Difficulties in obtaining a commercial loan or business financing for your established or start up firm in Canada? First of all you’re not alone, and secondly it’s because you’re what’s known as a ‘ story credit ‘. That’s the term that commercial lenders use in Canada when financing needs to be structured uniquely to your firm’s current situation /status. Let’s explain!
Given that our Canadian chartered banks tend to be the first ‘ go to ‘ when you’re looking for financing it’s no surprise we often hear the term ‘ where to go when the bank says ‘ no’ .. ‘ .. or never.
So when the business owner finds himself or herself in that situation it clearly is a time when they are looking for some real world advice on financing solutions that still might be available. And they are available, it’s just that you need the help an expertise to find and access them successfully.
In a lot of situations we see when talking to clients it’s about not getting enough. By that of course we mean that you can view your financing as your firm’s need to be fed, it’s your job to ensure that appetite is satisfied.
The concept of a story credit still pertains sometimes to traditional financing, but more often than not it comes under the umbrella of alternative finance. It’s simply that your firm, for whatever reason, is not ‘ GRADE A ‘ today. So you need to properly explain ‘ the story’
When you’re a ‘ story credit ‘it’s never as important to ensure you are prepared when you are looking for business financing. This is definitely not the case of looking in the yellow pages and making a call – there a bit of work and preparation required! In fact it’s been our observation that a lot of clients we meet have failed in the past to raise the financing they need simply because they present their story properly or fail to document correctly their need for financing.
It’s important also to differentiate between equity and debt financing- we’re focusing in our discussion here on debt financing and asset monetization. Top finance experts agree that debt financing is pretty well always more costly than equity financing, but the wrong type of debt financing has disastrous consequences.
Don’t get us wrong , we’re all for more equity, it’s just that the journey in dealing with angel investors, friends and family, and initial public offerings or capital pools and VC’s can be one of the longest roads you’ll take .
There are some sources of debt financing that in fact can be quite creative that you may wish to explore – these might be Community Futures loans, Royalty Financing, loans from high net worth private investors, and even the government?
Did we just say the government?! Well in facto for many firms the government small business loan is a great way to access capital in your start up or early stage. Close to 8000 firms a year, including your competitors, rely on this program which offers great rates, terms, and structures and low personal guarantees.
Other forms of ‘ story credit’ financing when accessing a commercial loan.
Supply chain/PO Finance
Asset based non bank lines of credit
Financing SR&ED tax credits
Leasing Companies which consider less than ‘GRADE A ‘credits
Our key point today? It simply that if your firm has a unique challenge, or is in the throes of a turnaround you still are eligible for commercial loan and asset finance in Canada.
Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your story credit business finance 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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