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 businesses 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
Are you struggling to secure the necessary funds for your business's growth? Debt financing might just be the solution you've been searching for.
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer DEBT FINANCING solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
INTRODUCTION
Business finance in Canada still relies a lot on the old days.
If that's how owners and financial managers look at things these days they just might be surprised at the amount of debt financing and cash flow facilities available if you're aware of the criteria and how they work to improve your cash position without going the equity route and diluting ownership.
Debt financing is one of the most common methods for businesses to expand and innovate. expansion, innovation, and sustainability. Debt finance leverages borrowed funds to invest in operations, projects, or acquisitions, with the expectation of generating returns that are higher than the cost of borrowing.
From startups seeking capital to established firms eyeing expansion or funding an acquisition, debt financing remains a vital tool. For business borrowers navigating the sometimes complicated landscape of financing needs, understanding the nuances and benefits of debt financing is key.
Let's dig in on cash flow from financing solutions and the clues in your cash flow statement and your sales forecasts around the company's earnings and the net amount of funds your firm can generate when balancing debt and equity.
Again going back to those old days the lending model for companies places a high reliance on your ability to prove financial cash flow as what our good bankers call the ' primary source of repayment' when it comes to debt repayment and how much debt your firm can handle in a firms capital structures around debt and equity. Demonstrating good cash flow generation will always lead to a better interest rate when borrowing in business.
The good news? Many new techniques have emerged over the last number of years that allow your firm to access capital and build positive cash flow. It's a combination of new lending solutions combined with technologies and techniques that allow a lot more flexibility loan and cash flow solutions.
TRANSACTIONAL LENDING
What we're talking about could well be described as ‘transactional lending'; loans and cash flow monetization strategies that focus on your assets on the balance sheet and are less reliant on what traditional bank lending tends to be focused on around operating cash flow solutions.
That focus historically has been ratios and covenants, debt load, gross margins, etc. Those are all important but any deviation in those will often lead to severe credit limitations on your firm's borrowing ability and financing operations. Understanding asset turnover around the inflows and outflows of funds and accounts receivable and accounts payable management is key to business working capital success.
Many smaller transactions, especially in the SME COMMERCIAL FINANCE space utilize some quick ' credit scoring ' techniques that could quickly have your firm borrowing up to several hundred thousand dollars Bank borrowing traditionally has been based on ' relationships' with your bank and a fair amount of contact over time.
WHAT IS FINANCING CASH FLOW?
We never under-emphasize with our clients the ongoing need to be able to produce timely financial statements and asset reporting data, typically aged payables, receivables, inventory lists, etc. Businesses that understand their financials and interpret the ' cash flow from financing activities' part of their financial statement will always do better in accessing financing. The cash flow statement is a key part of a company's 3 part financial statement.
CASH FLOW FINANCING SOLUTIONS
It's critical to understand that most financing solutions should typically be matched to a direct need around a firm's capital structure. A basic list of financing solutions available to almost every business to enhance the road to positive cash flows in the company's capital structure includes:
A/R Financing/ Confidential receivable finance - reversing negative cash flow through accounts receivable financing via cash generated from instant funding of sales revenues - Accelerating cash inflows via factoring is used by thousands of firms in Canada - no new long term debt is added to the balance sheet. This type of financing allows for virtually unlimited sales growth. The amount of debt a company takes on can be significantly reduced with proper monetization of assets
Inventory Loans / Purchase Order Financing
Tax Credit Bridge Loans (Typically SR&ED) - recovering r&d funds via a specific project/projects
Sale Leasebacks - cash inflow providing net cash via refinancing of owned assets - refinancing capital assets via investing activities around equipment leasing solutions
Asset-based business credit lines - asset-based revolving credit facility
Unsecured cash flow loans - reversing negative cash flows via short term borrowings
Govt Guaranteed Small Business Loans (maximum to $ 1,000,000.00) - excellent interest rates for start ups, early-stage firms, franchise loans, etc - Tak to the 7 Park Avenue Financial team around which financial institutions or you should be using for government loans vis a vis an approved financial institution. The lump-sum / term loan structure does bring long-term liabilities to the balance sheet.
Equipment Leasing- saving more money and conserving cash when acquiring asset levels of plant and equipment and technology.
Short Term Working Capital Loans - fast access to cash but higher interest payments/costs
BANK FINANCING = LOW-COST FINANCING
When you can meet requirements for personal credit, collateral, and owner equity in the business bank financing in today's low rate financial markets and capital markets offers the lowest financing cost with a strong amount of flexibility when it comes to solutions around cash flows.
KEY TAKEAWAYS
- Leverage: Using borrowed capital to boost potential returns.
- Interest rates: Crucial in determining borrowing costs.
- Credit ratings: Assess borrower creditworthiness for favorable terms.
- Collateral: Security for lenders in case of borrower default.
- Debt-to-equity ratio: Measures financial leverage by comparing liabilities to equity.
- Amortization: Gradual debt repayment through regular installments.
- Debt covenants: Agreements specifying borrower-lender obligations for protection.
CONCLUSION - REAL WORLD FINANCING SOLUTIONS!
The ability of owners, managers, and entrepreneurs to successfully address the limitations they face in financing their business without new equity financing and will go a long way to long-term financial success, including potential dividend payments to owners.
Call 7 Park Avenue Financial , a trusted, credible and experienced Canadian business financing advisor who can assist you with the key takeaways you need to understand in your short and long-term financial requirements for business growth.
FAQ: FREQUENTLY ASKED QUESTIONS & MORE INFORMATION
What are the benefits of debt financing for businesses?
Debt financing provides access to capital for growth without diluting ownership. When debt financing occurs it can also offer tax advantages and can improve the company's creditworthiness.
How does debt financing differ from equity financing?
Debt financing involves borrowing funds that must be repaid with interest, while equity financing entails selling ownership stakes in the company in exchange for capital.
What factors influence the interest rates on debt financing?
Interest rates on debt financing are influenced by factors such as the borrower's creditworthiness, prevailing market rates, loan terms, and economic conditions.
How can businesses manage the risks associated with debt financing?
Businesses can manage risks by maintaining a healthy debt-to-equity ratio, securing favourable loan terms, diversifying sources of financing, and implementing effective risk management strategies. Too much debt is one of the disadvantages of debt financing strategies although funding via debt instruments is cheaper than equity.
What happens if a business defaults on debt payments?
Defaulting on debt payments on a business loan can lead to severe consequences, including damage to the company's credit rating, legal action by creditors, and potential bankruptcy proceedings.
How does debt financing differ from mezzanine financing?
Debt financing options include borrowing funds with a promise of repayment via a fixed rate or variable interest expense, while mezzanine financing combines debt and equity features, often used for growth capital.
What are some alternative sources of financing for businesses?
Alternative sources of financing to raise money include equity financing, crowdfunding to raise capital, venture capital, angel investors, merchant cash advances, and grants. Not all of these apply to many Canadian businesses when a company raises money.
How does debt restructuring work for businesses facing financial difficulties?
Debt restructuring and borrowing money involves renegotiating the terms of existing debt agreements such as bank loans to alleviate financial pressure and improve the company's financial stability. Companies should strive to be updated on amounts owing on business income taxes and any Canada Revenue obligation.
What is cash flow from financing activities?
The financing section of a company's cash flow statement shows how much money is available to use for debt and equity financing. Financing activities are transactions with long-term contracts, owner's equity and changes in short-term borrowing in operating activities.
