Capital Financing For Businesses

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Financing a business in Canada can often leave the business owner/financial manager feel like they are operating in reverse gear .The sources of finance for businesses don't have to seem unattainable if you've got some of the basics under your belt... along with some expert advice which never hurts. Let's dig in.

Timelines are not what you might be associating with your company's finance needs. However, the reality is that almost all the financing you require has some sort of timeline attached to it - typically short/ intermediate and long term. And in today's relentless pace of business and technology the ability to adapt mid stream is quite often a necessity.

What then are some of the elements of understanding what financing you need and when. In our clients mind it's usually cost, and of course that's a factor. Some financing sources present a certain element of risk. Take for example Canadian chartered bank financing - low cost and plentiful if you qualify. Those qualifications often come with debt and liquidity ' covenants ' - Failing to meet those has the potential to put your entire business at risk.

 Knowing what the big boys call your ' capital structure ' is important also. - that will affect the amount of debt you can take on. In some cases Canadian business owners and financial managers have found themselves in a position that their industry or the economy creates severe financing pressures - i.e. access to liquidity, etc.

Top experts seem to always agree that arranging financing in advance makes most sense - that sense of desperation never seems to impress the lender/banker/financier

In some cases refinancing your whole business with a focus to turning short term debt into long term might makes sense. Knowing you cash flow capabilities is key here.

What then are those business financing sources, and can we put some timelines on them?

SHORT TERM - typically one year in nature

A/R financing

Inventory finance

Bank lines of credit

Asset based non bank lines of credit

Purchase Order/Revenue Financing

Tax Credit Monetization

Bridge loans

INTERMEDIATE TERM - typically 3-5 years

Equipment financing

Working capital term loans

LONG TERM - 5-25 years?

Commercial mortgages

Mezzanine financing

If you want to reverse gear on financing a business properly seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can ' right track' you to sources of finance for businesses that make sense.