Working Capital Financing: Key to Sustained Business Growth | 7 Park Avenue Financial

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YOUR COMPANY IS LOOKING FOR CANADIAN SOURCES OF WORKING CAPITAL AND CASH FLOW FINANCING! 

How Working Capital Financing Can Transform Your Business Overnight

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the biggest issues facing business today

                              ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CONTACT US  - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

                           EMAIL - sprokop@7parkavenuefinancial.com

Working capital financing is an essential strategy for businesses seeking to enhance their operational liquidity and foster growth.

Unlock your business's potential with smart solutions to meet everyday financial challenges!

7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer  WORKING CAPITAL FINANCING    solutions that solve the issue of cash flow and working capital  – Save time and focus on profits and business opportunities

Avoid Cash Crunches: Top Benefits of Working Capital Financing

INTRODUCTION

Sources of financing require business owners & financial managers in Canada to get 'hard-wired' into real-world accessible financing to solve their working capital finance and cash flow challenges. Let's dig in.

Working capital financing is a business financing solution that allows businesses to maintain short-term obligations and capitalize on growth opportunities without the challenge of cash flow shortages. By covering short-term operational needs, working capital loans and other short-term financing solutions offer a lifeline to businesses.

 
GROWTH FINANCING 

Funding for your business typically revolves around growing your sales and staying a step ahead of the competition.  Businesses in Canada's SME sector (small to medium enterprises) represent the largest majority of businesses in Canada that need to finance working capital

 HOW DO CHANGES IN WORKING CAPITAL AFFECT YOUR ABILITY TO GROW SALES OF PRODUCTS AND SERVICES 

Those firms that have been in business a while, are growing their sales, and have the ability to sell products in other geographies are always strong candidates for new financing.

But changes in working capital needs will often require higher investments in balance sheet accounts such as a/r and capital equipment needs in the fixed assets area of your business. Your financial statements will tell the story around issues such as long term debt capacity and whether your firm has enough cash to fund operations and consider growth financing.



Tapping into financing sources and lines of credit must, for most business owners and financial managers in Canada, seem like finding the holy grail of financing. We're far past the 2008 recession, but we are in Covid 19 pandemic times also, and most businesses still find finance options inaccessible to reverse negative working capital.

Most business folks associate Canadian banks as the sole source of business financing. When we meet with clients, who have been denied bank loans, we can, of course, commiserate. Is there a solution?

The bottom line quite frankly is that Canadian businesses is looking to alternative sources of financing for working capital, cash flow, and asset acquisition. The Canadian government has a full-scale bank that is a non-brick and mortar bank, i.e. not branches, and they are committed to providing working capital and equipment financing.

However, the bottom line reality is that if you can access business financing, you need you should consider non-bank financing because it is these firms that seem to be the current bench strength in asset and receivable financing - these firms include:

Leasing companies - (Note that top experts tell us that machinery & equipment are almost always at the top of the list in new financing needs). Right behind that are investments in computers, software and other technologies

Asset-based lenders - equipment, receivables and inventory - non-bank line of credit solutions for short term financial health


Purchase Order and Inventory financing firms


Factoring Companies - i.e. accounts receivable financing - That ability to get a/r converted into cash is key to day-to-day funding success when cash is tied up in receivable investments.



Tax credit monetization firms - i.e. SRED/SR&ED tax credit financing helps recover cash flows from r&d investments

When we talk to clients, they often use the term 'government grants and loans' - We feel that term is not realistic, in that that the only two real-world programs out there are the Canadian SR&ED program, which is the non-repayable grant for R&D, and also, the Government Small Business Loan.

 Net Working capital financing in our terms means several obvious solutions - it's all about addressing the ' cash conversion cycle ' in your business as well as the related working capital management of current liabilities such as accounts payable


Monetizing your current assets such as receivables and inventory - it's short term balance sheet financing that works


Cash-flowing items such as SR&ED credits


Entering into a government  term loan/business loans via the Canada Small Business Financing Program


Negotiating a working capital/receivables financing facility - which in larger dollar terms is referred to as an asset-based lending (ABL) arrangement.

These facilities provide a significant business credit line on terms far more attainable than traditional bank-type financing. Asset-based lending is leading the charge in the revolution in Canadian business financing.


When looking for financing sources for working capital and cash flow, you understand the meaning behind the jargon. Determine whether you are looking for liquid operating capital or a longer-term working capital solution. Real estate typically requires long-term financing via commercial mortgages or business loans.


A recent BDC study concluded that 1/3 of all businesses in Canada have difficulty accessing financing to run and grow their business as well as managing their assets and liabilities -  Is that you?

KEY TAKEAWAYS -  WORKING CAPITAL  

CONCLUSION  

Call 7 Park Avenue Financial,  a trusted, credible, and experienced financing advisor who can guide you through the Canadian working capital financing solution  maze and determine the best cash flow and source of financing for your long-term growth and profits

FAQ: FREQUENTLY ASKED QUESTIONS /  PEOPLE ALSO ASK  / MORE INFORMATION  

What is working capital financing and how can it benefit my business?

Working capital financing is a type of loan intended to finance the everyday operations of a company. It helps manage fluctuations in revenues and expenses, ensuring smooth operational flow.

How does working capital financing differ from long-term loans?

Working capital loans are intended for short-term needs rather than long-term investments, focusing on covering operational expenses like payroll and inventory rather than funding capital expenditures.

Can startups qualify for working capital financing?

Yes, startups can qualify for working capital financing, often through specialized loan products designed to handle higher risks associated with new businesses. A  bank loan or a revolving credit facility is typically offered to firms with established sales and credit histories.

What are the typical interest rates for working capital loans?

Interest rates for a company's working capital funding vary widely based on the lender, the credit rating and the overall creditworthiness of the business, and the type of financing obtained.

How quickly can I access funds once approved for working capital financing?

Access to funds can be very quick, sometimes within 24 to 48 hours, depending on the lender’s processes and the type of loan.

How do I calculate the working capital requirement for my business?

Calculating your working capital requirement involves analyzing current assets and liabilities on the company's balance sheet  to determine your net working capital needs.

What is the impact of poor working capital management?

Poor management can lead to cash flow problems, affecting your ability to operate effectively and possibly leading to financial instability.

Are there any alternatives to traditional working capital loans?

Yes, alternatives include trade credit, factoring, and merchant cash advances, which might be suitable depending on your business's specific needs.

What role does credit score play in securing working capital financing?

A good credit score can help secure better terms, including lower interest

Is working capital financing suitable for all types of businesses?

While beneficial for many, it might not be suitable for businesses with stable cash flows that do not require short-term financing solutions.

What are the risks involved in working capital financing?

Risks include potential debt accumulation if the financing is not managed properly and the possibility of dependency on external financing for operational expenses.

How can working capital financing improve a company's liquidity?

It provides immediate funds that can be used to cover short-term operational needs, thus improving the company's liquidity and operational flexibility.

How is working capital financing perceived by financial institutions?

Financial institutions view it as a part of normal business operations, offering various products tailored to different types of working capital loan soluitons that  businesses need for their specific needs.