OVERVIEW – Information on business financing options in Canada . Understanding various business loan and asset monetization solutions is key to your company’s financial success
Business financing options in Canada tend to be an ‘ all seasons’ challenge. The Canadian business owner/financial manager constantly seeks different loan options and is constantly challenged to understand who to deal with, where to go, and what makes up qualifications for any specific type of financing . Let’s dig in.
In a perfect world (by the way, its not) commercial businesses in the B2B sector would choose to be ‘all cash ‘ businesses. That won’t happen as along with the costs of paying supplies, funding operating expenses and overhead the reality is that some form of debt or asset monetization is required to carry inventory, receivables, purchase equipment , etc.
Through those ongoing ‘ seasons’ of a business year there are of course bulge requirements and seasonality, simply adding more ‘ excitement’ to the mix.
‘Loans’ is of course the generic word that business folks associate with financing. Those fundings come from banks, commercial finance companies, and for many companies in the SME Commercial Finance need sector even the govt, via the CANADIAN GOVERNMENT GUARANTEED LOAN PROGRAM. That loan guarantees banks the majority of their principal on the loan in case of a loss
So back to our ‘ all seasons’ approach to Canadian business financing. Typical loan needs in the business financing area include lines of credit from banks or other commercial finance companies, or equipment loans from those same banks or equipment lessors.
There is currently a healthy competition between banks and other lenders who focus on various ‘ niches’ in business finance. As an example one alternative to the bank line of credit is the ‘ ABL ‘. It’s a working capital revolving line of credit that is based on the total value of your receivables, inventory and equipment. It costs more, but 99% of the time give you more, and is much easier to access if your firm can’t meet bank qualifications.
You not only need to be comfortable is assessing your options; you must ensure you have a basis sense of some key aspects of any specific type of business financing. Typical forms of business financing include:
Receivables financing / factoring / confidential receivable funding
Working capital term loans
Tax Credit Monetization (primarily ‘SR&ED ‘)
Asset based non bank credit lines
Purchase Order / Contract Financing
Cash Flow/ Mezzanine Financing
What are those issues that need to be addressed in any of those options for our ‘ all season ‘ approach to business loans/asset monetization? They include:
Interest rates and fees
Owner equity issues
Personal guarantee emphasis
If you’re focused on capitalizing on the best form of financing for your business, during any season! , consider seeking out and speaking to a trusted, credible and experienced Canadian business financing advisor who can assist you with your options assessment.
Author: Stan Prokop – 7 Park Avenue Financial :
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 – Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :
7 PARK AVENUE FINANCIAL = CANADIAN BUSINESS FINANCE EXPERTISE
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