Business Borrowing Rates And Costs Shouldn’t Be A Frightening Truth

OVERVIEW – Information on borrowing rates for Canadian firms seeking financing solutions . What factors affect the financing rate for a bank business loan or commercial non bank finance solution

Borrowing rates and the financing rate for a bank business loan
or other forms of commercial financing often are a disconcerting issue for Canadian owners and financial managers. Talking to clients we’re often explaining (defending?) the costs associated with different types of borrowing. So.. The (not so) frightening truth … Let’s dig in.

We can quickly break down our subject into 2 categories – consumer/retail borrowing and business funding. We’re talking solely about business funding here. We can further break that down into a bank business loan, or financing that is provided by commercial finance companies in Canada. And by the way a lot of those business financing firms, non bank in nature are in many cases subsidiaries of U.S. firms.

Almost always, and certainly currently, business bank rates are at an all time low. Should this be a surprise to the Canadian business owner/financial manager? Not really, as it’s simply the spread between what the bank is paying us on our deposits versus their profit requirement on the mark up of those rates.

Confusion reigns supreme quite often because there’s a myriad of bank products and services that all come with their own lingo – base rate, ancillary costs (our favourite!!) etc.

Behind the entire bank pricing is of course the policy by the Bank of Canada as it pertains to the banks borrowing and lending with the government and themselves. That’s, fortunately, a subject for another day.

When it comes to business financing transactions from banks or commercial finance firms for that matter can be short term or long term in nature. In a perfect world the banks themselves want to pay us consumers low short term rates and lend these funds out on a long term basis at higher rates – just common sense.

How does your firm have input into what rates you will be charged for revolving facilities, asset monetization’s, or term loans?  It’s simply all about credit quality. So being credit worthy as it pertains to being profitable, having a historical borrowing record, and having solid financials, or being in business a long time  all counts.

Thousands of firms borrow outside of the banking system for business needs. Here solutions for working capital and asset monetization abound – they include:

A/R financing


Inventory Finance

Franchise Financing

Asset based non bank lines of credit

Tax Credit Monetization

Mezzanine financing

Equipment financing and Sale Leasebacks


In non bank financing rates are higher typically because more risk is taken on by the finance firm, and transactions are more structured in nature. That might include deposits, outside collateral, warrant plays, etc.

Your business in fact does have an input into rates – first of all simply because Canadian business financing is competitive, and your ability to demonstrate growth, prospects, good mgmt, and assets will turn the odds of better borrowing rates in your favour.

If you’re focused on the truth in bank business loan and borrowing rates in Canada seek, including options for commercial loans seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can help you map the road to lowest cost/maximum benefit.

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