Ready To Triumph In Private Commercial Financing ?
OVERVIEW – Information on bridging finance solutions in Canada . Bridging finance alternatives are compared to equity capital . When do bridge loans and alternative financing make the most sense
Commercial financing for private companies in Canada, or rather, the lack of it has been a challenge for companies in the SME sector (small to medium enterprise) for some time. Let’s dig in.
Remarkably even the owners of Canada’s largest stock exchange, the TMX Group recently announced capital raising activity for companies whose longer term goal is to ‘ go public ‘.
In the mean time the business owner grapples with lack of bank financing, and finds himself or herself considering bridging finance solutions – those bridge loan and alternative finance solutions that are non bank in nature.
Top experts, including those TMX gurus tell us that ‘ bank loans and venture capital are tougher to come by ‘. Naturally private financing of a larger nature comes with ‘ control ‘ issues, or loss thereof, as the stats tell us that when private equity and VC’s are done with your firm they often own majority interest in the business, in fact over 86% of the time!
Financing in the SME sector typically involves amts of 250k and goes up to the 10-15M dollar range. The challenge for the owner is almost always the same – debt, or equity?
The core of bank financing in Canada revolves around the ability of our chartered banks to ensure loaned funds are always secure. If a business does not have cash flow repayment power, or significant unencumbered assets then getting all the financing you need will be difficult. While the entrepreneur dreams of hyper growth the bank dreads it – there go the ratios!
The Canada Small Business Loan program is often a solid alternative for start up or fledgling companies. It’s all about the government guaranteeing loans that typically max out at 350k – recent changes to the program have made this program worth watching.
The challenge with taking on debt in commercial financing is simply repayment ability – don’t forget also that repayment of bridge and asset loans come at the cost of not being able to plough that money back into the business. Many businesses in Canada become so focused on their debt that the hurdles to growth and success are even higher.
Equity capital in Canada can come from several sources, in addition to the new kid on the block ‘ Crowd funding’ the owner can also solicit capital from Angel investors, VC’s, and strategic partners.
While equity investors rely on sales projections and future valuation and operating margins the asset lender focuses on past and present financial statements. Here the focus is debt load, quality of accounting and cash flows.
Bridging finance solutions in Canada include:
Non bank commercial finance companies
Solutions offered by these firms include:
Royalty and Contract Financing
SR&ED Tax credit monetization
Asset based lines of credit that bundle A/R, inventory and equipt into one solution
If you’re looking to ‘ triumph’ via bridge loans and asset monetization seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your commercial finance needs.
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