Bank Alternatives for Business Financing in Canada | 7 Park Avenue Financial

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YOUR COMPANY IS LOOKING FOR  BUSINESS FINANCING ALTERNATIVES!

SMALL BUSINESS ALTERNATIVE FINANCING SOLUTIONS IN CANADA

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?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL ADDRESS  - sprokop@7parkavenuefinancial.com

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Phone =  416 319 5769

 

 

 

 

 

 

WHAT IS THE BEST BUSINESS FINANCING OPTION FOR YOUR BUSINESS?  

 

  

 

INTRODUCTION   

 

No secret that small and medium-sized businesses in Canada, ie '  SME ' companies, constantly struggle to access the business financing capital they need from banks or their financial institutions known as traditional lenders. A combination of eligibility requirements and the time it takes to get approved are always top of mind with business owners and financing managers.

 

The solution?  Many alternative financing options are now more available than ever - allowing a business to get the capital it needs to operate .. and grow!  It's safe to say that choosing which option/options are best for your firm is key!

 

Business Financing banking alternatives in Canada - For many business owners and financial managers, it must seem like they spend a tremendous... aka ' too much time searching for credit and banking alternatives for the sources of cash they need to run and grow their business. If a company is deemed to have ' poor credit 'challenges increase!

 

 

  

WHAT ARE THE BEST FINANCING OPTIONS FOR A BUSINESS  

 

Raising business is even more challenging when searching for traditional loans and financing for startups!

 

What then are some of those decision points when your business is looking for raising money and business funding of any type? Business sources such as Canada's premier business dailies such as the Globe & Mail and Financial Post, constantly reveal the SME commercial finance sector's small businesses' challenges in financing a business.

 

Most entrepreneurs quickly realize that business banking loans are difficult to achieve in the best of times, forcing the business owner to consider bank alternatives in Canada. Let's dig in!

 

It's easy to say, but fundamentally it's all about finding the right types of funding in the amount you need that carries an acceptable level of risk and cost relative to the financing utilized, as we said, easier to talk about than get done.

 

 

FINANCING OPTIONS FOR A BUSINESS / ALTERNATIVES SOURCES OF FINANCE 

 

More often than not, it's about taking on the wrong kind or too much debt and risking business failure. Working with the right type of banks or finance companies is also important; it's all about knowing the lay of the land! Traditional bank business loans are the best solution for Canadian companies. However, it is not always accessible and that is where alternative funding and alternative financing options can solve the challenge.

 

 

  

BUSINESS FINANCING ALTERNATIVES - TYPES OF FINANCING FOR BUSINESS  

 

There are several ways business finances itself - what type of financing works best for your firm?  Business owners should know that interest rates vary based on what kind of traditional or alternative lenders are utilized.

 

 

 

Sources of cash for your company include :

 

Vendor / Supplier credit - That is financing a business without a loan!

 

Lease Finance / Equipment Financing

 

Bank Financing/bank loans/ Term Loans / Lines of Credit

 

  

GOVERNMENT FUNDING PROGRAMS  

 

Government funding programs, including grants,  as well as government-guaranteed federal loans are also available to Canadian business owners and entrepreneurs. Borrowers must meet certain eligibility requirements for financial assistance based on factors such as size or type of industry and type of financing required. When it comes to financing options for small businesses SBL loans are a solid solution!

 

Businesses looking to secure grant financing for non-repayable grants can find several specific programs and program requirements on the Government grant websites.

 

Government of Canada Small Business Loan and Grants for startups - (Working with government programs and crown corporations often can seem frustrating for business people. It is strongly recommended that you use a business finance expert who has a proven track record in business finance).

 

The Canada Small business financing program is a complementary solution to a traditional bank loan. Many new and significant changes were made to the program in 2022 including new credit facilities for working capital, lines of credit, etc. When it comes to how to finance a startup business federally guaranteed loans are a great solution.

 

Asset monetization

 

New Equity

 

Online Lenders

 

Alternative financing real estate solutions are also available via bridge loans, etc.

 

Many business owners often underestimate the power of supplier finance - payment terms and credit need you can negotiate can contribute significantly to positive business cash flow.

 

Supplier credit stems from the outflows of cash. The bad news here is that everybody's in the same boat at the end of the day, as everyone, including your clients, attempts to stretch payment terms.

 

Instead of paying cash for equipment and technology assets, businesses can lease those assets on a lease or rental basis.  Terms of anywhere from 2-7 years, sometimes longer, are available to lease assets such as rolling stock, computers, heavy equipment, production machinery, etc. Bottom line... any asset can be financed.

 

Canadian commercial banks offer significant financing choices for established businesses when your firm seeks business credit, but they are not always the best alternative sources of financing for entrepreneurs. The most desirable bank facility is typically the 'revolver,' allowing you to draw daily against the cash you need up to a set limit.  The danger of breaking a bank arrangement often leads many businesses into a death spiral.

 

Some business-oriented credit unions are another form of non-traditional financing as credit unions are not-for-profit organizations and compete directly with financial institutions such as banks for their members. Many credit unions offer the same services as banks, including business credit lines, and term loans, as well as offering competitive fees and interest rates.

