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Business financing is a challenge anytime, from the entrepreneur's dream of a small start up to major corporate needs. The current economic downturn makes the above noted challenge even more daunting. Whether a firm is established and doing well, or experiencing financial distress or working capital or growth needs - the challenge remains the same. What is the 'challenge'? Simply speaking it is identifying the proper financing solution , determining whether the solutions is a short term fix or a long term solution , and then, most importantly executing with experience the proper financing solution. The business owner must be able to properly position the current shortcoming as both an opportunity and risk appropriate. Capital for Canadian firms is traditionally much harder to secure in the Canadian banking system. Outside of the aforementioned CSBFL program that is federally underwritten the banks tend to secure small business loans with usually up to 100% of personal collateral. That of course has the customers pledging personal assets, savings, etc. There certainly are no ' templates ' for fast quick borrowing in the Canadian small business banking. Loan criteria is judiciously adjudicated by underwriters on a case by case basis, and as has been noted, relies heavily on the traditional three C's of credit - - character - capacity - capital Proper financing begins with the owners and his advisors ability to identify the current financing challenge. The owner and advisors must provide a compelling reason for the lender to assist in an appropriate financial solution. Borrowing funds of course comes with risk, as those loans must be repaid. Business owners sometimes get caught in the trap of financing long term projects with short term money - they are therefore at the mercy of having to always roll over that debt, and potentially also seeing rates go up, sometimes dramatically. Also, a business can carry only so much debt, at which point cash flow becomes a potential problem if the company is over leveraged. Currently rates are very low for businesses that have access to capital. Therefore in many cases it might make sense to lock into longer term loans in the current attractive rate environment. Who are these 'advisors'? Typically they are internal financial staff, i.e. CFO/Controller, etc, or alternately third part accountants and experienced financial intermediaries with a track record of success. Business Financing is complex - However at the end of the day the financing solutions are actually very well defined - They are as follows: Leases and Term Loans Working Capital Loans Asset Based Lines of Credit Bank credit lines Non bank credit lines Receivables purchasing Inventory Lines of Credit Purchase Order Financing Commercial mortgages Tax Credit financing The business owner, and their advisor, should have a very clear focus - That focus is as follows: What is the best financing solution on either a short term or an intermediate/long term basis for the business. Does the business owner or executive clearly understand all the financial options available - what are the criteria for these different options - what are the rates/terms and structures for each option. Stan Prokop is founder of 7 Park Avenue Financial - www.7parkavenuefinancial.com The company originates business financing for Canadian companies and is a specialist in working capital, cash flow, and asset based financing . In business 5 years the company has completed in excess of 45 Million dollars of financing for Canadian corporations of all size . For information on Canadian business financing and contact details please see : http://www.7parkavenuefinancial.com/Home_page.html
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business financing Canada, working capital for Canadian business,
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