YOUR COMPANY IS LOOKING FOR BUSINESS FINANCE 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?
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
CONTACT US: Direct Line = 416 319 5769
Email = sprokop@7parkavenuefinancial.com
Unlock your business's potential with innovative financing that bypasses banks!
Introduction - Exploring Alternatives to Traditional Commercial Loans
When business owners and financial managers contemplate additional borrowing for their firm, they must consider whether the business does, or will have, enough cash flow to repay the debt. We can assure small business owners that the bank or lending institution thinks the same way regarding cash flow loans for small businesses and larger corporations.
Business financing often comes with limitations and challenges that may not fit all business models or stages of growth. High eligibility criteria, lengthy application processes, and rigid repayment terms can challenge businesses regarding a traditional bank loan.
That is where traditional lenders and alternative lenders play a key role in Canadian business financing.
This has led to a surge in interest in alternative financing options, offering more flexible, accessible, and innovative solutions to meet diverse business needs.
Why Look Beyond Traditional Loans?
Traditional commercial loans have long been the go-to option for businesses seeking funding, but what if they don't fit your needs or circumstances? The good news is, the financial landscape is brimming with innovative alternatives, each offering unique advantages and considerations. Let's explore some exciting possibilities beyond the bank:
With their stringent credit requirements and collateral demands, traditional bank loans can be prohibitive for startups and small businesses lacking a substantial credit history or assets.
Moreover, the one-size-fits-all approach to repayment does not account for the fluctuating revenues of many modern businesses, particularly those in seasonal industries or in the early stages of growth. Alternative financing options present a more adaptable and sometimes more accessible solution for these entities.
What is Cash Flow Finance?
Cash flow finance allows firms to borrow based on sales and cash flow of the business. While some types of business financing, for example, mezzanine finance, do not require specific collateral, cash flow financing solutions are usually secured by some of the business assets, most commonly accounts receivable secured by lines of credit instead of a term loan.
When businesses enter into bank loans or other institutional loans, the payments are, 99% of the time, fixed and specified. The business owner and financial manager must ensure those payments can be made. If the company has over-relied on debt, it is viewed as highly leveraged by the lender.
Government Loans & Programs
Governments can offer programs like the Canada Small Business Financing Program and other financial support programs via BDC designed to grow businesses and encourage innovation.
Canada's SR&ED program is one of the best examples. Understanding the eligibility requirements and preparing a compelling application is crucial to accessing these funds.
Why Your Company Needs Cash Flow Finance Solutions
In other cases, the need for cash flow finance comes down to addressing the shortfall in current liquidity if current credit lines are fully used due to increased sales and additional investments in current assets such as receivables and inventory, which reduce cash flow.
Some industries in Canada are very capital-intensive and require significant investments in new equipment and technology.
Pure cash flow loans are based on the lenders' perception of historical, present and future cash flow projections. Typically, they will not require additional collateral or personal pledges of the owner.
TRADITIONAL TERM LOANS VERSUS SHORT-TERM WORKING CAPITAL LOANS
Term cash flow loans tend to be 3-5 years, sometimes longer. In Canada, short-term working capital loans are currently hugely popular.
Although these rates are very high in this type of financing, the appeal to the small business owner is ease of securing this capital quickly.
Many businesses in the SME sector make the mistake of mismatching short-term capital with long-term investments, which can cause severe repercussions.
Equipment leases and loans are probably the best alternatives for securing long-term assets, which will have a useful economic life and generate sales and profits for the company.
Companies that hit a temporary cash-flow crunch and require some form of what the pros call ' bulge financing ' are excellent candidates for working capital loans, as they have demonstrated they can generate cash for repayment.
Key Takeaways
- Accounts Receivable Financing: Understanding this concept is crucial as it provides immediate cash flow by financing against invoices, addressing urgent liquidity needs without waiting for payment terms to close.
- Government Loans and Support Programs: These are vital to understanding because they offer non-repayable funds or supportive loans under favourable conditions, essential for businesses looking for cost-effective financing solutions.
Conclusion
The business financing landscape is rich with alternatives to traditional commercial loans, each offering unique advantages and considerations.
Call 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor who can assist you with alternative financing methods for your business loan, cash flow financing, and asset monetization needs beyond funding from traditional banks.
FAQ: FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION
What is the significance of understanding different types of accounts receivable financing for alternative lending options?
Knowing the options helps businesses choose the most suitable form to improve cash flow and fund operations without diluting equity or incurring debt.
What makes accounts receivable financing a preferable option for businesses?
It offers immediate liquidity by leveraging unpaid invoices, enabling businesses to continue operations without waiting for loan approvals from traditional financial institutions.
How can merchant cash advances provide a solution for businesses with fluctuating sales?
They offer immediate capital based on future sales, ideal for businesses with variable revenue patterns, providing flexibility in managing cash flow. MCAs) offer a lump sum in exchange for a portion of future sales, suitable for businesses with high sales or credit card sales but perhaps unsuitable for those with fluctuating revenues due to the potentially high costs.
Pros: Fast funding, minimal documentation, ideal for immediate expenses.
Cons: Expensive option, short repayment periods, potential damage to credit score.
