Business Financing Challenges At The Fiscal Cliff ? Navigating Loan Interest Rates And Finance Capital Solutions

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Posted by Stan Prokop

How do you get 'fully funded' to operate or grow? This article can help you achieve business funding and more. A good start is understanding the difference between debt and equity.

It's actually pretty easy today for Canadian busines owners and financial managers to feel that business financing is hardly easy anymore. To put it in the context of recent events in the U.S. the business owners in Canada actually often feel they are at the edge of the ' fiscal cliff '.

And boy does that cliff seem steep sometimes as we see competition in our businesses closing in on us every day. But if your new or emerging competitors are raising financing capital and accessing finance solutions and interest rates commensurate with their credit quality... why can't you?

The answer of course is... you can... if you know how, who to talk to, and are focused on a realistic solution that makes sense for your company.

One of the big mistakes that some business owners / managers make when it comes to financing is that they focus on only one solution ( unfortunately they also might be focusing on the wrong one !) when in fact there are a number of capital and finance solutions that are quite complimentary to each other . As an example we often get calls from existing or potential clients looking for ' inventory financing ‘. While this can in fact be achieved (it’s not easy by the way) the reality is that this type of solution is often best achieved in the context of a ' comprehensive ‘ asset based business line of credit by a non bank finance firm.

We're also assuming that your business is past the ' friends and family' stage which has business entrepreneurs accessing capital via family loans and gifts, credit cards, collapsing of savings, personal lines of credit, etc ... While interest rates on those might be great they typically can only get your business so far - so if you're in it for the long haul, or established already its time to move on - to real business financing!

So... getting ' fully funded ' to operate or grow. What can you as the owner /manager do to achieve that? A good start is understanding the difference between debt and equity. While most people understand that equity means new partners and dilution of ownership they often don't understand that their business is not ready for angel investors and VC’s. So debt financing is the option, but we're talking about debt financing... done right!

Having a solid business plan or executive summary is key to financial funding success. At its most basic it covers off a very simple concept - how you will use the funds and how will financing be paid.

Another key take away for your navigation of debt financing? Simply that a lot of financing solutions bring debt to your balance sheet ; when in many circumstances you can simply monetize assets without bring debt to your financials . Those solutions include:

Non bank lines of credit

Sale Leasebacks

Bridge Loans

Receivable Financing/ Factoring

Tax Credit Monetization

Securitization of A/R portfolios.

Unsecured cash flow loans

Etc! Bottom line - a lot of new capital commensurate with interest rates that makes sense for your firm, and no long term debt on the balance sheet. That's a good thing!

Flexibility is key to proper business financing. Many finance solutions come with higher rates, at least for an interim period. But if they are sustainable and can allow you to take the business to the next level then they just might make a lot of sense. And boy is that better than giving up equity or going down the road of searching for ' investors ' when that solution simply isn’t attainable or doesnt make sense.

Seek out and speak to a trusted credible and experienced Canadian business financing advisor on how you can access finance capital for your firm.


Author Credit Line. Stan Prokop - founder of 7 Park Avenue Financial – Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 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. Info re: Canadian business financing & contact details :