Beyond the Bank: Exploring Alternative Financing Options for Your Business
Stan Prokop
Canadian Business Financing | Cash Flow Financing | Asset Based Lending | Equipment Finance | Lender Financing | Purchase Order Financing | Acquisition Financing | SAAS Financing | Acquisition Financing
Navigating the New Frontier of Business Financing: Bank Alternatives Explained
YOUR COMPANY IS LOOKING FOR THE BEST COMMERCIAL LOANS & BANK FINANCING / NON-BANK FINANCING SOLUTIONS!
FUNDING FOR YOUR GROWING THE FULL POTENTIAL OF YOUR BUSINESS NEEDS
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing businesses today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CONTACT:
7 Park Avenue Financial South Sheridan Executive Centre 2910 South Sheridan Way Oakville, Ontario L6J 7J8
Direct Line = 416 319 5769
Email = sprokop@7parkavenuefinancial.com
"The future of business financing lies not in the traditional but in the innovative. Bank Alternatives empower entrepreneurs to chart their course, unencumbered by the constraints of the past."
Unlock your business's full potential with innovative Bank Alternatives tailored to your unique needs.
BUSINESS BANK ALTERNATIVES IN CANADA
Business loans via commercial bank financing in Canada can often leave business owners / financial managers feeling that something isn’t right.
We’re looking at access to business capital via bank solutions to ensure that business credit works for your firm.
THE SME BUSINESS SECTOR OF THE CANADIAN ECONOMY DESERVES BETTER
Let’s dig in on business loan commercial financing solutions!
Today, businesses in Canada can borrow from various traditional and non-traditional alternative sources of capital and funds to stay competitive.
Different types of financial institutions, such as Credit Unions, online banks, and neobanks, offer various banking services. Each provides unique solutions ranging from traditional offerings like savings and loans to innovative features tailored to specific customer needs.
Various qualifications exist for financing you need to grow your business.
Depending on the business's stage (e.g., start-up, growth, mature, etc.), various qualification criteria exist, including analysis of financial statements, revenue growth, time in business, cash flows, collateral, and owner credit history.
That’s what the business loan lender is looking for.
HELP TO FINANCE YOUR PROJECTS!
Bank finance solutions are, of course, not the only way for you to fund your business.
Banks and credit unions offer various financial services, including savings and checking accounts, through their commercial banking services, catering to local businesses.
Other solutions may well achieve the goal, including financing, purchasing, and transferring a business for a business acquisition loan.
Businesses can obtain a variety of working capital loans, with terms typically ranging from 2 to 5 years. Interest rates vary based on the quality of cash flows and the overall credit quality of the business.
Thousands of Canadian businesses utilize short-term working capital loans, which are readily available and based chiefly on sales revenues and the personal credit history of the owner/owners.
These loans are readily available but come at higher interest rates. Payments are structured to the business's cash flow via cash flow unsecured loans.
The ability of a business to present its cash flows properly is the key to unsecured cash flow-based loans from traditional financing lenders such as banks or BDC. Talk to the 7 Park Avenue Financial team about qualifying for bank and BDC loans.
Tax Credit Monetization Financing - The popular SR&ED program under the auspices of Revenue Canada and Industry Canada for non-refundable tax credits for research projects - Sred loan solutions fund your refundable tax credit
Government-backed loans in Canada, such as the Canada Small Business Loan, help thousands of businesses grow and start up with affordable financing every year.
Talk to the 7 Park Avenue Financial team to see how you can expedite the loan approval process for these loans.
Many businesses experience long delays in approval, which can easily be circumvented with the help of a proven Canadian Business FInancing advisor/originator such as 7 Park Avenue Financial, who can help you achieve success in Canada's small business financing loan program guidelines to see if your business meets basic criteria.
Under the small business loan guarantee program, Loans up to $1,500,000 can be accessed for various business needs, including capital asset acquisition, technology financing, real estate purchase for company-owned/occupied premises, and general corporate purposes such as working capital.
Loans for Canadian small businesses are at competitive interest rates, and there is maximum flexibility around repayment based on the type of financing you require.
MAJOR CHANGES TO THE GOVERNMENT OF CANADA SMALL BUSINESS FINANCING PROGRAM - HOW THE PROGRAM WORKS
Several significant positive changes have been made to the Government Small Business Loan Program, which is used by thousands of businesses in Canada!
