Working Capital Financing Options To Raise Business Capital

It is no longer unusual to hear about start up and small business struggling with the finances of their ventures. More often than not, this does not stem from a lack of proper planning, and from profits that were never realized. There are simply times wherein business capital is no longer enough to cover for all the expenses needed to keep the business operating. And in times like such, business owners need reliable financial institutions that can offer them the working capital financing that they need. In this way, they will not have to waste a day of operations because they do not have money to spend.

Through working capital financing, business owners can have a good range of options when it comes to raising or increasing their business capital. They can select from options like applying for small business loans, making cash advances, credit card factoring, and opening business lines of credit. These are only some of the few financing options that business owners can resort to during those times when they need additional capital for their business.

Among these options, small business loans appear to remain as the most popular. However, it is not all too easy to qualify for a small business loan. A business must have a good credit history to qualify. And to most small business owners, having good credit ratings can be quite elusive. This is because building business credit requires time and time is something that most start up business owners do not have.

This leads most small business owners to consider other alternatives. A merchant or business cash advance is seen as an easier way of gaining additional business capital. So does business lines of credit and credit card factoring. These options do not require good credit scores. What matters more to these options is for small business owners to have good monthly sales volumes. The method of payment and repayment are also less burdensome. Payments and repayments do not come in fixed schedules. Instead, payments and repayments often come as a small percentage of the monthly sales that the business is able to generate.

You can learn more about these working capital financing options through financial firms near your area. You can also go online to learn more about them. Most financing firms already have online presence and these days, you no longer need to physically travel to the nearest financing office to apply for business capital financing options.

Leasing Company – Your Best Choice For Business Equipment Finance: Business Leasing Makes Sense!

Common sense financing, fast approvals and flexibility that makes perfect sense for your firm – that’s why when you want to lease business equipment a leasing company is your best choice for business leasing financing.

If we were to ask you to name ten quick benefits of any type of business financing in Canada we quite frankly cant imaging you would name any other type of finance other then leasing. Just think about it.

Ten, yes ten solid reasons to consider a leasing company for your right choice of asset finance. Let’s recap them: technological obsolescence protection, accounting benefits, cash flow management, potential tax savings, the right to own or not own the asset at the end of the lease, convenience, ability to match the asset financing to its useful economic life, quick credit approval ( boy do we like that one!) and finally often a lower cost and cash outflow.

Whew! That was a mouthful of reasons. Let’s circle back on one of those benefits, the issue of a prompt credit approval.

Canadian business financing got really challenging in the last couple years. Traditional financial institutions that funded equipment such as banks and insurance companies quite frankly simply stopped funding your business leasing needs. The leasing company you probably worked with also borrows, just in case you didn’t realize it. Somehow we all survived and as we head into 2011 the equipment financing industry is on a pretty good roll.

We keep coming back to flexibility when clients ask us about what the best choice options are in business leasing. Always remember that when you choose to finance an asset you can enter into a lease to own scenario, aka a ‘capital lease ‘, or, continuing on our theme of flexibility, you can opt for an operating lease – which simply states your desire to use an asset, not own it. Equipment that depreciates quickly, needs to be replaced due to technology, etc, is the perfect choice for an operating lease option.

Asset financing from your business comes out of very different needs – it might be a photocopier for the office, (or computers), equipment for your shop floor, and, even a commercial jet for your corporate meetings! (Well, we can dream, cant we?!). Our point is simply that any type of asset can be leased, and often bundled in with other ancillary services such as installation, maintenance, warranty, etc. Again, there’s our flexibility again.

Do you have a personal business relationship with the hundreds of lease companies in Canada? If you do we’re jealous, and you obviously have a lot of time on your hands. If you don’t, speak to a trusted, credible and experienced Canadian business financing advisor who can ensure those many benefits of business leasing can be matched with the leasing company that suits your needs.

Stop Me If You’ve Heard This But Isn’t Business Credit Challenging and What’s Asset Based Finance?

It is always surprising to us that asset based lending is still probably less than 5% of Canadian business credit while in the U.S. it accounts for hundreds of billions of dollars of ongoing business financing.

