are traditional bank loans?
Traditional bank loans are a common financing option in which businesses borrow money from banks and commit to repaying it with interest over a set period. These loans often require strong credit and collateral.
How does venture capital work?
Venture capital involves investors providing funds to startups with high growth potential in exchange for equity. It’s suitable for innovative businesses looking for substantial capital and mentorship.
Are small business grants available for all types of businesses?
Small business grants are highly competitive and typically available for specific industries or initiatives related to economic development. They are non-repayable funds that can significantly boost a business’s resources.
Who are angel investors? Angel investors are affluent individuals who provide capital to startups in exchange for equity or convertible debt. They often bring valuable industry expertise and networks.
What is peer-to-peer lending?
Peer-to-peer lending is a method where businesses borrow money directly from individuals through online platforms, bypassing traditional financial institutions. It offers flexible terms but often comes with higher interest rates.
How do business credit cards work as a financing option?
They provide a revolving line of credit for business expenses. They help manage cash flow and short-term funding needs, with the added benefit of rewards programs.
What is invoice financing?
Invoice financing allows businesses to borrow against their outstanding invoices. It helps improve cash flow by providing immediate funds without waiting for customer payments.
What are merchant cash advances?
Merchant cash advances provide businesses with a lump sum of cash in exchange for a percentage of future sales. It’s a quick funding option but costly due to high fees. Owners must have a good credit score
How do microloans differ from traditional loans?
Microloans are small, short-term loans offered by nonprofit organizations and government agencies. They are designed to support startups and small businesses that may not qualify for traditional bank loans.
How can I determine which business financing option is best for my company?
Consider your business’s stage, financial health, and funding needs. Evaluate the pros and cons of each option and consult with financial advisors such as 7 Park Avenue Financial, banks or credit unions to make an informed decision.
What factors should I consider when applying for a traditional bank loan?
When applying to conventional financial institutions or for business credit union financing, consider your credit score, collateral, interest rates, repayment terms, and the lender’s reputation. Ensure you have a solid business plan to present to the bank when considering government small business loans, which are guaranteed. Other financial institutions, such as credit unions, also support the program and can complement your personal investment.
