OVERVIEW – Information on accessing the business line of credit including alternate funding that does the also does the job
Business line of credit alternatives make funding a business a lot easier when it comes to the ups and downs of owners and financial managers managing their cash flow and working capital. As we have hinted, traditional and non traditional alternatives exist – it’s not a ‘one size fits all’ type of financing. Let’s dig in.
Whether a firm is a start up or established and growing there is always going to be gaps between cash outflows and inflows. Although it might be a surprise to some even the largest corporations in Canada do not always exhibit constantly good cash flow.
Why does cash flow fluctuate then? For the majority of companies it because a company has to ‘ ride out ‘ the time between purchasing products and delivering services to ultimate collection of receivables from clients. Business credit lines address that gap.
We talk a lot with clients about what stage their business is in and what types of business credit facilities are available. The traditional ‘ go to ‘ financing is of course our Canadian chartered banks.
More non traditional financial offerings are becoming more popular all the time – they include:
Non bank Asset based lines of credit (they lend, all in one facility, against A/R, inventory and equipment)
Invoice Financing /Confidential Receivable Financing facilities
PO/Supply chain financing
Royalty/Revenue financing (New)
If a firm is in start up mode, or in early revenue stages it is fairly impossible to access a traditional bank borrowing facility whereby receivables and inventory are margined on an on going basis. Instead the banks will focus on the owner’s personal assets, credit history, etc.
Your ability to access the type of business credit funding you need depends on some very basic pieces of data –
Current financial statements
A Sales/cash flow forecast
Your current and projected financials should do a good job of indicating where your company is going. Presenting cash flow, debt load capacity in a manner that shows you are managing assets and able to grow sales with access to cash flow solutions is key.
There is not question there is a lot of demand for asset financing in Canada in the SME sector. Knowing you have choices is key; consider seeking out and speaking to a trusted, credible and experienced Canadian business financing advisor who can makes things a lot simpler that you imagined.
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:
7 Park Avenue Financial
Off. 905 829 2653
Cell 905 302 4171
7 Park Avenue Financial
Canadian Business Financing