However the trend is reversing and new transaction are being completed everyday in this asset financing category. Canadian businesses who need financing in excess of 250k (the upper limit is almost unlimited) can benefit from this relatively new Canadian business financing strategy.

Clients always have questions as to what the financing actually is and, more importantly, how it works and does their firm qualify.

ABL is simply A business loan secured by collateral (assets). The line of credit, is secured by inventory, accounts receivable and/or other balance-sheet assets, and is non bank in nature.

Let’s address the qualification issue first – the reality is that if your firm has business assets in receivables, inventory, equipment, and even real estate those assets can be monetized into a business line of credit that focuses on the asset, not the overall quality or condition of your balance sheet.

We are of course referring to Canadian chartered bank lines of credit that provide a similar and more often than not less expensive form of financing via revolving lines of credit. However most business owners know those facilities focus on balance sheet and income statement strength, ratios that must be met, and heavy emphasis on personal covenants and outside collateral. That is not asset based lending relative to what we are talking about!

Your asset based lending financing facility is secured by business assets. These facilities are typically available through private finance firms that are non-bank in nature. One of two of Canada’s banks offer this type of financing outside their normal business banking, but qualifications and deal size are still somewhat challenging to meet in our opinion.

When you negotiate an A B L facility (that’s the acronym the industry uses) you and the lender agree up front on the market value of your ongoing receivables, inventory, and unencumbered equipment. That collateral becomes the essence of your financing and drawdown capability.

So why is this all different from a bank? The answer is simply – banks have regulated formulaic methods of financing business – in fact many would agree that bank business credit got increasingly difficult to get since the 2008 worldwide debacle.

Finance firms offering asset based lending are not regulated in the same manner, do business in almost every industry in Canada, even those that are deemed ‘ out of favor ‘and the management of these firms typically have years of experience in lending against receivables, inventory (yes, inventory!), with the additional enhancement of allowing you to monetize your credit facility by including some borrowing against your equipment for ongoing working capital and cash flow.

Speak to a trusted, credible and experienced business financing advisor in this specialized area and find out how a new financing facility can put you head and shoulders above your competition in overall financing strategy.

Can A Franchise Finance Business Loan Be Creative? Here’s How Canadian Franchise Finance Works!

Is it actually possible to get ‘ creative ‘ when considering a franchise finance business loan for you new Canadian role as an entrepreneur in franchise financing? There are some tried and trusted rules we use in the franchise lending area, but a little creativity has never hurt anyone we believe!

If you haven’t considered how to finance your new business in the franchise industry then we feel it’s probably a little too late in some ways, as your ability to finance your business properly we think has a lot to do with the ultimate growth and success of your business. There are very focused lending sources for the franchise area of financing in Canada – the trick of course is to know what they are and more importantly how you can navigate the ‘ maze ‘ successfully.

The reality is that if you have some industry experience in your new business and a proper finance plan you have a much better chance of financing your business properly.

So, who can you turn to in terms of creativity and resources for franchise financing? Clients are amazed when we tell them the most creative partner in franchise financing in Canada is none other than the Canadian government!How could that possibly be? Simply because a program guaranteed by the government and administered by the banks could not be any more creative than this.

The program is the ‘BIL’ loan program, and it provides you with financing up to 350k for your new business. Are the terms onerous? Hardly! The essence of the program is a 5-7 year term loan, with great rates, limited personal guarantees, and some other elements of flexibility. If that isn’t creative then we don’t know what is!

Naturally all the creativity in a business loan of that type for your franchise finance scenario should not be reliant on just one lender – the other lender is someone you know very well. Yourself. That’s simply because when you look at the total financing of a franchise in Canada the two components are simply debt (the funds you have borrowed) and the equity, or money you have put in yourself. These equity funds, i.e. your commitment to the business, typical come from savings, the proverbial ‘ friends and family ‘ support, and investments or collateral that you have available.

Getting back to our key subject of creativity, our above noted BIL loan program only covers certain aspects of a franchise finance scenario. You can augment that loan with flexible equipment financing that has low down payments and extended amortization terms, as well as, in some cases, a working capital term loan.

We never forget to remind clients that the franchise financing plan is a two stage process, acquiring the business, and making sure they have some capital and funding to operate and grow their new business.