Business Capital Solutions In Canada: Accessing Proper Cash Flow & Commercial Financing

Business capital requirements in Canada often boil down to some basic truths the business owner/financial mgr/entrepreneur needs to address when it comes to financing for businesses.

One of those truths? Knowing the true state of their financial condition and what financing they do and don’t qualify for when it comes to meeting commercial lending requirements in Canadian business.

Business Loans In Canada

Whether you are smaller or start-up firm looking for information on how to get a business loan or a larger established firm looking for growth financing or acquisition opportunities we’re highlighting 3 mistakes that commercial loan seekers like your company need to avoid making when addressing, sourcing and negotiating your cash flow / working capital and commercial financing needs.

1. Understand the true condition of your company finances – These are almost always successful addressed when you spend time on your financials and understand how your financial statements reflect your access to commercial loans & business credit in general

2. Ensure you have a plan in place for sales growth and financial needs as it relates to commercial financing

3. Understand that actual hard facts about cash flow which is, of course, the lifeblood of your company

Can you honestly answer or feel positive about all those 3 points. If so, pass Go and collect $ 100.00!

A good way to address your company’s finance plans is to ensure you understand growth finance solutions, as well as how to manage in a downturn – i.e. not growing, losing money, etc; It’s never fun to fund yourself in an economic or industry downturn such as the COVID pandemic of 2020!

When we talk to clients of new or established businesses it seems they are almost always talking about sales, so the ability to understand and focus on the differences in their profits and cash fluctuations is key.

How do cash flow and sales plans and projections affect the type of financing you require? For one thing sales growth usually starts out by consuming your cash, not generating it. A poor finance plan will drag your business down and addressing financing simply gets tougher and tougher.

Three basics always emerge when it comes to your search for the right business capital and financing.

1. The amount of financing you need

2. The type of financing (debt/cash flow/asset monetization) The business loan interest rate will be dramatically affected by whether you choose traditional or alternative financing solutions. Private business loans in Canada come from non regulated commercial finance companies most often known as ‘ alternative lenders ‘. These lenders are typically highly specialized in one ‘ niche ‘ of business financing and may be Canadian firms or branches of U.S. banks and non-bank lenders

3. How the financing is structured to be manageable with your day to day operations

What Finance Company In Canada Can Meet Your Borrowing Needs & Why Is Capital Important In Business

Let’s identify and break down key financings your firm should know about and understand if they are applicable and achievable to your business. They include:

A/R Financing / Factoring / Confidential Receivable Finance

Inventory finance / floor planning / retail inventory

Working Capital term loans

Unsecured cash flow loans

Merchant working capital loans/advances – these loans are geared toward short term cash needs and are typically one year in duration. Loan amounts are typically 15-20% of your annual sales revenues.

Royalty finance

Asset based non bank business lines of credit

Tax credit financing (SR&ED bridge loans)

Equipment Leasing / Sale leasebacks – Equipment financing in Canada is used by almost 80% of all companies looking to acquire new, and used, assets.

Govt Guaranteed Small Business Loan program – Government Loans in Canada are sometimes referred to as ‘ SBL’, aka Note: BDC Finance solutions are available from this Canadian non-bricks and morter crown corporation. A small business loan via the government-guaranteed loan program comes with true flexibility around term loan duration, market rates, no pre payment penalties, and of course the low personal guarantee that is required by borrowers. These two ‘ government ‘ loan solutions are often perfect for financing a new business.

If you’re focused on not making mistakes in your business finance needs and want to capitalize on the solutions your competitors are probably already using seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your cash flow and commercial financing needs.

Stan has had a successful career with some of the world’s largest and most successful corporations.

His employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) In 2004 Stan founded 7 PARK AVENUE FINANCIAL – He is an expert in Canadian Business Financing.

Alternative Financing Vs. Venture Capital: Which Option Is Best for Boosting Working Capital?

There are several potential financing options available to cash-strapped businesses that need a healthy dose of working capital. A bank loan or line of credit is often the first option that owners think of – and for businesses that qualify, this may be the best option.

In today’s uncertain business, economic and regulatory environment, qualifying for a bank loan can be difficult – especially for start-up companies and those that have experienced any type of financial difficulty. Sometimes, owners of businesses that don’t qualify for a bank loan decide that seeking venture capital or bringing on equity investors are other viable options.

