Trade credit and working capital are consistently one of your company’s biggest obstacles to innovation and growing sales and profits. What can be done through a traditional or alternative method to ensure that your company has all the financing it needs to generate growth? Let’s examine some of those solutions.
You can’t find it if you don’t know what you’re looking for. What do we mean by that? Simply put, cash flow, working capital, and business financing can sometimes be “excess” terms that mean various things to various people. Therefore, you should focus on the need first, not the solution. Fortunately, those needs can be divided into several categories as follows: day-to-day operating capital, immediate growth needs for new opportunities, equipment and asset acquisition, refinancing of tangible assets.
The easy-to-use solution is to apply for bank financing authorized in Canada. Businesses with strong balance sheets, earnings, established history and additional collateral etc. can most of the time find all the financing they need with one of Canada’s licensed banks.
That’s easy for us to say, but most of the customers we know can simply qualify for all the business credit and working capital they need to survive and grow. They usually have some traditional financing but not enough or, in a more serious case, do not qualify for traditional bank loans in the Canadian landscape.
When the going gets tough, the tough get going is the expression, so it’s all about getting a little ‘creative’ in your quest for working capital.
If your business has assets and growth prospects, we strongly believe that you can get most, if not all, of the financing you need. This financing can be obtained in several ways. You can monetize your current assets through a working capital facility for accounts receivable and inventory. If set up correctly, you should congratulate yourself that you’ve just traded in unlimited working capital, as these facilities allow you to borrow on an ongoing basis relative to the size of your current asset investment in accounts receivable and inventory. We refer to the generalization of terms such as cash flow, working capital, etc. The loans just described are better known as asset-based loans, and in many cases, they can also cover purchase orders and new contracts.
Equipment financing and sale-leaseback financing for new and owned/lien-free equipment are excellent solutions for acquiring or refinancing capital acquisitions. In Canada, lease financing is available for all asset and credit qualities for any amount from $1,000.00 to $1,000,000.
Although most of the clients we discuss working capital needs with are private companies, your company could be public, as a result, you might be in a position to consider an equity line of credit, with equity issues being your equity.
If your business has revenues below $5 million and is privately owned, you should consider the best financing available in Canada: the government-backed BIL/CSBF loan backed by our good friends in Ottawa. Loans up to $500,000.00 are available for tangible assets such as equipment, leases, real estate, etc. You can even be a new company and qualify. The financing rate is incredibly attractive, the guarantees are limited, and the terms and structure are flexible.
It’s always about the bottom line, so what’s our bottom line today? You simply need to focus on what type of financing you need, determine if you qualify for traditional financing, and whether or not to get creative with a multitude of solutions available. .
Confused about the Canadian business financing landscape and what and who is waiting for you. Speak to a trusted, credible and experienced business financial advisor who will guide you through the maze to what we believe will be the right solution for your business.