Business financing options in Canada. Boy is it difficult to learn to love something that always seems so elusive. Is there though, a checklist we can employ to ensure finance funding strategies can properly be put in place? We think there is, so let’s dig in.
Having a strong sense of your current overall capital/ financing structure is important as a starter. That will of course determine the amount of debt your firm can or can’t take on.
Any sort of intermediate or long term debt affects how the banks or other commercial lenders view your firm in the context of additional credit extension. In some cases a more positive solution might be to monetize current assets such as receivables and inventory – these don’t add debt to the balance sheet and simply enhance working capital and cash flow.
A good example of asset monetization. It might inlcude, but not be limited to:
Commercial bank lines
Non Bank asset based lines of credit
Monetizing tax credits
If you’re firm has access to what we can call traditional capital you need to be in a position to understand current interest rate trends in the context of Canadian commercial borrowing.
Another key checklist point is to understand and have a handle on your overall corporate objectives. Are they focused on cash flow and working capital, or building assets and infrastructure to enhance long term growth?
Remember also that depending on the type of financing you undertake that there are always some tax ramifications which should be both understood in the context of talking to your accountants re pros/cons, future liabilities, etc.
Your company’s overall profitability will also affect the type of financing you can undertake. If you don’t have current on ongoing profitability in some cases you have access to business credit – however it will be at a cost. A typical situation might be a firm that is in turnaround mode.
If your firm is in growth mode you need to look out at the intermediate term and determine the amount of working capital levels you need. All companies are in different stages – which ranges from start up to mature and working capital levels, and access to them… differ.
A key factor that many clients we talk to seems to be forgotten on occasion is the fact that you need to plan for future cash fall shortages. Here the old adage of getting financing in place when you don’t need it is important. In some cases it might, but not always, make sense to consider more equity financing from owners. Dangers of additional equity financing include though certain restrictions that will affect you can operate the company in the future.
If a lot of your financing needs are affected by what we could call ‘ external’ forces you need to really focus hard on stability and reliable financing.
In some cases firms with challenges can ‘ refinance the company – i.e. lengthen the term of financing in place, etc.
So, are business financing options and finance funding your ‘ elusive butterfly’? Proper planning helps eliminate the problems your firm encounters for financing success. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your needs.
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.
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