Tech financing needs in Canada can be a combination of challenge (and a headache!) Canadian businesses in the SME and large corporate sector. Technology corporate finance solutions, no matter how small or large your company is, come in a variety of flavors and sizes. Let’s dig in.
The start up or early phase company has difficulty in attracting any type of financing. So planning for tech solutions and upgrades is crucial and challenging. The reality, as harsh as it is in Canada is that owner equity provides the majority of early stage financing for operations and technology. The irony here is that many times the technology is what will drive higher and faster growth and profits.
Service based businesses, and those relying on ‘ IP ‘ (intellectual properly) create even more of a problem for themselves, as much of the financing for the SME Commercial sector in Canada is ‘ asset based ‘. So from the owner/financial manager perspective they feel they are compelled to take financing at rates, structures and terms that are less than favorable.
It’s no secret to Canadian business owners and entrepreneurs that it’s difficult to pitch technology financing needs to our Canadian chartered banks. The reasons are pretty simple: Tech needs seem to quickly become obsolete, and even with prices of the majority of tech assets going down in price they still are a huge part of any firms ‘ CAPEX’ budget.
So who are the ‘ sources of financing ‘ – those firms that can fill the tech financing gap you’re faced with? As well, is there a better way to address rapid growth in technology changes and those ‘ life cycles’?
One way to secure financing for hardware, software, telecom equipment, etc is to take a look at the Government CSBF loan. Recent changes have appeared to make the program even more popular. Billions are borrowed every year under this program.
So is there a clear cut way to finance the acquisition of technologies? The obvious choice? LEASING! The reasons are pretty simple – along with typical tax and accounting advantages the owner/manager has the ability to match cash outflows with the ‘ estimated ‘ useful life of the asset.
And because many firms want to ‘ use ‘, not ‘ own’ tech assets they also have the choice of opting for operating leases. These allow for maximum flexibility when it comes to upgrades, buying out, or simply extending.
Currently the industry as a whole prides itself of fast approvals, often within a day or so. And again, those assets that can be financed:
If you’re looking to get the proverbial ‘ monkey off your back ‘ when it comes to financing tech needs seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in ensuring you’re ‘ up to speed’ in tech corporate finance requirements.