Two Ways Of Looking At Your SME Business Financing Needs – Yours and Your Lenders!

OVERVIEW – Information on achieving success in SME Business loan finance in Canada . Knowing how banks and finance companies you’re your business allows owners/managers to access the right commercial loans for your their company at the right time. 

Commercial loans and SME Business loan finance comes with two different optics – one is of course the eyes of the owner/financial manager, the other is the bank or commercial finance company. No surprise to many that these two views often differ! Let’s examine some best and worst strategies for achieving Canadian business finance success.

The criteria for firms in the SME (small to medium enterprise) sector are in some ways different from lending criteria for larger private and public corporations. One key factor in that area is owner equity which is often a lot less on the balance sheet of SME firms.

At the same time these firms need to purchase or replace key fixed assets or new technologies. This is often best addressed by looking at lease financing options, as equipment finance allows companies to minimize cash outlays. The even better news about leasing assets is that almost every type of credit profile can still access asset financing in this manner. Companies with weaker balance sheets may be asked to either increase a down payment of shorten the lease term, but they still can be approved.

Because SME firms rarely are able to, or in fact want to access additional equity they are relegated to only two other options – taking on debt or monetizing their existing assets. In rare cases a ‘ hybrid ‘third solution might be in the form of a solution that provides debt and has an equity component to it – for example a convertible loan or warrant scenario.

What then are the financing options available? Part of the solution is simply understanding where your firm is at on the start up or growth stage. Typical scenarios include those where sales are starting to grow but profits are not fully being achieved, if at all! The reality is that it’s at this time that business funding is often needed the most but in fact is least accessible in the eyes of the business owner. The lender, typically ‘ the bank’ has already weighed in and criticized your balance sheet or lack of profits and positive cash flows.

Key solutions at this point in the road include:business loans finance
A/R Financing
Inventory loans
Non bank asset based lines of credit
Tax credit monetization (Financing your SR&ED credits)
PO/Contract financing
Sales/Royalty finance

Because banks in Canada are both highly regulated public companies they can rarely provide all the financing you need based on their inability to fully secure loans to your firm. That’s their story and they are sticking to it.

Even firms that are profitable and achieving some measure of return on equity banks will rarely lend to firms that are offside on the total debt/equity issue. Although it can be frustrating at times it is important for busines owners to know how banks look at your financials – if only for the reason you can understand the arithmetic and decline yourself!!

Banks focus significantly on cash flow and collateral security and debt to equity relationships on your balance sheet. Banks are very focus on identifying any risk – it’s as simple as that. It’s important therefore if you’re in start up or growth stages that you manage your working capital and asset turnover to the utmost. That’s all about inventory turns, collecting your receivables promptly, and managing payables and supplier relationships.

It’s at these times that the owner/manager is best to explore commercial finance company solutions that are both traditional and alternative in nature. While pricing will always be higher it will provide you with the capital you need.

Have we forgotten anyone? Oh yes, the government! Besides the aforementioned SR&ED program which provides billions in refundable tax credits ( these can be financed ) there is also the Small Business Govt Guaranteed Loan program, providing financing up to 350k for assets and leasehold improvements.

If you’re focused on acquiring the best financing strategies for commercial loan financing success 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 your SME business loan finance needs.

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 100 Million $ of financing for Canadian corporations . Info /Contact :

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Office = 905 829 2653

‘ Canadian Business Financing With The Intelligent Use Of Experience ‘

7 Park Avenue Financial

Canadian Business Financing