Commercial Business Financing In Canada: Dispatches From The Field On SME Finance Options

Commercial business financing options in Canada shouldn’t ( but unfortunately often do ) require a quantum jump in effort and time , so when it comes to SME commercial finance options just consider us your ‘ reporter in the field trenches’ with some suggestions to fix financing challenges with solutions that make sense. Let’s dig in.

Most private, independent business owners in Canada recognize the need for financing choices. We would add though that sometimes companies quite large and famous have their own challenges – they often might wish they were able to be as nimble as does the smaller firm grappling with cash flow, working challenges, and debt structure .

In the SME financing sector in Canada, including start ups by the way, one partner in finance that many business owners/financial managers don’t consider is the Canadian government via the GUARANTEED SMALL BUSINESS LOAN program. Although it caps out at 350,000$ that’ still a healthy amount to finance start ups, equipment needs, leasehold improvements, and even real estate. When it comes to real estate the program actually allows a limit of 1/2 Million $.

Franchise finance can more often than not be successfully achieved through the same program, a fact certainly not known or recognized by all.

For any established business the criteria to get true traditional low cost bank financing couldn’t be more straightforward.-

Clean balance sheet
Reasonable debt to equity
Profits
Positive cash flow coverage
Shareholder guarantees and additional collateral coverage

The bottom line – easier said than done in many cases, right?

When Canadian business financing is required the ‘ go to ‘ is obviously bank financing. When that can’t be achieved either the govt SBL/BIL program, or alternative commercial financing from non bank entities make sense.

What then are those solutions? They include:

Receivable financing

Inventory finance

Purchase Order/Contract financing

Tax credit bridge loans

Equipment financing for fixed assets/technology/production assets/Rolling stock

Asset based business lines of credit (‘ ABL’)

How you make money and how you turnover assets is key in financing success. It’s critical to maintain a strong handle on those ‘ working assets’ – those assets that turn into cash after you effectively manage inventory and A/R.

Many business owners/managers find themselves in a state of ‘ limbo’ as they wait for clients to pay – especially if they have a long cycle in their business, and that isn’t even taking into account the risk of bad debt.

The way you manage, and therefore are able to finance your A/R and inventory will reflect more often than not in your competitive stature in your industry.

Want a great tip – try and manage your business to reflect an ongoing trend of lower A/R as a per cent age of your sales. Easy to track and will almost always guarantee profit and cash flow success.

Whether you’re a start up or a large firm struggling for the ‘ nimbleness ‘ of SME Commercial Finance options seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in you commercial business financing needs.