Beyond Banks: Exploring Alternative Business Financing Solutions

 

 

YOUR COMPANY IS LOOKING FOR  CASH FLOW AND WORKING CAPITAL

SOLUTIONS!

Business Funding Solutions For Canadian Companies Seeking Business Capital

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the  biggest issues facing business today

ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS FINANCING OPTIONS?

CALL NOW / CONTACT US - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

 

 

 

Unlock your business potential with tailored financing solutions that work for you.

 

7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Business Financing and working capital solutions  – Save time and focus on profits and business opportunities

 

7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”

 

 

CANADIAN BUSINESS FINANCING SOLUTIONS

 

 

Cash flow and working capital solutions in Canada. If there is one myth about success with growth and financing solutions, sales and revenue growth will get you there in small business. It won't!

 

Getting The Bank Or Business Lender 'On Side': Business Financing Solutions

 

 

As a Canadian business owner and financial manager, I know it takes more than that to get lenders ( bank and non-bank) to feel good about financing your firm and approving business credit for cash flow working capital finance solutions your firm might require.

 

It’s about  ‘ protecting ‘ their financing and collateral interests in your company.

 

Unfortunately, there are ways to be totally  ‘ not great ‘ at proving that you’re an excellent cash flow business owner/manager.

 

 

ASSET TURNOVER HELPS DETERMINING WORKING CAPITAL HEALTH

 

 

In financing, more often than not, it’s about ‘ the assets ‘.   So, while we can easily get caught up in fancy formulas such as EBITDA and other calculations, the reality is that your assets and their turnover determine your real working capital health.

 

Mismanaging those assets makes you a great ‘ mismanager ‘ of cash flow and working capital.

 

One Of America’s great cash flow and investment managers ( Warren Buffett ) once said:

 

 

‘Does management think the tooth fairy pays for (future) capital expenditures’ 

 

Not all companies do the proper amount of planning, so when the inevitable cash flow crunch happens, a business is usually caught off guard because of that lack of planning.

 

Understanding asset turnover will allow the business owner and financial manager to address needs and identify proper business finance solutions. Professional accountants and advisors call this whole process the operating cycle, also called cash conversion.

 

It's no secret to any business owner that it takes a fair amount of time for a dollar to flow through the company coffers from the time you create products or generate services to the payment of your final invoice/contract.

 

At 7 Park Avenue Financial, we look at the whole picture and determine the critical relationships and timing between generating sales from inventory or providing services and turnover in payables and receivables.

 

Knowing the exact numbers in those relationships helps us determine financing solutions for our clients.

 

While our clients might often view these calculations as complex, they simply know some basic formulas for how many days inventory is outstanding, how long it takes to collect receivables (that's day's sales outstanding ‘ ), and finally, days payable.

 

Not all our clients understand that simply slowing their payables creates a positive cash flow. The formula for this is average payables multiplied by the amount of time you are looking at and then divided by your cost of goods.

 

If there is one very important number to remember relative to some of the calculations we have shown, it is simply that receivables should rise accordingly.

 

For example, if sales are stable or going down and receivables are up, that is bad! There should be a strong correlation between sales growth and receivables and inventories.

 

 

Naturally, term debt lenders focus on your long-term viability in generating payment for their loans. At its very simplest it’s about your cash flow from the management of your working capital accounts (A/R and inventory) that pays bills, not the fancy EBITDA formulas that reflect how much your assets have actually depreciated.

 

 

So, when profits and EBITDA calculations are positive, we meet clients who still have a challenge paying suppliers and meeting payroll obligations.

 

 

So we are saying that it’s essential to understand that sales revenue and profits and the ‘ value ‘ of your company if you’re focusing on just those, have made you a great Mismanager of cash flow and working capital.

 

 

It’s all about knowing how your firm can access cash from assets and plan for future needs.

 

Business credit cards can be useful tools for managing day-to-day business expenses and building a strong credit profile. That’s where a bit of planning comes in—putting together a sales and receipts forecast and discussing these needs with a bank or non-bank lender.

 

The biggest mistake we see in this area from clients is that they do not properly analyze the cash timing of collections from accounts receivable.

 

 

HERE ARE BUSINESS FINANCING SOLUTIONS TO NEGATIVE CASH FLOW

 

 

If your cash flows are negative through this planning process, the solutions are pretty clear and limited: Understanding various business financing options is crucial for planning and achieving business milestones.

 

 

Flexible financing solutions can provide adaptable financial options tailored to the dynamic needs of businesses.

 

 

5 WAYS TO ACCELERATE CASH

 

 

1. Take on term debt

2. Have shareholders put in more money

3. Delay payments to suppliers

4. increase sales!

