Business Finance Sources: Essential Funding Options for Canadian Business | 7 Park Avenue Financial

Tweet

You Are Looking For Canadian Business Financing! 

Sources Of Finance For  Businesses 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 

               Unaware / Dissatisfied with your financing options?

CONTACT US

Call Now!  - Direct Line  - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

Email  - sprokop@7parkavenuefinancial.com

COMPARING TYPES OF BUSINESS LOANS IN CANADA - WHICH ONES WORK FOR YOUR COMPANY  

The types of business financing your firm needs and the sources of business finance are vital knowledge for every business owner and financial manager who needs to raise funds for debt capital or cash flow.

Let's dig in on ways to finance your business!

Several business financing solutions are available, including business credit lines, accounts receivable financing, and short-term working capital loans.

All of these have various benefits and, in some cases, disadvantages. Talk to the 7 Park Avenue Financial team about which business financing solution/ solutions will work for your firm and get the best information about terms, interest rates, and qualification requirements.

Your inability to source funds can stop your daily operations (e.g., suppliers/payrolls, etc.) and certainly slow, if not halt, your ability to expand. Many firms are early-stage, making the challenge even greater.

It comes down to debt financing versus cash flow financing solutions, or sometimes equity funding. At the far end of the spectrum is venture capital, angel investors, private equity, etc, but those latter three are for the smallest percentage of Canadian businesses -

They include long timelines, which are not a luxury in the SME sector of the economy. They also involve giving up equity ownership via an ownership stake in your business.

The Business Funding Dilemma: Solving Your Business Finance Puzzle 

Are you struggling to find the right financing for your business needs? Many Canadian entrepreneurs face complex business funding challenges while trying to grow their operations. Traditional options may seem limited or inaccessible, creating frustration and stalling growth.

Let the  7 Park Avenue Financial team show you how Business finance sources have evolved dramatically, offering solutions tailored to your specific situation and industry requirements.

DIFFERENT TYPES OF FUNDING FOR DIFFERENT BUSINESS NEEDS    

There isn't a day when 7 Park Avenue Financial doesn't get a call from potential clients looking to capitalize on growth opportunities in various ways, such as new contracts, market expansion, acquisitions, mergers, etc. Knowing sources of funds for your business is essential!

CHARTERED BANK FINANCING IN CANADA   

So that brings many business owners to their immediate ' go-to '. What is the go-to? Canadian banks for a bank loan/source of funding. But when business ventures down the Canadian chartered bank or business credit union route, new rules apply, and to be approved, you need to play by the rules.

KEY  REQUIREMENTS FOR BUSINESS FINANCE APPROVAL  

Those ' rules 'involve proper credit ratings of owners, the ability to produce proper financial statements, profitability, and a reasonable debt load.

That, coupled with some level of collateral, even if owners promise to pay,' makes bank financing work. The rates, terms, and structures are flexible and can be used for unlimited capital.

TRADITIONAL FINANCE VERSUS ALTERNATIVE FINANCING SOLUTIONS   

Have we forgotten something?  What about new firms, struggling firms, or businesses that can't satisfy all the criteria needed to access what the Bay Street folks call ' traditional finance '? 

That's when non-conventional business financing, aka ' alternative finance ', comes to the rescue of the business owner.  We're assuming by now you've abandoned the ' friends and family ' route, which seems to almost always in our experience lead to, shall we say, ' relationship problems!

So, what are these lesser-known ' sources of finance  ' for SME small businesses, how do they work, and where are they available?

Generally speaking, they are available from what we call 'non-bank' commercial finance companies and they offer short-term business capital or long term sources of finance for the type of funding you need to run and grow your business.

 START-UP FINANCING     

Start-up finance solutions in Canada are always a challenge. In many cases, the personal investment of the business owner/entrepreneur provides the initial cash investment or collateral for a loan, which, of course, indicates their long-term commitment to their project.

In some cases, friends and family, aka ' love money,' come from wives, parents, friends, etc. This is a classic form of 'patient capital,' often without defined terms of repayment. It is sometimes a challenge to form business relationships with friends and relatives!

A small portion of Canadian businesses might qualify for a venture capital investment. Technology companies, as well as some other industries able to demonstrate high growth, might be candidates. Biotech and telecom are two similar industries.

Owners must understand that venture capitalists will demand a significant portion of the company's equity to cover higher execution risk. The VC's long-term solution is typically to take a company public. 

Similar to VC funding, some business owners choose to work with Angel investors, who often are affiliated with business incubators.

Angel investments are typically made by other entrepreneurs who have significant business and management knowledge and are comfortable with early-stage investments. These investors might often choose to be involved in the business to some extent. 

Business incubator organizations are also known as business accelerators.

They often focus on local job creation and, in many cases, provide sharing services around offices and technology. Firms graduate from incubators when their products are commercialized and available for sale.

