Business Loans in Canada: Alternative Finance & Traditional Funding Financing Options

Maybe things are looking up for business financing and loans again? Even in the best of times, let alone during an economic or industry crisis, obtaining credit and funding for cash flow solutions for your business can seem like an insurmountable challenge. Let’s dig in.

There have been significant changes in the financing options available from lenders for corporate loans since the financial crisis of 2008. Peer-to-peer business loans, a variety of alternative financing options, and, of course, the conventional financing provided by Canadian chartered banks are all available to business owners and financial managers in Canada in abundance.

In the United States, merchant cash advance programs gave rise to the well-known online business loans that were previously mentioned. Loans are calculated as a percentage of your annual sales, usually between 15% and 20%. Many small businesses, including retailers who accept credit cards or cash, believe the loans to be simple to obtain despite the fact that they are undoubtedly expensive.

Depending on the specifics of your company’s situation and your ability to fully comprehend the various options available to businesses looking for SME Commercial Finance. The definition of “small business” varies depending on what is meant by the term; frequently, it is used to refer to organizations with fewer than 500 employees. )

So how do we develop our road map for external financing methods and solutions? To put it more simply, we can group these various financing options together as follows:

Debt / Loans

Asset Based Financing

Alternative Hybrid type solutions

Numerous leading experts contend that your company’s current alternative financing options, when it comes to a full spectrum of funding, are actually on par with Canadian chartered bank financing. The alternative lender is typically a private commercial finance company with a niche in one of the various asset finance areas

Asset Based Finance is a significant trend that is “sticking,” if there is such a thing. The secret to success in ABL (Asset Based Lending) is for businesses to be able to obtain funding through assets like accounts receivable, inventory, and fixed assets without placing a significant emphasis on balance sheet structure, profits, and cash flow (those three factors heavily influence bank financing approval).

Another important component of Canadian trade finance is factoring, also known as “receivables finance.” In some circumstances, it’s a company’s only opportunity to market to and finance customers in other regions or nations.

It is also impossible to overstate the growth of “online finance.” The technological pace continues at what seems to be a feverish pace, whether it’s accessing “crowdfunding” or locating working capital term loans. To understand the difficulty small businesses have in obtaining capital, one only needs to read a business newspaper like the Globe & Mail or Financial Post.

When a company reaches a “turning point” in its history, financing is frequently required or opportunities and risks must be forgone. Even though it’s frequently impossible to add or acquire new equity in the company, the majority of SME commercial finance-requiring businesses aren’t, shall we say, “suited” to this type of funding and capital raising. Non-traditional financing offers more flexibility and easier access to capital, but business loan interest rates vary.

We’re also the first to point out to clients that they shouldn’t overlook government capital solutions. The Government Small Business Loan Canada program, which has a $1,000,000 maximum availability limit, and the SR&ED program, which enables business owners to recoup capital expenditures for R&D, are two of the best. After filing, SRED credits may also be financed.

These latter two financing options are frequently excellent choices for loans for new businesses. We must not overlook the possibility of using asset finance, also known as “ABL” by those Bay Street thugs, as a loan to purchase a company.

A trusted, credible, and experienced Canadian business financing advisor with a proven track record of success in business finance can help you with your funding needs if you’re looking to get the ideal balance of liquidity and risk with the flexibility to grow your business.