Not every one these days is totally clear on the term of alternative finance , so lets recap some non traditional financing alternatives that just might make sense for your business financing needs. And to quote ourselves you just might find that alternative, in some cases, is the ‘ new traditional ‘!
First thought that comes into a clients mind when they think of the need for business capital? Of course its the Canadian chartered banking system. But thousands of business owners and financial managers quickly find that while somebody seems to be qualifying for those loans and other bank facilities it isnt them!
We dont want to weigh in too heavily on why the banking solution isnt always totally available for your business – its just a fact that the Canadian banks manage risk very well! But when you qualify boy are those rates attractive!
We will add one more point about the banking system in Canada, which is simply that while you might in fact qualify your needs, ironically may be deemed too small or too large. How ironic.
So that allows us to move on to a discussion on alternative financing vehicles that might just work for your firm. One of those is in fact a bank alternative that is non bank nature. It’s the government guaranteed SBL loan program. Although its facilitated by a bank the majority of the loan is guaranteed under the INDUSTRY CANADA loan program, allowing you to tap into rates, terms and structures that are attractive.
To access the SBL program you need to seek a bank employee who is aware and comfortable with the program. And the other qualification is simply a loan package that covers off the basics, which isnt hard as you might think. Your financials, a business plan, and some back up documentation and you are off to the races.
Another solid form of alternative financing is Asset based lending. These are non bank commercial credit facilities that secure, into a business line of credit your A/R, inventory, equipment, and real estate if applicable.
Almost any firm (with assets!) qualifies for ABL lines of credit – including manufacturing firms, service companies, technology companies, etc. Most facilities start at the 250k range and there is pretty well no limit on the upper end of an asset based deal. Oh, and by the way, some of the largest corporations in Canada use this ‘ alternative ‘ finance vehicle to run their business. Apparently (to quote us!) alternative is the new traditional for them.
Other forms of alternative finance? You just might be surprised. They include”
Supply chain PO finance
Tax Credit Financing
Securitization of A/R
Seek out and speak to a trusted credible and experienced Canadian business financing advisor on how alternative finance can work for your firm… and you just might find that alternative is the new traditional!