Bank business loan needs in Canada. Whether it's operating capital or financing loans that are ' term' in nature the ability to access 'OPM' (other people's money!) remains a constant challenge for the Canadian business owner and financial manager.!br>
You don't necessarily need a business plan when it comes to sourcing Canadian financing, but you do require what we could simply call a clean loan package when it comes to accessing chartered bank capital. (Business plans relate more to start up financing or equity investments)
We spend a lot of time with clients on the subject of choosing the right bank. Invariably we think they have got it wrong. They're focusing on a logo as opposed to choosing the best business banker that suits their needs.
Truth be told the Canadian owner/manager has an easier ob than our U.S. counterparts searching for the right business finance solutions. Why is that? Simply because our system has it narrowed down to a handful of chartered banks and occasionally a Credit Union or Non Schedule A bank. In the U.S. the myriad of banks within their system make it challenging - they have to rationalize ' money center banks ', 'Savings and Loans ' , 'Regional Banks ' , Community Banks,' etc !
There's a tremendous difference in Canada between retain banking and commercial banking. It's important to focus on the services of commercial bankers, as the lines can easily blur in the SME sector around how business financing is collateralized. We constantly stress to clients that it's important to separate their personal and business finances when it comes to operating and growth capital.
We meet many owners who tell us they have a business line of credit. They're quite surprised when we demonstrate to them that the ' business financing ' that they have in place is essentially lending based on their personal assets and personal credit history.
There are some key factors in choosing bank business loans and financing. While convenience re: geographical location is important it should never be at the expense of losing a strong commercial banking relationship you have in place. You'd be surprised how far we would recommend driving to get the right banker! So bottom line, focus on the relationship, not the fees!
Revolving lines of credit are key to any growing firm's success. They help balance out the investment you make in A/R, receivables, equipment, etc. One of the truest maxims in business banking is that banks only lend generously when your firm needs the funds the least. So here the concept of putting revolving credit facilities in place when you might not necessarily need them is critical!
The 4 C's of credit remain a true constant in lending. They are especially true in the SME sector, and they are character, capacity, credit, and collateral.
Bank business loans typically come in two categories:
Revolving Credit Lines
Bank credit lines, when you qualify, are low cost and cheaper than pretty well all types of financing. In Canada business owners in the SME sector access capital via a combination of means. They include:
Business credit cards
Other alternatives exist for Corporate Canada when bank financing is either not enough of can't be accessed. That includes:
Non bank asset based credit lines
Equipment leases and loans
Tax credit financing (SR&ED R&D Finance)
Government SBL loans
We highly recommend working with a trusted, credible and experienced Canadian business financing advisor who can assist you in putting together a loan package that positively reflects your capital needs. That package would include an executive summary, current and projected financials, Information on the company and owners, etc. Seek the expertise of someone who can fast track you into the mind of the lender in Canada .
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Stan Prokop - founder of 7 Park Avenue Financial – www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing. Info re: Canadian business financing & contact details :
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