Business finance options in Canada. We constantly hear the term ' out of the box thinking ' these days, denoting some level of creative. When it comes to alternative financing a number of solutions are available that are non traditional in nature.!br>
However a number of these finance strategies get more and more traction every day. So yes, they are 'out of the box ' to a certain degree, but we can guarantee you there are no 'dark secrets '. Let's dig in.
Let's take a look at some methods to finance your business that might be ' alternative ' in nature. Every successful business requires some level of owner equity. Many businesses are started by the use of personal assets which are monetized. We've said time and time again that it's important to separate your business and personal life when it comes to finances.
So while selling or liquidating assets might be considered an ' alternative ' strategy the reality is that your personal resources become completed, they are at risk if there is a business failure and your all important personal credit history might unravel. So yes, it's important to commit equity to a business, combined with the right amount of debt. Ensure though that assets you're tapping are in the right amount and that will help attract the correct amount of debt financing you need.
Many businesses that can't be funded by banks are in fact eligible for bank financing! What do we mean by that -simply whether you consider it ' traditional' or ' alternative bank government guaranteed loans are a great way to finance fixed assets, leaseholds, technology requirements, etc. Bottom line - investigate the SBL program.
We constantly run into many businesses that are financed by credit cards. Here it's a double edged sword. Business credit is accessible - caution must be taken to use the right type of cards and to further ensure your personal credit history will not be tarnished by over use of credit.
Certain companies are great candidates for high net worth investors, many of whom are termed ' Angel' investors. They look for good opportunities with firms that have growth and profit potential. Many have experience in the industry you are in, which you benefit from via external expertise. The biggest challenge in Canada is finding Angel investors and understanding they will demand an ' equity ' or ownership role in your business.
Over the years we've worked with a number of clients who have utilized the capital pool or reverse take over option for new financing. Our own experience is that this often does not work, but done properly your firm is certainly more visible to the public and you have the opportunity to attract additional capital.
Many business owners and managers don't realize they can bulk up on cash simply by selling accounts receivable. This process immediately monetizes A/R into cash, and although more expensive is much cheaper than giving up control and equity ownership. Receivable financing, done right is a solid alternative strategy used by thousands of corporations, large and small, everyday. Our recommended solution in this area is Confidential Receivable Financing , providing you with unlimited credit against your sales and allowing you to bill and collect from your own clients without any third part interference.
Heard of Royalty Finance? We rarely see clients use this method of financing, but it's certainly up for consideration. It simply allows you to borrow against future sales which create a win / win strategy for your investor/lender and allows you to avoid debt and grow your company.
Never forget that your suppliers/key vendors are great sources of capital. Just negotiating better payment terms creates business cash flow. In certain cases you might end up considering some sort of more strategic relationship which is of future benefit.
Traditional finance sources include:
Commercial bank lines
Asset based lines of Credit
Bridge Loans/ Sale Leasebacks
Tax Credit Monetization
Supply chain/PO finance
Which traditional or alternative business finance options will provide your company with the capital you need. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your capital needs.
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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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