Do You Know The Driving Forces Of Canadian Business Finance – Not Everyone Does

OVERVIEW – Information on business finance and loan financing in Canada. What Challenge and Solutions are available ?

Business finance
in Canada. When it comes to loan financing in Canada we’re the first to admit we hate it when people flog a dead horse, as the expression goes. (Is that even politically correct to say?)

So we promise that this will be the last installment on the revelations we got when we participated in a CEO survey for BDC. The subject – Access to financing and nothing interests us more than that!

While a survey posts questions and responses we thought it even more prudent to add some real world commentary and throw in some solutions.

It was no surprise to us of course that 62% of Canadian business owners and financial managers found financing their business both difficult and ‘somewhat difficult ‘. Bottom line, half of your competitors are in the same boat as you, so don’t feel overly bad.

The survey also revealed that many businesses are out there seeking equity financing of some form. While only a very minute amount of Canadian firms are successful in seeking VC or Private equity financing many business owners/managers still feel there firms are candidates for some sort of equity finance . Sadly few get to the goal line. Naturally if you’ve got the greatest story every told, sales, profits, and high growth potentials those friendly VC guys will be all over you. Good luck with that.

So if equity or quasi equity financing isn’t in fact available for your firm you’ve basically got two other solutions – take on term debt or our favourite, monetize and finance existing assets.

As a business owner is you sure that you have explored every aspect of asset and cash flow financing. These include:

Receivable financing

Equipment finance / Sale leasebacks

Secured/Unsecured cash flow loans

Monetizing your SR&ED Tax credits

Government SBL loans

Asset based lines of credit

Oh and lest we forget, the best but hardest to get – Commercial bank financing from our Chartered banks and government crown corporations

More often than not you’re eligible for any or most of the above simply because your business is growing. As our survey noted if you’re downsizing your company, outsourcing, or finding your business in a death spiral financing is going to always be more of a challenge. Not impossible, but a challenge.

43% of all Canadian business respondents in the survey indicated they were either unsuccessful or only partially successful in getting the financing they received. A good example of a solid solution as per above? Many companies don’t meet qualifications for bank financing these days, simply because their ratios and covenants are out of order. However, they are absolutely eligible for an asset based line of credit from a non bank commercial lender. The upside? This solution actually gives you more financing than you would obtain from a chartered bank facility. Trust us!

The main categories for business finance needs in the survey are those that clients talk to us about everyday. They include:

Equipment and Technology Assets

Inventory finance

Lines of credit

Leasehold improvements

Your peers and competitors in the survey indicated they didn’t receive access to financing because of the size of their firm, their inability to meet ‘ ratios’, or inability to provide solid personal guarantees and additional collateral.

While our great banks in Canada provide over 64% of all financing to business make sure you explore the firms and type of financing that provides the other 36%.

43% of all companies in Canada maintain they utilize a trusted, credible and experienced Canadian business advisor or firm to help them with their financing needs.

Author: Stan Prokop – founder of 7 Park Avenue Financial


7 Park Avenue Financial
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7 Park Avenue Financial
Canadian Business Financing