 

While, in many cases, it's desirable to get new equity into your company, the challenge here is that it dilutes ownership at the expense of current owners. At the same time, alternatives to bank financing can help the owner maintain majority ownership. Large corporations of course, have access to venues such as venture capital.

 

  

BUSINESS FINANCE SOLUTIONS- OBTAINING ALTERNATIVE FINANCING FOR YOUR BUSINESS  

 

Many owners and finance managers who focus on getting new equity don't fully realize that numerous ' Asset Monetization ' strategies exist as an alternative to equity in many cases. This monetization of assets is about alternatives to loans.

 

They include-

 

Receivable financing / Invoice financing  for outstanding invoices / Asset-based line of credit

 

Inventory Financing

 

Tax Credit Financing

 

Royalty financing

 

SR&ED Tax credit monetization

 

Non-bank asset-based lines of credit

 

Sale-leaseback

 

Canada Small Business Loan and BDC Funds

 

Bridge loans

 

Merchant Cash Advances / Business credit card / Peer Lending  -  The Merchant cash advance is a short-term working capital loan that provides lump-sum loans for short terms, typically 12 months - The financing cost is high in this type of business loan, but funding is easily accessible. For retailers, future credit card sales are often the security.

 

These merchant cash advances are popular and provide short-term working capital installment loans based on future sales or in the cases of retailers future credit card sales.

 

Owners of small businesses should demonstrate a positive good credit score that is often, but not always required, to secure proper financing. A Personal credit rating in small business financing is important because banks and lenders view the principal and the company through a similar telescope! 

 

Credit scores also weigh any business interest rate and cost of financing consideration in a traditional loan solution. Alternative financiers generally place less emphasis on credit scores / personal net worth, etc.

 

A startup business loan rate is highly dependent on scores, and business owners should explore all solutions for alternative loans, including the Government Guaranteed loan program which comes with an attractive interest rate around the monthly payments given that the small business loan rate of interest is higher in alternative funding solutions.

 

When it comes to the commercial loans landscape low interest business loans typically come with requirements of outside collateral, full personal guarantees, etc.

 

Your firm might require a business plan to secure a certain type of financing, either as requested by the lender or simply as a part of a thorough credit application especially if it's a case of funding for startups.  7 Park Avenue Financial business plans meet and exceed bank and commercial lender requirements.

 

 CHOOSING THE RIGHT FINANCING OPTION  - BEST FINANCING OPTIONS FOR YOUR BUSINESS

 

When you are in the process of researching alternative business financing solutions, businesses must focus on key issues such as interest rates and fees to ensure financing costs are competitive to the overall credit quality of the business in relation to how much funding the company needs.

Depending on the type of financing needed, repayment terms should be carefully selected or negotiated, including early repayment, as well as the company's overall cash flow to ensure payments can be made - While longer amortizations might lower payments, they also come with higher financing costs,

Determining the eligibility requirements of any specific type of financing will save a lot of management time based on strict requirements that might not be able to be met by the business.

 

 

KEY DECISION POINTS IN ASSESSING FINANCE OPTIONS  

 

5 key issues typically should come up in your overall financing decision. They include:

 

1. Flexibility of the financial offering

2. Risk

3. Cash flow and profit concerns

4. Control exerted by the lender based on the finance offer refers to issues such as loan covenants, financial ratios that must be maintained, and those ever-dreaded ' personal guarantees.'

5. Timing

 

 

  

 CONCLUSION  - THE SMALL BUSINESS FINANCING CHALLENGE FOR SMALL BUSINESS OWNERS

 

  

Many bank alternatives exist for Canadian businesses looking to secure growth and operating funding. When choosing a  business finance option outside traditional banking businesses can access the capital they need from alternative finance companies and asset-based lenders, achieving their business needs and business goals.

 

At certain times in any company’s history, it can't always get the financing it needs. Issues such as your overall leverage and capital structure must be addressed carefully. While always desired by the business owner in almost all firms, growth requires a proper assessment of your financing needs around business loans from either a traditional or alternative lender.

 

 CONCLUSION 

 

If traditional bank loans and required credit lines aren't available to your firm and you're looking for alternatives for today's small business owner speak to 7 Park Avenue Financial,  a trusted, credible, and experienced Canadian business financing advisor who can assist you with business credit and banking decisions and financing options that make sense today and tomorrow.

 

 

 

  

FAQ: FREQUENTLY ASKED QUESTIONS/PEOPLE ALSO ASK / MORE INFORMATION

 

 

  

 

What are alternative methods of financing in business?  

 

Alternative funding refers to all the non-bank options that are available for small businesses, such as non-bank lending (including online lending), crowdfunding, grants, angel investors, venture capitalists, and factoring or invoice advances

 

Term loans are one of the most common types of small business loans and are a lump sum of cash that you repay over a fixed term. The monthly payments will typically be fixed and include interest on top of the principal balance.

 

 

What is alternative lending?

 

Alternative lending refers to business financing solutions that originate outside of traditional financial institutions such as chartered banks and business-oriented credit unions.

 

  

What are alternative financing examples?