Get a Fast Merchant Cash Advance and Business Cash Flow Loan in Canada
Why unsecured cash flow and working capital short term loans can work for your business!
YOU ARE LOOKING FOR A MERCHANT CASH ADVANCE FOR IMMEDIATE CASH FLOW NEEDS
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
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A merchant cash advance for business cash flow continues to grow and become more widely used in smaller-sized firms in the Canadian business environment.
SMALL BUSINESS IN CANADA DON'T HAVE ACCESS TO LARGER CORPORATE FINANCING SOLUTIONS
Smaller Canadian firms that do not have major investments in receivables and inventory do not have the financing alternatives enjoyed by their larger company counterparts. Larger corporations use the concept of securitization as a method of financing working capital and enhancing balance sheets. This type of sophisticated financing allows firms to improve liquidity and satisfy lender loan covenants.
Smaller firms, usually due to cost, lack of financial sophistication and size, cannot utilize such alternative financing. Additionally, in the current 2020/2021 financial environment, many firms are struggling with maintaining bank credit facilities, let alone increase them! And let's not even talk about pandemics!
The discounting of future sales for cash today allows firms to convert working capital into immediate cash. This comes with a cost which we will also discuss.
It is critical to note that when a firm sells, or factors, or discounts (they all mean the same thing), they retain no ownership or interest in the future sale.
Depending on how the merchant advance facility is structured, they may or may not be responsible for the account's ultimate non-collectibility. Lenders address that issue in a variety of manners.
Smaller companies in Canada aren't able to enter into large multi-year arrangements with lower costs that would allow them to achieve the benefits of a true securitization.
FINANCING FUTURES SALES IS WHAT A MERCHANT CASH ADVANCE IS ALL ABOUT
But ... ! ... You can sell future sales under a discounting agreement. This can be done with a minimum of cost, and deals can be structured uniquely to the customer's situation, and there is a lower cost and no reliance on lawyers, advisors, etc.
If used regularly, the merchant cash advance discounting process continually generates new working capital, allows the customer to generate better rates as time goes on, and, most importantly, relieves the financial stress of managing working capital.
It is essential to note that smaller companies have some distinct choices that, on occasion, the larger firms don't have. They can, on a one-time basis or periodically choose to utilize this alternate financing method.
Ultimately, the business owner has to pay back the lender or generate sales to allow the repayment.
THE COST OF FINANCING IS HIGHER - A QUESTION OF ACCESS TO CAPITAL VERSUS COST OF CAPITAL
Typically the costs in business cash flow financing vary greatly. Rates range from 1.5 - 3% every month. Most customers view this as an 'interest rate,' while the lender tends to view it as a discount rate.
FAST, FLEXIBLE EASY ACCESS TO FUNDING
Generally, the facility can be set up in a couple of weeks! We have seen our clients set up a facility in a matter of days!
As we can imagine, it takes the larger corporations many months (and many thousands of dollars) to set up their large dollar securitization facilities.
In summary, more and more firms are turning towards a merchant cash advance business cash flow loan to manage their working capital and liquidity challenges.
Firms are strongly advised to search out experts in this area who know the Canadian marketplace. It differs substantially from the U.S. environment in this unique method of alternative financing.
If you are looking for a merchant cash advance talk to 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with your capital needs.
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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