Beyond Banks: Exploring Alternative Funding with Working Capital Lenders

 

YOUR COMPANY IS LOOKING FOR WORKING 

CAPITAL FINANCE!

SOLVING THE WORKING CAPITAL AND CASH FLOW CHALLENGE

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 - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

7 Park Avenue Financial South Sheridan Executive Centre 2910 South Sheridan Way Oakville, Ontario L6J 7J8

 

 

 

"Working capital is the lifeblood of a business. The moment it starts to dry up, the business starts to die." - Richard Branson

 

Struggling to keep your business afloat? Discover how working capital lenders can be your financial lifeline!"

 

7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer 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”

 

 

Working Capital Lenders: Financing Solutions in Canada

 

Working Capital . Very few businesses in Canada can make the statement they have never experienced a cash flow shortage.

 

Working capital finance is crucial for companies to manage these cash flow shortages and ensure financial stability.

 

We’ve toiled ourselves in some of the giant multinationals in the world, and we can assure you it happens to everyone. In some ways, we are saying that we can condone any obsession you have with cash flow - keep it a healthy obsession, please! Let’s dig in.

 

WHAT IS WORKING CAPITAL?

 

After many business owners meet with their financial managers and accountants, we can forgive them for getting confused about the technical definitions of working capital (it’s those ratio guys again!). We tend to view the so-called real world from a different perspective.

 

So, it’s simply a matter of sitting down with clients and pinpointing solutions to finance the ebb and flow of the inventory cycle (raw materials become finished goods) and the collection cycle. It also requires understanding that you should only pay suppliers when they are due.

 

It’s even more recommended that you negotiate special terms if you can, as those special terms equal… CASH FLOW. (Less cash going out). Achieving positive net working capital is appropriately managing your balance sheet, which leads to proper financial health.

 

The bottom line? It’s all about managing and turnover of current assets and current liabilities. The relationship of those balance sheet items creates the ‘ working capital formula ‘.

 

Debt payments are short-term items on the balance sheet and are key to business liquidity. Managing debt payments is crucial for maintaining positive net working capital, ensuring that businesses can meet their obligations even when cash flow is tight.

 

Again, any supplier payment relationship can be negotiated to reinforce our point. By the way, you’re in a position to ask for discounts on prompt payment.

 

We read some great terms for types of clients/customers that affect your whole ‘ payables/cash flow ‘ strategies. They included the ‘dictator' client, the' narrow focus' client, and the ‘ incorrect scorecard’ client. Their ability to put you into a negative working capital position is huge if not adequately managed!

 

The actual days that your money sits in inventory accounts receivable and then gets spent in A/P becomes what is known as your conversion time in how the owner and financial manager can calculate working capital positions. The textbooks call it the ‘ current ratio ‘ formula when calculating working capital .

 

 

MANAGING PAYABLES PROPERLY INCREASES WORKING CAPITAL  AVAILABILITY

 

 

Proper a/p management of terms and loans due within one year measures a company's short-term liquidity.

Lenders often require business bank statements to evaluate a company's financial health and creditworthiness when managing payables and securing working capital loans.

 

 

SPECIALIZED LENDING SOLUTIONS IN ALTERNATIVE FINANCE FOR SHORT AND LONG TERM BUSINESS FUNDING NEEDS

 

 

Remember also that there are various forms of what we can call ‘Specialized Lending’ when it comes to working capital solutions converted into cash funding -

 

These include:

 

 

A/R Financing   --   next day business financing for accounts receivables

Inventory Loans

Bank Business line of credit

Non bank asset based lines of credit

SR&ED Tax credit financing

Equipment financing / fixed asset financing

Cash flow loans

Royalty finance solutions

Purchase Order Financing

Short Term Working Capital Loans / Merchant Advance Short term   business loan  structured as installment  loans typically for a 12-month term

Securitization

 

The best working capital loans and small business loans, in general, are evaluated based on rates, fees, and the overall borrowing experience, ensuring that small business owners can make informed financial decisions around  funding everyday business expenses.

 

Commercial real estate loans are significant business funding options, providing substantial amounts for property-related investments.

 

A line of credit is beneficial for managing short-term expenses and cash flow fluctuations. It offers flexibility by accruing interest only on the amount withdrawn.

 

Merchant cash advance is a quick funding solution leveraging credit card sales, allowing businesses to borrow against future earnings. Different lenders require a minimum credit score, ranging from 500 to 660, which affects loan eligibility.

 

A personal guarantee is crucial in securing working capital loans, as it affirms the borrower's responsibility to repay if the business defaults.

 

Small business owners can benefit from various financing options to maintain and grow their operations. Working capital loans for startups are available, tailored to support new ventures regardless of their industry or operational duration.

 

CANADIAN CHARTERED BANK SOLUTIONS AND MERCHANT CASH ADVANCES

 

 

And let’s not forget COMMERCIAL BANKING FACILITIES if your firm qualifies.

