The Easy Way To Understand Business Finance Interest Rates In Canada
OVERVIEW – Information on business financing solutions in Canada and how interest rates are priced for loans by traditional and alternative lenders
Business Financing interest rates in Canada are often both misunderstood by business owners and financial managers. Is there an easy way to understand how finance solutions are priced? It’s certainly not always only about ‘ fixed’ or ‘variable ‘ – that’s for sure. We think so. Let’s dig in.
Fundamentally it’s all about your risk profile but don’t forget also there are a variety of both traditional and alternative lenders in Canada- all of whom have different lending guidelines and structures.
Companies who qualify for bank financing in Canada (Spoiler alert – not everyone does!) tend to focus on amortized life of loans and the fixed/variable conundrum. The current low rate environment is a boon for those who qualify for bank financing.
Covenants, ratios and documentation required should always be a part of any commercial borrower’s consideration. Whether it’s a bank or a commercial finance company we’ve certainly observed that the majority of borrowers tend to prefer to deal with a lender with a local presence.
Is size everything? Quite frankly when it come to loans or cash flow finance solutions ‘ size ‘ does play an important role in both rate and approval . Interest rate pricing will vary based on credit facility/loan size as well as the amount and type of debt you have on your balance sheet.
It’s important to understand that different types of financing in Canada support different goals – that might be one of combinations of growth, working capital, expansion, and even acquisition. In many cases firms opt for a complete refinancing of existing facilities.
What then are different types of business financing that support your firm’s goals? Note also they all have different rates and structures. Solutions for your business include:
SR&ED Tax credit financing
Non bank asset based lines of credit
Bank credit lines / term loans
Unsecured Cash flow loans
Your company’s track record and financials will play a key role in obtaining any commercial financing Note also that you firm might have a ‘ Senior lender ‘ – typically a bank or commercial finance company, as well as utilizing the financing services of other ‘ niche ‘ based lenders, some of whom are profiled above in our list .
While some may view alternative finance solutions as ‘ expensive’ remember also that they will always be cheaper than surrendering equity ownership? Alternative financing solutions can help firms who are challenged or on the verge of distress, which obviously is a key factor in higher rates
It’s always about the ‘ risk ‘ undertaken by our traditional or alternative lender. If you want to better understand the not so secret truth about business finance interest rates 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 the best loans and finance solutions that match your firm’s 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 Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Direct Line = 905 302 4171
Office = 905 829 2653
‘ Canadian Business Financing with the intelligent use of experience ‘