But are they really? While there are some potential benefits to bringing venture capital and so-called “angel” investors into your business, there are drawbacks as well. Unfortunately, owners sometimes don’t think about these drawbacks until the ink has dried on a contract with a venture capitalist or angel investor – and it’s too late to back out of the deal.

Different Types of Financing

One problem with bringing in equity investors to help provide a working capital boost is that working capital and equity are really two different types of financing.

Working capital – or the money that is used to pay business expenses incurred during the time lag until cash from sales (or accounts receivable) is collected – is short-term in nature, so it should be financed via a short-term financing tool. Equity, however, should generally be used to finance rapid growth, business expansion, acquisitions or the purchase of long-term assets, which are defined as assets that are repaid over more than one 12-month business cycle.

But the biggest drawback to bringing equity investors into your business is a potential loss of control. When you sell equity (or shares) in your business to venture capitalists or angels, you are giving up a percentage of ownership in your business, and you may be doing so at an inopportune time. With this dilution of ownership most often comes a loss of control over some or all of the most important business decisions that must be made.

Sometimes, owners are enticed to sell equity by the fact that there is little (if any) out-of-pocket expense. Unlike debt financing, you don’t usually pay interest with equity financing. The equity investor gains its return via the ownership stake gained in your business. But the long-term “cost” of selling equity is always much higher than the short-term cost of debt, in terms of both actual cash cost as well as soft costs like the loss of control and stewardship of your company and the potential future value of the ownership shares that are sold.

Alternative Financing Solutions

But what if your business needs working capital and you don’t qualify for a bank loan or line of credit? Alternative financing solutions are often appropriate for injecting working capital into businesses in this situation. Three of the most common types of alternative financing used by such businesses are:

1. Full-Service Factoring – Businesses sell outstanding accounts receivable on an ongoing basis to a commercial finance (or factoring) company at a discount. The factoring company then manages the receivable until it is paid. Factoring is a well-established and accepted method of temporary alternative finance that is especially well-suited for rapidly growing companies and those with customer concentrations.

2. Accounts Receivable (A/R) Financing – A/R financing is an ideal solution for companies that are not yet bankable but have a stable financial condition and a more diverse customer base. Here, the business provides details on all accounts receivable and pledges those assets as collateral. The proceeds of those receivables are sent to a lockbox while the finance company calculates a borrowing base to determine the amount the company can borrow. When the borrower needs money, it makes an advance request and the finance company advances money using a percentage of the accounts receivable.

3. Asset-Based Lending (ABL) – This is a credit facility secured by all of a company’s assets, which may include A/R, equipment and inventory. Unlike with factoring, the business continues to manage and collect its own receivables and submits collateral reports on an ongoing basis to the finance company, which will review and periodically audit the reports.

In addition to providing working capital and enabling owners to maintain business control, alternative financing may provide other benefits as well:

It’s easy to determine the exact cost of financing and obtain an increase.
Professional collateral management can be included depending on the facility type and the lender.
Real-time, online interactive reporting is often available.
It may provide the business with access to more capital.
It’s flexible – financing ebbs and flows with the business’ needs.
It’s important to note that there are some circumstances in which equity is a viable and attractive financing solution. This is especially true in cases of business expansion and acquisition and new product launches – these are capital needs that are not generally well suited to debt financing. However, equity is not usually the appropriate financing solution to solve a working capital problem or help plug a cash-flow gap.

A Precious Commodity

Remember that business equity is a precious commodity that should only be considered under the right circumstances and at the right time. When equity financing is sought, ideally this should be done at a time when the company has good growth prospects and a significant cash need for this growth. Ideally, majority ownership (and thus, absolute control) should remain with the company founder(s).

Alternative financing solutions like factoring, A/R financing and ABL can provide the working capital boost many cash-strapped businesses that don’t qualify for bank financing need – without diluting ownership and possibly giving up business control at an inopportune time for the owner. If and when these companies become bankable later, it’s often an easy transition to a traditional bank line of credit. Your banker may be able to refer you to a commercial finance company that can offer the right type of alternative financing solution for your particular situation.