 

These specialty lenders are focused on quick approvals and asset monetization and can often bring significant expertise to your business via their own industry knowledge. Canadian chartered banks also offer commercial real estate loans as funding options, highlighting their importance for business growth.

 

That deeper understanding means only one thing: more business credit for your firm.

 

3  UNCOMMON TAKES ON WORKING  CAPITAL LENDERS

 

 

1. They act as strategic partners, offering valuable insights beyond just funding.
2. Working capital lenders can help businesses optimize their supply chain efficiency.
3. Some working capital lenders specialize in specific industries, providing sector-specific expertise.

 

 

KEY TAKEAWAYS

 

• Liquidity management: Understanding how to maintain optimal cash flow for daily operations
• Collateral valuation: Assessing the worth of assets used to secure funding
• Risk assessment: Evaluating a business’s creditworthiness and repayment capacity
• Repayment terms: Structuring flexible payment schedules aligned with cash flow cycles
• Industry-specific lending: Tailoring financing solutions to unique sector requirements

 

CONCLUSION

 

Working capital lenders empower businesses to thrive by unlocking the potential of their assets and cash flow.

 

Small and SME sectors are seeking more financing to achieve positive working capital. Time is better, and they want to grow. Hopefully, we have shown that the fix is in for enough cash to fund your day-to-day operations. Small business owners can benefit from working capital loans to achieve positive working capital and support their growth.

 

Call 7 Park Avenue Financial , a trusted, credible, experienced Canadian business financing advisor who can assist you with your financing needs .

 

FAQ

 

How do working capital lenders differ from traditional banks?

Working capital lenders typically offer more flexible terms, faster approval processes, and specialized industry knowledge than conventional banks. They focus on short-term financing needs and often consider a broader range of factors when assessing loan applications.

 

 

What types of businesses can benefit from working capital lending?

Businesses of all sizes and industries can benefit from working capital lending, particularly those experiencing seasonal fluctuations, rapid growth, or temporary cash flow challenges. It’s especially useful for companies with high inventory needs or long payment cycles.

 

How quickly can I access funds from a working capital lender?

Many working capital lenders provide fast access to funds within a few days to a week after approval. This quick turnaround can be crucial for businesses facing time-sensitive opportunities or urgent financial needs.

 

What collateral is typically required for working capital loans?

Collateral requirements vary depending on the lender and loan type. Some working capital loans may be secured by inventory, accounts receivable, or other business assets. However, unsecured options are also available for businesses with strong credit profiles.

 

How can working capital lending help my business grow?

Working capital lending can fuel growth by providing the necessary funds to take on new projects, expand inventory, hire additional staff, or invest in marketing initiatives. It allows businesses to seize opportunities without depleting their cash reserves.

 

What is the typical interest rate for working capital loans?

Interest rates for working capital loans vary widely depending on the lender, loan type, borrower’s credit profile, and perceived risk. Rates can range from single digits to over 20% APR. It’s essential to compare multiple-lender offers to find the best terms for your business.

 

Are there any alternatives to working capital loans?

Yes, alternatives to working capital loans include business credit cards, merchant cash advances, crowdfunding, and equity financing. Each option has its own advantages and drawbacks, so it’s essential to carefully consider which best suits your business needs and financial situation.

 

How does the application process for working capital lending work?

The application process typically involves submitting financial statements, bank records, and business documentation. Many working capital lenders offer online applications for convenience. After review, the lender may request additional information or conduct a brief interview before deciding.

 

Can startups qualify for working capital loans?

While it can be more challenging for startups to qualify for working capital loans due to limited operating history, some lenders specialize in financing new businesses. These lenders may focus more on the business plan, market potential, and the founder’s experience rather than solely on financial history.

 

What happens if I can’t repay a working capital loan on time?

If you’re unable to repay a working capital loan on time, it’s crucial to communicate with your lender immediately. Many lenders are willing to work out alternative payment arrangements or restructure the loan to help you avoid default. However, failing to address the issue can result in penalties, damage to your credit score, and potential legal action.

 

What factors do working capital lenders consider when evaluating loan applications?

Working capital lenders typically evaluate factors such as credit score, cash flow history, accounts receivable aging, inventory turnover, and overall business performance when making lending decisions. They may also consider industry trends and the business’s growth potential.

 

How do working capital lenders determine loan amounts and terms?

Loan amounts and terms are often based on the borrower’s creditworthiness, cash flow projections, and collateral value (if applicable). Lenders may use metrics like accounts receivable turnover or inventory levels to calculate appropriate loan amounts that align with the business’s working capital needs.

 

What role does technology play in modern working capital lending?

Technology has significantly streamlined the process, enabling faster application processing, automated underwriting, and real-time monitoring of borrower financials. Many lenders now use AI and machine learning algorithms to assess risk and tailor lending solutions more accurately to each business’s unique needs.

' 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