Alternative Financing Is Not The Wild West Anymore – Here’s Why & How SME Commercial Finance Solutions Work Alternative Financing In Canada

OVERVIEW – Information on alternative financing solutions in Canada . SME finance needs are often not being able to be fully met by traditional banking solutions

Alternative financing in Canada
may seem to some like a bit of the ‘ wild west ‘, but the reality is that SME finance has dramatically changed the landscape of the commercial loan market in Canada . What are some of these solutions, what do they cost, and how do they work? Let’s dig in.

Commercial finance firms and alternative financiers are for the most part unregulated businesses. While that might seem to some as that ‘ wild west connotation the reality is that they simply arent subject to a lot of the reporting and lending rules that Canadian chartered banks are subject to .

These firms are also perceived as more ‘ nimble ‘ and the bottom line is that they are more willing and likely to lend to businesses (and in a much speedier fashion!) – The trade off is usually a higher cost of borrowing. In essence it’s a question of ‘ access’ to capital, not ‘ cost’ of capital.

Though borrowing rates are still at historic lows in Canada there’s no mad rush by traditional lending institutions to finance firms that are in start up mode, or experiencing ‘ challenges ‘.

We think the real trick of understanding the world of alternative finance solutions (a/r financing, inventory finance, tax credit financing, sale leasebacks, equipment financing, po /contract finance / asset based lines of credit, sales royalty financing, merchant advances) is really all about how to manage the cost and debt and ensure these financing mechanisms are used properly to generate cash flow and profits.

Some top experts in the U.S. have actually termed these alternative finance firms as ‘ shadow banks ‘. Whatever one calls them they certainly deliver capital quickly.

Alternative finance solutions in the SME sector almost always work best when they are funding sales and assets. Being able to monetize those to aspects of a business is really the key to working capital solutions.

A/R Financing
is probably one of the clearest ways to explain the alternative lending solution in Canada. As businesses generate sales it’s a pure reality that commercial business customers will not pay your firm for anywhere from 30-90 days.

The ability to cash flow this liquid asset (receivables) within 24 hrs and use the capital to pay suppliers, purchase inventory, thereby selling more is a great use of capital. Picking the right A/R financing solution (we recommend CONFIDENTIAL A/R FINANCE) allows the business to bill and collect its own receivables, mirroring the exact way in which a traditional bank credit line would run.

If you’re focused on ‘ cashing in’ on new business financing alternatives 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 borrowing needs .

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 :


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