YOUR COMPANY IS LOOKING FOR CAPITAL STRUCTURE FINANCING!
HOW TO ADDRESS OPTIMAL CAPITAL STRUCTURE
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?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Business financing solutions are the cornerstone of entrepreneurial success, providing the capital necessary for growth, innovation, and sustainability in today's competitive marketplace.
"Unlock your business potential: Discover the financing solutions that can turn your vision into reality."
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer BUSINESS FINANCING solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”
Canadian Business Financing Solutions
Access to business capital will differentiate your business from the competition, whether it is growing quickly or surviving from a financial perspective of sales and profits and maintaining your obligations.
The right business financing solutions provide you with that cash flow lifeline—whether it's traditional financing from banks or the new world of business alternative financial solutions. The reality is that there have never been so many financing options for the saavy business owner.
The general idea of capital structure is for the business owner/manager to have a strong sense of whether money is coming from or could come from their suppliers, their bank and other lenders, or their owner equity in the company.
That is the debt and equity balancing act! It’s those three that comprise your capital structure! As debt increases, so do those interest payments! Using debt properly and understanding the cost of debt should always be at the forefront of a business owner's / financial manager's mind. As debt increases, leverage becomes a double-edged sword.
How you finance your optimal capital structure can make you successful or drive you into bankruptcy with too much debt. At 7 Park Avenue Financial, we prefer the former, which is why we focus on delivering proper corporate finance structures.
In some ways, you might be managing your capital structure quite uniquely and successfully already.
Case in point - supplier terms. Getting a supplier to allow you to pay anywhere from 60-120 days brings you a solid source of cash at minimal cost. Hopefully, the ultimate price isn’t your relationship with your suppliers in your day to day business !
WHO ARE THE FINANCIAL INSTITUTION TO ASSIST IN OPTIMAL CAPITAL STRUCTURE / BUSINESS FINANCE
Canada’s chartered banks, financial institutions, asset-based lenders, lessors, or working capital firms, such as receivable finance and PO-based finance firms, are your short—and long-term lenders for capital structure concerning debt. And that debt, of course, is short-term or long-term, depending on the nature of the borrowing and what type of credit approval you require to secure funds.
ISSUES AROUND COLLATERAL FOR BUSINESS LOANS
Another point is that the business loan debt you are undertaking within your capital structure has collateral attached to it—and there is only so much collateral to go around.
Accounts receivable can be used as collateral for obtaining a secured line of credit, allowing businesses to leverage their receivables to improve working capital and get more credit.
A positive aspect of debt is that you can leverage it to maximize returns on capital and investment - if done properly. A great rule of them is that your long-term debt is not more outstanding than your shareholder equity.
That is the standard debt-equity relationship for many industries. When it comes to total debt, a typical bank requirement is that it exceed equity by no more than two or three to one.
Naturally, the cost of capital has to be factored into your analysis, and financial experts agree that debt is cheaper than giving up equity ownership.
BUSINESS ACQUISITIONS REQUIRE PROPER TIME SPENT ON OPTIMAL FINANCING STRUCTURE
Suppose you are looking to purchase a business, for example. In that case, it’s essential to understand that financing will come from various sources, including borrowing money from lenders, your firm or you personally, and potentially the seller—aka the Vendor Takeback.
BANKS AND CASH FLOW COVERAGE
When talking to a bank about financing your capital structure, they focus on cash flow stability. Banks and other lenders use a simple cash flow analysis tool called ‘coverage. ' They typically like to see cash flow exceed debt coverage by 1.25:1 on term loans via the amortization schedule.
Borrowers only pay interest on the funds they draw from a line of credit, which can help manage cash flow more effectively when a competitive interest rate is achieved.
Lenders, i.e. banks and other commercial finance firms, will simultaneously look to the balance sheet for collateral, typically from receivables, inventory, fixed assets, and even real estate. In your search to find the optimal business capital for your firm, your firm's net worth/market value will always play a key role.