Government Grant Financing  / Government  subsidies

Canadian small businesses can access government grants from government agencies, including  Industry Canada's  Small Business Financing Program, Scientific Research and Experimental Development Tax Incentive, and regional development programs like the Atlantic Innovation Fund. These grants typically cover 50-75% of eligible expenses for innovation, expansion, or employment initiatives, with some offering non-repayable contributions up to $100,000.

Some startups are eligible for funding from Canadian banks, which offer many business financing solutions.

In many cases, business financing will only be provided to firms with a certain track record level and the requirement for business owners to have good personal credit.  Business plans are almost always required -

7 Park Avenue Financial prepares detailed business plans that meet and exceed bank and non-bank lender requirements.

For bank financing, business owners will always be required to provide a personal guarantee or, in some cases, external collateral. BDC is a non-bricks-and-mortar business bank that offers some start-up financing levels under similar chartered bank criteria.

SOURCES OF BUSINESS FINANCING  

1. A/R Financing / Invoice Financing - The ability to finance unpaid customer invoices provides cash, eliminating the need to wait for client payments.

Immediate cash and fast approval for A/R financing are key benefits of using a business factoring company. Business owners should understand the costs of this financing and be aware of how the receivables funding facility works. Any business requiring cash and that has a solid customer base is eligible for accounts receivable financing.  Funding is typically the same-day funds deposited into your bank account.

2. Inventory Loans

3. Access to Canadian bank credit -

4. Non bank asset based lines of credit 

5. SR&ED Tax credit financing -  financing refundable tax credits

6. Equipment / fixed asset financing / Equipment Loans for company assets

7. Cash flow loans / Working Capital Loans / Merchant Cash Advance / Short Term Business Loans

8. Royalty finance solutions

9. Government Of Canada Small Business Loan Program  - The guaranteed federal business loan for small business funding in Canada

In almost all cases, the key asset in question is the main source of ' collateral ' for these.

In the case of working capital loans, the emphasis is simply on your ability to demonstrate that your sales and revenues have been somewhat regular historically. 

This is the Canadian version of the U.S. SBA loans, and the program was recently significantly updated to offer more financing, including lines of credit and working capital.

The government is not the financial institution providing the loan, as Canadian banks and some business credit unions administer loans. Repayment terms are flexible, including long amortization for business asset acquisition. Nonprofit organizations can also use the program.

A  fixed interest rate or variable rates are available under program loan terms - Maximum loan amount is 1.1M $

Interest rates on SBL loans are competitive, and only a limited personal guarantee is required. Good personal credit and a satisfactory personal credit score are also required. The program also allows for commercial real estate purchases owned by the company.

Many entrepreneurs find it challenging to qualify. Talk to the 7 Park Avenue Financial team, who can facilitate your entire process.

Case Study: The Benefits of Business Finance Sources

When a furniture manufacturer faced a critical turning point, their 35-year-old family business desperately needed new equipment to remain competitive. After their bank declined a $375,000 loan application despite decades of banking history, the company explored alternative business finance sources.

Working with a specialized funding consultant, they discovered an equipment financing program requiring only a 10% down payment combined with a government manufacturing innovation grant. This financing combination provided the necessary equipment and working capital to hire additional staff.

The results transformed their business: production efficiency increased by 42%, manufacturing costs decreased by 23%, and annual revenue grew by $1.2 million within 18 months. Most importantly, the flexible repayment structure aligned with their seasonal cash flow patterns, eliminating the financial stress they had anticipated.

KEY  TAKEAWAYS

• Government funding programs offer substantial capital without repayment requirements, making grant applications your priority despite their competitive nature.

• Asset-based lending solutions unlock immediate capital using existing business assets as collateral, helping companies with strong assets but weak cash flow.

• Lines of credit provide flexibility that traditional loans cannot match, functioning as financial safety nets during seasonal fluctuations or unexpected opportunities.

• Alternative lenders/debt capital companies approve approximately 60% more applications than traditional banks, offering viable options when conventional financing falls through.

• Invoice factoring transforms outstanding receivables into immediate working capital, eliminating waiting periods for customer payments.

• Equipment financing preserves operating capital while acquiring necessary machinery, usually requiring minimal documentation compared to traditional loans.Interest payments are tax deductible.

• Venture capital firms /private equity firms bring expertise alongside financing, which is particularly valuable for high-growth technology companies seeking rapid expansion and who wish to secure equity financing.

• Merchant cash advances provide quick funding based on future sales, ideal for businesses with strong credit card revenues despite higher overall costs.

• Purchase order financing enables fulfillment of large orders exceeding current financial capabilities, which is particularly valuable for manufacturing businesses and growing the company's profits.

CONCLUSION - TYPES OF BUSINESS FINANCE

The bottom line? We hate ' wise guys,' but 'wise' business people must know all their options in today's ultra-competitive business capital landscape.

Your company can raise business finance capital from various sources, including debt, equity, and cash flow.

Call  7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist business owners with financing options and business funding needs.

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