OVERVIEW – Information on working capital financing solutions in Canada. The type of business loan your company requires and where you get that finance solution makes or breaks business success
Working capital financing and business loan finance solutions are always a challenge for Canadian business owners and financial managers. We can safely say after talking to many of our clients that challenge is in fact… you guessed it… anxiety inducing !!!
So it’s about time to start the search for the right funding can capital for your business. Let’s dig in.
Although many business folks believe their challenges are unique in many respects the reality often is that depending on what industry you operate in there are certain characteristics that always define your capital and cash flow needs.
But one thing is for sure, you do have more choice than ever in your search for proper capital to grow sales and profits.
There clearly in the mind of Canadian business owners exists a gap in financing solutions. Working capital is needed by your firm for both long term and short term needs. Many companies are capital intensive, while some are cash flow challenged in other ways – i.e. financing current assets that are generated out of sales – i.e. receivables and inventory.
One of the best programs, bar none in Canada is a government sponsored guaranteed loan that goes by the name of CSBF loan, or BIL loan, and most people commonly call it the SBL Loan, which stands of course for small business . There is only one problem with it, as we tell our clients. It’s simply the program covers only equipment and leaseholds and real estate. So while it’s an excellent solution for start up or younger firms it clearly won’t help in the cash flow challenge.
Working capital needs are commonly day to day needs – other terms for it are operating lines of credit and net working capital. The two most common assets in this category are receivables and inventories. So short term working capital needs need to be addressed within those two asset categories.
What business person doesn’t embrace the term ‘ free’?! There’s actually some free financing! Its supplier financing, because the credit suppliers grant you has no financing charges applied to it, and by delaying payment of your payables you are in effect generating cash flow and working capital. But that must of course be balance off by the need to maintain positive supplier relations in the context of a long term business relationship.
A great problem to have is of course growing sales, and often the biggest challenge in the working capital environment is fast or dramatic growth of revenues. Sales are great, fast growing sales are even better, but at the end of the day they require your additional investment in receivables and inventory.
How can your firm finance receivables and inventory?
A number of solutions exist. They include:
Bank operating lines
Floor plan financing
Asset based lending – Non bank full fledged business credit lines
A permanent cash flow loan that injects working capital but is paid back on a long term basis
Sale leaseback financing
Most small and medium sized business we talk to have a major challenge in obtaining the proper overdraft or line of credit facilities from their banks. Quite often they also have a hefty inventory component in their working capital needs and are unable to get proper margining on inventory.
Alternative non bank financing is increasing popular in today’s Canadian business finance environment. Alternative finance comes at a higher cost but often times can be the source of financing that takes your company to the next level of sales and profit growth.
In summary, yes working capital challenges can be complicated. You need to determine what your cash flow needs is, how they will be met, and if they aren’t being met by your current financing strategy consider alternative methods of working capital financing. And, as we stated, you can talk to a non-expert in this area, but we don’t recommend that!
Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you end the search for working capital financing & funding for your particular business needs.
Stan Prokop – founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years – Completed in excess of 100 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing. Info & Contact Details :
7 Park Avenue FinancialSouth Sheridan Executive Centre
2910 South Sheridan Way
Office = 905 829 2653
Mobile = 905 302 4171
Email = email@example.com
‘ Canadian Business Financing with the intelligent use of experience ‘
ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.
Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.
7 Park Avenue Financial
Canadian Business Financing