Business financing in Canada. How to finance a company is in fact a question that many owners and financial managers ask themselves… in hindsight.

Hindsight as we know is… great! But isn’t there a better way to assess your options and alternatives in the Canadian business financing landscape. We tell clients we think there is. Let’s dig in.

Your timeline perspective when you approach your overall finance strategy is key. Simply speaking are we talking about short term, intermediate or long term financing alternatives and solutions? Short term for the purposes of our discussion tends to be 1 year, while intermediate could well be 3-5… And long term . Well its 5+ years of course.

Each finance solution your company undertakes has upside and downside scenarios. One might not necessarily be better than another, especially if overall cost or rate is your prime yardstick measurement.

In some cases business owners / managers are forced to endure the worst fate possible – becoming economists of sorts! That’s because you also have to step back sometimes and understand some of the economic, political and industry issues that are pertinent to your business. These conditions may have influence on your ability to borrow funds or access business credit. If your industry is temporarily ‘ out of favor ‘ with lenders you’re in somewhat of a potential ‘ dire straits ‘ scenario that may force you to access non traditional type funding.

While it’s easy to look at outside solutions when you’re thinking ‘ funding ‘ the reality is that there are numerous internal sources of funds. They are many times overlooked. Just better turnover of assets – ie inventories and receivables, or better management of payables all lead to strong internal cash flow.

But when you do need your external finance strategy to be in place it then boils down to three key areas – they are:

The cost of the financing
The amount of risk to both your firm (and your lender!!)
The overall effect of the debt or asset monetization on your balance sheet – ie will this financing increase your overall solvency or endanger it?

Is business financing in Canada a challenge? It pretty well always is if you talk to clients we meet daily. So take a step back when your goal is to finance a company properly and keep issues as we have mentioned top of mind. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with proper vision when it comes to financing strategies, effects, and alternatives.