Business financing in Canada. It’s an age old challenge… probably going back to before the Dead Sea was even sick . We’re talking about the risks inherent in not getting the right funding or commercial finance loan and … surviving. And that’s short term operating finance or long term debt solutions.

A lot of top ‘experts ‘ will give you their opinions why business finance in Canada today is either working or not working – its kind of like the age old debate ‘ butter or margarine ?” . We won’t weigh in on that one but we have some solid observations and solutions for smarter business financing strategies in the Canadian landscape.

Accessing financing solutions at the right time, cost and structure comes with risk and reward – much more so when you’re a private company that doesnt have access to capital markets , and certainly the majority of businesses in Canada, the ‘ SME sector ‘ will fall in that category.

We’re talking primarily about debt and asset financing, as equity raises and going public are a whole different kettle of fish. In general we’re not big fans either of capital pools or reverse takeovers; our own clients who have utilized those two strategies seem to be in pretty well the same boat they were in when they started, other than the fabulous benefit of higher legal and accounting costs. Sorry for that bit of sarcasm!

One other reason that businesses seek business financing and funding in a commercial finance loan is the ability for them to continue research and innovation on their products and services, hopefully staying one step ahead of their Canadian and ( these days ) international competitors.

One key aspect in the search for financing is to properly address your stage of business, i.e. start up, high growth, mature, and even, dare we say it ‘ dire straits ‘.

While the majority of business owners and managers in Canada focus on Canadian chartered bank financing this solid, well priced and robust finance solution is unfortunately not fit for all. So if your firm doesnt have the great balance sheets, solid profits, and positive cash flows and external collateral you should well be considering alternative solutions such as:

Receivable financing
Inventory financing
Working capital term loans
Tax Credit monetization ‘ SR&ED Bridge Loans’
Purchase order/contract financing
Sale leaseback of owned assets
Non bank asset based lines of credit

Your current financial challenges will seem a lot less problematic when accessing alternative solutions, as they are tailored to firms that have sales revenues but are experiencing financing challenges that make their commercial credit profile deemed ‘ more risky’.

These solutions and even others solve the Canadian business financing conundrum. And by the way, there is always going to be an industry that’s a little, or very ‘ out of favor ‘. In that cases the financing challenges increase commensurately, because your financing needs will barely be considered if you’re anywhere near working with the wrong funding partner or lender or bank.

In summary, do you feel that your firm has less access to capitol than your competitors? That might not necessarily be the case, your current ‘ commercial credit profile ‘ notwithstanding. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your funding needs. It will probably be easier than our ‘ margarine or butter’ analogy!