OVERVIEW – Information on business funding paths for Canadian business owners and financial managers. Alternative financing and traditional solutions comes with different requirements and obligations . The debt vs. equity conundrum
Business funding needs come with two other ‘ minor’ complications – assessing how much financing you need and oh yes… where to get it .Let’s dig in.
Many types of financing in fact may be totally in appropriate for your needs, and its critical to focus on both immediate needs and longer term needs. When it comes to debt financing and monetizing business assets the funding search is comparable to what equity seekers go through in their ‘ rounds ‘ of capital searching.
Your business needs funds to increase revenue and to ensure it has some sort of ‘ cushion’ for unforeseen circumstances. Some firms are much more reliant on the need for new capital assets, placing further strain on the capital search. Service oriented firms don’t need those assets – but the double edged sword here is that they have no assets to finance or collateralize.
Sales revenues are key to planning business funding needs. And for firms that are in start up mode careful planning has to be done around one time initial costs and needs Most entrepreneurs don’t realize that the majority, almost 90% of original financing for businesses in the SME sector comes from personal sources. Oh yes, and those VC’s, sharks and dragons that we read about and see on TV… they fund only a whopping 1-4% of all new businesses.
Debt financing and asset monetization, done properly allows the owner/owners to maintain their full ownership. Solutions include business credit lines, equipment financing, working capital loans, etc. If there is any good news about ‘ debt ‘ and asset monetization it’s that in comes in a variety of flavors- that includes:
Equipment Financing / Sale Leasebacks
ABL loans – asset based credit lines that monetize A/R, inventory and equipment into one revolving facility
Royalty/Sales Finance Solutions
Even the Canadian government wades in with it’s much sought after Govt Guaranteed Small business loan, providing financing up to 350k for new and existing businesses and franchises.
What does the business owner/manager need to know with respect to debt and asset monetization? Issues to consider include the amount and timing of your cash flows, qualification issues, collateral and personal guarantees.
Getting ‘ reasonable rates ‘ will always be tied to business financials and asset quality. While bank rates are low they come with restrictions and demands in the form of ratios/covenants and back up collateral respectively.
For proper direction and advice in your business funding needs consider seeking the services of a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
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 FUNDING EXPERTISE
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7 Park Avenue Financial
Canadian Business Financing