Are Your Highly Fuzzy On Business Credit Lines In Canada ? business credit line

OVERVIEW – Information on the business credit line loan in Canada . Commercial loans and revolving credit facilities come in all shapes and sizes, and they are offered by many entities the business owner/manager may not have considered


Getting a business credit line loan in Canada can often make the business owner / financial manager in Canada feel somewhat ‘ highly fuzzy ‘. It’s easy to understand as commercial loans in Canada, specifically revolving credit facilities come in different shapes and sizes! Let’s dig in.

A credit line is needed for most businesses as it relates to ‘ operating cycles’ – Those cycles are driven by seasonality, the level of current assets in a business ( inventory and receivables ) and the overall timing as it relates to inflows and outflows in a business.

While many business owners are somewhat purposely unfamiliar with Page 3 of their financial statement (the ‘ statement of cash flows ‘) this is perhaps the most telling document about their business. It’s a classic case of what we old school types call ‘ where got/ where gone ‘!

So why do commercial loans for a credit facility make sense for a business. Two words basically – GROW / OPERATE…

The natural ‘ go to ‘ for most owners, entrepreneurs, financial managers is our Canadian chartered banks as it relates to a business credit line loan. The criteria for approval are simple – but sometimes simply hard to achieve. They include profits, positive cash flows, and overall financial performance of your business as it relates to the balance sheet. By the way, that relates to the owner/owners balance sheets also as banks place emphasis on outside collateral and personal credit worthiness of ownership of the firm.

The credit line at a bank will almost always have a limit, and it becomes the responsibility of owners/managers to ensure the continual drawing down and repayment of the loan is handled in a satisfactory manner.

In some cases a bank might even consider converting a part of the credit line into a term loan .

One strong alternative (What? There are Alternatives?!) to that bank facility is a non bank asset based line of credit. These facilities allow your business to borrow, under one roof, funds against a combination of A/R, inventory and equipment. And while bank credit lines are rigid and reviewed typically annually the Asset credit facility can easily fluctuate according to your needs and sales growth.

It is always important for the company to use these types of loans judiciously. They should almost never be used to purchase assets or make longer term investments in the business. That’s a classic mismatch of the intended use.

In Canada there are what we have called ‘ sub sets ‘ of a credit line – These are niche borrowing facilities specifically tailored to your firms or industries specific needs.

They include:

Inventory financing

Factoring/ Confidential Receivable Financing

Purchase Order/ Supply Chain finance

SR&ED tax credit monetization

Royalty financing

Sizes of borrowing will always vary specifically to a firm’s needs and actual finance charges will depend on whether your firm has chosen a traditional or alternative financial source.

If achieving business credit lines that make sense for your firm is at the top of your ‘ TO DO ‘ list seek out and speak to a
trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your short term borrowing needs.

Author: Stan Prokop – founder of 7 Park Avenue Financial

Originating business financing for Canadian companies, specializing in working capital, cash flow, and asset based financing. In business 10 years – has completed in excess of $90 Million of financing for Canadian corporations. Core competencies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details:


Greg LaBella
7 Park Avenue Financial
Off.   905 829 2653

Cell   905 302 4171


7 Park Avenue Financial
Canadian Business Financing