KEY TAKEAWAYS
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Understanding loan types and their specific purposes forms the foundation of business financing knowledge.
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Grasping the concept of collateral and its role in securing loans is crucial for borrowers.
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Credit scores' importance in determining loan eligibility and terms can significantly impact financing options.
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Mastering the art of creating comprehensive business plans enhances the likelihood of securing funding.
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Familiarizing oneself with interest rates and repayment terms helps make informed financing decisions.
CONCLUSION
We have seen that capital structure is all about the proper mix of debt and equity. The goal is to enhance your company's value while ensuring you take on the right level of risk to ensure the proper ‘ ROE ‘—aka return on equity.
Getting a handle on today’s subject will help guarantee business success.
Secure financing by working with financial partners who understand your business and can provide tailored financial support.
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with financing solutions within your capital structure.
FAQ
What are the most common types of business financing solutions?
The most common types include small business loans, lines of credit, SBL loans, real estate loans, equipment financing, and invoice factoring. Each serves different purposes and suits various business needs. New business Start ups require specialized financing solutions such as the government-backed loan program.
How do I determine which financing solution is right for my business?
Assess your business needs, financial status, and growth plans. Consider factors like the amount of funding required, repayment terms, and eligibility criteria. Consulting with a financial advisor can help you make an informed decision.
What are the advantages of using business financing solutions?
Business financing solutions can provide capital for expansion, help manage cash flow, fund equipment purchases, and offer working capital during slow periods. They can also help build business credit in current operations and sometimes provide tax benefits.
Are there financing options available for startups with limited credit history?
Yes, options like microloans, crowdfunding, angel investors, and certain government-backed programs cater to startups. These often focus more on business potential and founder credibility rather than extensive credit history. Owners should be able to demonstrate a good credit score personal tax returns if required.
How quickly can I obtain funding through business financing solutions?
Timeframes vary widely depending on the financing type. Some online lenders offer same-day approval and funding within 24-48 hours, while traditional bank loans or SBL loans may take several weeks to months to process.
How does the economic climate affect business financing options?
Economic conditions can impact interest rates, lending criteria, and the availability of capital. During economic downturns, traditional lenders may tighten requirements, while alternative financing options might become more prevalent.
Can business financing solutions be used to consolidate existing debt?
Yes, many businesses use financing solutions to consolidate debt. This can simplify payments, potentially lower interest rates, and improve cash flow. However, it’s important to consider the terms and long-term impact carefully.
What role does technology play in modern business financing solutions?
Technology has revolutionized business financing through fintech platforms, AI-driven credit assessments, and blockchain-based lending. These innovations often lead to faster approvals, more tailored products, and improved accessibility for small businesses.
Are there industry-specific financing solutions available?
Many lenders offer industry-specific financing tailored to the unique needs of sectors like healthcare, agriculture, or technology. These solutions often account for industry-specific cash flow patterns and collateral types.
How can seasonal businesses best leverage financing solutions?
Seasonal businesses can benefit from options like lines of credit or revenue-based financing. These allow for flexible borrowing and repayment aligned with business cycles, helping manage cash flow during off-peak periods.
What factors should businesses consider when comparing different financing solutions?
Businesses should evaluate interest rates, repayment terms, funding speed, eligibility requirements, required supporting documents, and the potential impact on cash flow. They should also consider the lender’s reputation, customer support, and hidden fees or prepayment penalties.
How can businesses improve their chances of qualifying for favourable financing terms?
To qualify for better terms, businesses should improve their credit score, maintain accurate financial records, develop a strong business plan, and build relationships with potential lenders. Demonstrating consistent revenue growth and profitability can also significantly enhance eligibility.
What are the potential risks associated with different types of business financing solutions?
Risks can include over-leveraging the business, agreeing to unfavourable terms due to immediate need, or choosing inappropriate financing for the business’s situation. Some solutions, like invoice factoring, may impact customer relationships, while others, such as equity financing, can dilute ownership control.
