OVERVIEW – Information on business financing and loan alternatives in Canada . Knowing the ‘ credit box ‘ is key to successful debt and asset monetization financing
Business financing , and loan alternatives, in Canada is either at one time (or constantly!) sought by owners/financial managers. If loan options are no understood chaos can reign supreme. Let’s dig in.
Unless you’re solely in the retail business cash flow, working capital, and debt alternatives should be on the table. We’re constantly amazed at the amount of time new clients have spent chasing down financing in areas they will never qualify for – these might include VC equity, Private Equity, etc.
Not knowing how to obtain loan financing, and more importantly, knowing what finance sources you qualify for are key points to consider. There’s a great analogy that Queen Isabella was the first VC, having financed Chris Columbus – and probably without a business plan! Key requirements are that some sort of equity be in place and with products and services that have future cash flow potential.
Private equity groups are on the other hand looking for no early development firms, and typically favor niches in certain industries they are familiar with. Whether it’s a VC or a Private Equity Group prepare for: DILUTION OF OWNERSHIP!
Early stage businesses, including start ups should take advantage, or at least investigate the Government Small business loan option. Getting someone to cover off and guarantee your loan is always difficult, so if the Canadian govt is willing to do that… check it out.
Business owners can be forgiven for not breaking down their financing needs into different loan types – that might be:
Lines of Credit – bank revolving credit facilities / non bank asset based lines of credit (typically these finance receivables and inventory)
Term loans – secured / unsecured cash flow loans
Asset Monetization – tax credit financing, sale leasebacks, etc
In every case the owner / manager needs to understand if they fit into the ‘ credit box ‘ that defines any particular loan or asset monetization. Those ‘ fit factors’ include: length of amortization/ amount borrowed/collateral/personal guarantee requirements/ down payments
Business owners in our observation seem to have a desire to blanket the market with their loan / financing request. This often backfires for the simple reason they don’t understand the particular ‘ niche ‘ that commercial finance company or bank or alternative lender specializes in.
So can we summarize key aspects to ‘ all seasons’ financing? Key areas to focus on are:
Understanding lender specialties
Ensuring proper documentation is immediately available – i.e. business plans, cash flow forecasts, and owner information
Being prepared and knowing finance alternatives is in fact the ‘ best preventive medicine ‘ for your financing needs. Consider seeking out and speaking to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can help you avoid ‘ tire kicking’ in Canadian finance.
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 FINANCING EXPERTISE
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Canadian Business Financing