- Certain loan amounts available under the program include a new loan cap of 1. Million dollars
- Term loans can now be accessed for equipment and leasehold improvements to a business in the amount of 500k - Intangible costs can be funded to a maximum of 150k - Intangible costs include asset categories such as goodwill, the fee to buy a franchise, and research and development
- Business lines of credit are now available under the program to a maximum facility size of 150k - Previous credit lines were not available under the program
- Certain term loans can have a maximum 15-year amortization - some assets financed might require an appraisal
- Interest rates on the Canada Small Business Financing ' SBL LOAN ' program are very competitive at an interest rate of 3% over prime
- The addition of a business line of credit is a significant improvement to the federal guarantee loan program - this allows businesses to have a revolving line of credit for day-to-day working capital funding and business needs such as payrolls, rents, lease payments and the ability to fund further investment in accounts receivable and inventory.
Canadian government grants for small businesses are also available via various R&D and IRAP-type grants. Export Development Canada product export and PO Financing solutions are also available.
Sales royalty financing / Saas financing - software as a service funding solutions
Asset-based business credit lines - ABL revolving facilities that allow you to borrow against receivables, inventory and equipment
Business Credit Lines
Revolving credit facilities allow a business to access business credit over the fiscal year period. The ability to draw down on a business credit line enables a company to pay financing costs only for the amount of facility used at any given time in your business bank account.
Customized solutions for Revolving lines of credit are beneficial for various reasons, such as a business's seasonality, temporary bulges in cash flow needs around sales, inventory and accounts receivables, repairs, and the ability to maximize growth opportunities that may materialize quickly.
For businesses unable to achieve traditional financial support from financial institutions such as Canadian chartered banks and business credit unions, facilities such as non-bank asset-based lines of credit can often provide all the operating capital a business needs, with the focus on assets as collateral versus the cash flow-based unsecured line of credit offered by a bank.
Commercial Real Estate Loan Solutions
Traditional banks or the government crown corporation can finance company-owned and occupied real estate premises.
Loans are typically structured as long-term commercial mortgages but can also be financed by short-term bridge loans for more unique financing needs. Canadian businesses can also access the equity in their currently owned real estate by short-term bridge financing based on owner equity.
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WHY DO BUSINESSES FOCUS ON BANK FINANCING?
Why does a business gravitate towards ‘the bank’ for financing? The two most common answers to that question are cost and flexibility around term loan solutions and unsecured loans for small businesses.
However, many businesses are now considering Credit Unions as an alternative. As smaller financial institutions, Credit Unions focus on serving local populations and offer personalized banking services tailored to their communities.
They provide advantages such as lower fees, competitive interest rates, and stronger community ties, making them an appealing option for local businesses and residents seeking relationship-based banking alternatives to larger banks.
When does bank financing not work for your firm?
The answer typically is that your firm can’t demonstrate ‘cash flow’ and ‘collateral,’ which are the two main components of a bank credit decision. The banker always focuses on your ability to demonstrate consistent cash flow properly.
Because banks in Canada are highly regulated and ‘public companies, ' they are constantly scrutinized by both the government and shareholders. Therefore, many business owners/financial managers are mistaken when they adopt the mindset that there is a major difference between different banks.
KEY POINT - While there aren’t significant differences in the bank lending mindset, there are huge differences in individual bankers relative to their expertise, capability, and reputation. Our point? It's the banker, not the bank!
EXPLORE MORE REAL-WORLD FINANCE SOLUTIONS FROM FINANCIAL INSTITUTIONS
FINANCING TAILORED TO REAL-WORLD SITUATIONS
A company's greatest challenge is when the business becomes ' offside ' in the bank relationship. That ' special loan' or' problem loan' status can be challenging to overcome if you don't have the proper advisor in place.
BUSINESS FINANCE SOLUTIONS YOU CAN COUNT ON
At that point, your ' collateral' and ' capacity ' are not working, and you need to get them working quickly. While in some cases, the bank relationship can be saved, that, unfortunately, is not always the case. That's the time to consider a specialty lender.
An interesting aspect of Canadian business finance is that banks have targeted many of the non-bank solutions offered by commercial finance firms. Most banks now offer some or all of these specialty offerings.
Once again, it’s incumbent on the business owner/ financial manager to evaluate the cost, quality of the relationship and expertise, and your ' capacity to meet bank requirements. The caveat is to beware of the bank's intense conservatism regarding financial covenants, reliance on backup personal guarantees, etc.
WHAT ARE THE BENEFITS OF PROPER COMMERCIAL LOAN FINANCING FROM TRADITIONAL BANKS
Properly used business loan solutions help your business run on a day-to-day basis while allowing the business owner and financial manager to exploit growth opportunities.
Access to capital for cash flow needs helps avoid the ‘lumpiness’ that comes with seasonality or numerous industry issues related to any industry.