Taking the time to understand all the different financing options available to your business, and the pros and cons of each, is the best way to make sure you choose the best option for your business. The use of alternative financing can help your company grow without diluting your ownership. After all, it’s your business – shouldn’t you keep as much of it as possible?

Herbal Skin Care – The Benefits of Using True Herbal Skin Care and Not “Natural” Synthetic Products

Herbal skin care – the benefits of using true herbal skin care and not “natural” synthetic productsDon’t you just hate it when the big pharmaceutical corporations loudly insist that their chemical products are safe in skin care creams?Even when they must know natural ingredients are safer, softer and superior!It happens all the time, of course. And herbal skin care products are an excellent example.Herbal treatment for the skin is ancient and effective. Egyptian elites 2000 years before Christ were successfully using sophisticated herbal skin care to maintain stunning, youthful complexions in the harsh heat of the Nile valley. You can clearly see this in hundreds of tomb painting, preserved in the dry desert.Yet, in modern times, the chemical industry scorns the wealth of information freely given away by herbal doctors and constantly puts out disinformation about the effectiveness of herbal products and disingenuously proclaims the ingredients in their pharmaceuticals are better, more targeted and (even) environmentally friendly. Plus they warn that herbal skin care ingredients can clash in your body’s systems with legitimate, tested and safe synthetic medicines.This is nonsense, of course. They should be warning us against their ingredients! And let me show you why.Just take three groups of ingredients found in most synthetic skin care products. It doesn’t take much investigation to find they are toxic and harmfully.Sulphates such as Sodium Lauryl Sulfate and Ammonium Lauryl Sulfate are commonly found as cleansers in many shampoos and shower gels. They’re cheap and strong. But they can irritate the skin. And Sodium Lauryl Sulfate is linked to cancer. They contain 1.4 dioxane, which is a known toxin and carcinogen that is easily absorbed through the skin. Members of the Ethoxylates, they are unstable and break down in direct sunlight, forming the skin-damaging free radicals.Chemical preservatives like formaldehyde, methylisothiazolinones and DMDM hydantonin are put into many synthetic skin care creams, even though it’s better to use natural alternatives such as Vitamin E, grapefruit seed extract, honey and sandalwood essential oil. True, these natural compounds last a shorter time than most chemical preservatives, but they adequately preserve herbal skin care products and give you the benefit of their own nourishing qualities.Propylene Glycol (PG) & Butylene Glycol are petroleum plastics widely used in car anti-freeze and skin care, despite the fact that they can penetrate your skin and weaken protein and cell structures. PG is so strong it dissolves stainless steel in 48 hours and can only be kept in plastic containers. The EPA insists it only be handled wearing protective gloves, clothing and goggles. But some skin care manufacturers use concentrations of up to 20 percent of it.I could make a very long list of widely used, dangerous chemicals, but I think you can see that there is a trend here. It’s this. The big chemical companies don’t mind putting dangerous toxic chemicals into your skin care products.And the reason is obvious — these are thick-skinned businesses (no pun intended) that exist simply to return profits to shareholders. Synthetic chemicals are cheaper than herbal ingredients. So the corporations chose to ride out any litigation from their small-fry customers, and keep producing synthetic skin care at the lowest possible price. Lower than good herbal skin care creams and lotions.Alarmingly, there is no legal definition of “natural”. So a corporation can make a 100 percent synthetic skin care product and yet call it “natural”. To someone who doesn’t know, it may seem like it is a herbal skin care item.Thankfully most of their ingredients have a molecular structure which makes it impossible for them to penetrate your skin, even when you pat on and rub in the creams and lotions. But these chemicals still sit on the surface of your face and arms, where they clog the entrances to your pores and trigger allergies and health problems. (Well, “problems” is a little mild, as some chemicals in skin care products, such as Sodium Laural sulfate has been shown to be fatal.)We’ve got to be very, very careful if we choose to use synthetic skin care products rather than herbal skin care.Actually, in conclusion, I would always recommend herbal treatment for the skin of anyone who asks me. There are excellent herbal skin care companies out there. They are usually small and efficient, and they can make healthy products at a reasonable price even though they are forced to compete with the giant pharmaceutical corporations which have the advantage of dirt cheap ingredients and economies of scale. I’ve written more about them at my web site, elegant-skincare.com and I invite you to visit and learn more about this unhappy situation.