5. And finally -  The  7 Park Avenue Financial favourite  - convert assets into cash via asset turnover focus!!!!

 

 

Converting assets into cash via :

 

 

A/R Financing

Inventory Loans

Access to Canadian bank line of credit

Non bank asset based lines of credit

SR&ED Tax credit financing

Equipment / fixed asset financing

Cash flow loans

Royalty finance solutions

Government Of Canada Small Business Loan Program  - The Guaranteed federal business loan

 

KEY TAKEAWAYS

 

 

• Small business loans form the backbone of many financing strategies, offering flexible terms and competitive rates.
• Invoice factoring allows companies to leverage unpaid invoices, improving cash flow and operational efficiency.
• Equipment financing enables businesses to acquire necessary tools without depleting working capital reserves.
• Lines of credit provide ongoing access to funds, which is ideal for managing seasonal fluctuations or unexpected expenses.
• SBL loans, backed by the government, offer favourable terms for qualifying small businesses seeking substantial capital.
• Working capital loans address short-term financial needs, ensuring smooth day-to-day operations and growth initiatives.
• Understanding credit scores is crucial, as they significantly impact loan approval chances and interest rates offered.
• Collateral requirements vary across financing options, influencing risk assessment and loan terms for borrowers.
• Alternative lending platforms have emerged, providing new avenues for businesses traditionally underserved by banks.
• Proper financial planning and accurate projections enhance the likelihood of securing optimal financing solutions.

 

 

CONCLUSION

 

 

Use our solutions and tips to avoid being a “ MISMANAGER “ of working capital solutions for your firm.

 

Secure financing is critical for ensuring businesses have the capital they need when required. Partnering with a reliable financial institution can provide competitive financing options and support business growth.

 

If you’re looking for cash flow working capital finance solutions for short—or your long-term needs, call  7 Park Avenue Financial , a trusted, credible, and experienced Canadian business financing advisor .

 

 

FAQ

 

What are the main advantages of using Business Financing Solutions?

Business Financing Solutions provide access to capital, improve cash flow, enable growth opportunities, and offer flexibility in managing financial obligations. They can help businesses overcome temporary financial challenges and invest in long-term success.

 

 

 

How can Business Financing Solutions help my company expand?

These solutions can provide the necessary funds for hiring new employees, purchasing equipment, expanding into new markets, or developing new products. Accessing capital through various financing options allows you to seize growth opportunities without depleting your existing resources.

 

 

Are Business Financing Solutions suitable for startups?

 

Many Business Financing Solutions cater specifically to start-ups, including  BDC or SBL loans via lump sum term loan structure, angel investing, and crowdfunding or a small business line of credit. These options can provide crucial early-stage funding, helping new businesses establish themselves and grow in their initial phases.

 

 

How do Business Financing Solutions differ from traditional bank loans?

Business Financing Solutions often offer more flexibility, faster approval processes, and may be accessible to businesses that don't qualify for traditional bank loans. They can include options like invoice factoring, merchant cash advances, or peer-to-peer lending, which may have different requirements and terms than conventional loans.

 

 

Can Business Financing Solutions help improve my company's cash flow?

Yes, many Business Financing Solutions are explicitly designed to enhance cash flow. Options like invoice factoring, lines of credit, and working capital loans can provide quick access to funds, helping businesses manage day-to-day expenses and bridge gaps between accounts receivable and payable.

 

 

 

What documentation is typically required when applying for Business Financing Solutions?

Most lenders require financial statements, tax returns, bank statements, and a business plan. Additional documents for final credit approval may include accounts receivable and payable aging reports, legal business documents, and personal financial information of the business owners.

 

 

How long does the approval process usually take for Business Financing Solutions?

The approval process can vary widely depending on the type of financing and the lender. Some online lenders offer decisions within hours, while traditional bank loans may take several weeks. Factors like the complexity of your business and the amount of funding requested can also affect the timeline.

 

 

Are there industry-specific Business Financing Solutions available?

Yes, many lenders offer specialized financing solutions tailored to specific industries such as healthcare, construction, or technology. These industry-specific options may have terms and requirements that better align with businesses' unique needs and cash flow patterns in those sectors.

 

 

How does my personal credit score affect my ability to secure Business Financing Solutions?

For many small businesses, especially startups, the owner's credit score plays a significant role in loan approval and terms. A higher credit score generally leads to better interest rates and more favourable terms. However, some alternative lenders may place less emphasis on personal credit scores.

 

 

What are the potential risks associated with Business Financing Solutions?

Risks can include taking on debt that your business struggles to repay, potentially high interest rates or fees, and sometimes pledging personal or business assets, or real estate as collateral. It's crucial to carefully evaluate the terms of any financing solution and ensure it aligns with your business's financial capabilities and goals.

 

 

How do Business Financing Solutions impact a company's financial statements?

Business Financing Solutions can affect various aspects of financial statements. Loans and lines of credit increase assets (cash) and liabilities on the balance sheet. Interest expenses impact the income statement, potentially reducing net income. Cash flow statements reflect inflows from financing activities and outflows for repayments. Understanding these impacts is crucial for maintaining accurate financial records and making informed business decisions.

 

What factors should be considered when choosing between different Business Financing Solutions?

When selecting a financing solution, consider the purpose of the funds, repayment terms, interest rates, and associated fees. Evaluate your business's cash flow patterns, credit history, and collateral availability.

Assess the urgency of your funding needs and the potential return on investment. Also, consider the long-term impact on your business's financial health and growth potential. Consulting with a financial advisor can help make the best choice for your situation.

 

 

How can businesses prepare to maximize their chances of securing favourable Business Financing Solutions?

To improve your chances of securing favourable financing, maintain accurate and up-to-date financial records. Develop a solid business plan and financial projections. Work on improving your personal and business credit scores. Build strong relationships with potential lenders or investors. Understand your industry's financial benchmarks and how your company compares. Be prepared to articulate your business model and growth strategy clearly and how you plan to use the funds. Having a well-prepared application package can significantly enhance your credibility with lenders.

' 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