Firms focusing on growth can grow faster with a proper financing structure/capital structure. Beyond traditional banking, various financial services, such as digital financial services provided by fintech companies and alternative banking solutions like credit unions, offer innovative ways to meet these needs.
Companies now willing to take on additional debt have numerous working capital and cash flow solutions to monetize assets and sales while avoiding the need and stress of additional equity funding that dilutes ownership stakes. That’s why the right business financing loan makes sense.
KEY TAKEAWAYS
CONCLUSION - SMALL BUSINESS LOANS CANADA - SME FINANCE ALTERNATIVES
Explore Bank Alternatives that empower your business to grow and thrive, even when traditional financing options fail.
Asking yourself ‘where to get small business loans‘?
If you feel your business credit needs are ‘hardly working’ and want to elevate status to code ‘working hard,’ talk to an expert! Speak to 7 Park Avenue Financial, a trusted, credible, experienced Canadian business financing advisor who can ensure you make the right financing decisions around customized financing solutions to run and grow your business!
FAQ
What kind of loan do I get for my business?
Business loan solutions for business start-up and business expansion in Canada include:
Term loans
Government-backed federal guarantee loans under Canada's small business financing program- this is the Canadian version of U.S. ' SBA loans '
Traditional and Alternative-based business lines of credit
Equipment leasing for asset acquistions / long term loans to purchase equipment for business capital assets
What are the benefits of using Bank Alternatives for my business?
Bank Alternatives offer greater flexibility, personalized financing terms, and alignment with your business's unique needs and growth trajectory.
How do Bank Alternatives compare to traditional bank loans?
Bank Alternatives often provide faster approval processes, more accessible financing options, and terms better suited to your business's circumstances.
Can Bank Alternatives help me secure funding when traditional banks aren't an option?
Yes, Bank Alternatives are designed to fill the gaps left by traditional banking, providing financing solutions for businesses that may not meet conventional lenders' strict criteria.
How can Bank Alternatives improve my business's cash flow management?
Bank Alternatives, such as revenue-based financing and invoice factoring, can help you unlock immediate access to capital tied to your business's performance, improving overall cash flow.
What are the long-term benefits of using Bank Alternatives for my business?
By accessing alternative financing, you can foster greater financial flexibility, accelerate growth, and maintain control over your business's future, empowering you to make strategic decisions.
What types of businesses are best suited for Bank Alternatives?
Bank Alternatives cater to various businesses, from startups to established enterprises, across various industries, providing tailored solutions for companies with unique financing needs.
How do I determine which Bank Alternative best fits my business?
Evaluating your specific business goals, cash flow requirements, and growth plans will help you identify the Bank Alternative that aligns most closely with your needs.
Are there any drawbacks or risks to consider when using Bank Alternatives?
While Bank Alternatives offer many benefits, it's essential to thoroughly understand the terms, fees, and potential implications before committing to any financing option. An online bank might offer lower rates but without all the needed commercial banking services.
How can I ensure I'm selecting a reputable and reliable Bank Alternative provider?
Research the provider's track record, customer reviews, and industry standing to ensure you partner with a trustworthy and transparent organization.
What steps should I take to prepare my business to secure Bank Alternative financing?
A well-documented business plan, financial statements, and a clear understanding of your financing needs will strengthen your application and increase your chances of securing favourable terms.
What are the critical differences between Bank Alternatives and traditional bank financing?
The primary differences lie in the flexibility, accessibility, and alignment of Bank Alternatives with a business's unique needs, as opposed to traditional banks' more rigid and standardized approach.
How do Bank Alternatives help businesses overcome the challenges of traditional financing?
Bank Alternatives are designed to fill the gaps left by traditional banks, providing financing solutions for businesses that may not meet conventional lenders' strict criteria or timelines.
What are the long-term implications of relying on Bank Alternatives for business financing?
By leveraging Bank Alternatives, businesses can foster greater financial flexibility, accelerate growth, and maintain control over their future, empowering them to make strategic decisions.
Are small business loans hard to get from credit unions?
Business financing can be challenging if businesses do not understand the criteria, qualifications, and time around loan approval for all types of business loans. Businesses should have up-to-date financials and be prepared if a business plan is required that highlights cash flow, assets, owner expertise, industry growth, etc.
In many cases, a business-oriented credit union will offer better rates and lower fees on savings accounts than larger banks, reflecting its nonprofit nature and focus on community support and member benefits.
' Canadian Business Financing With The Intelligent Use Of Experience '
STAN PROKOP 7 Park Avenue Financial/Copyright/2024
Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil