An Easy Solution to Debt Financing in Canada

An Easy Solution to Debt Financing in Canada
An Easy Solution to Debt Financing in Canada
September 3, 2016

The choice of your debt financing can strengthen your business or hinder it from growing to the enviable height you have envisaged it. Before going for any loan product, it is important to first of all understand the financial needs of your business. There is a formula to every successful loan. This article will help you to find out how this works and how it relates to your business.

Debt can help you grow your business

Debt doesn’t sound palatable to any business. In fact, the more the debt hanging on the neck of any business, the more the trouble they will have to deal with. That is not always the case. Loans can really boast your business potentials but you need to know which bank or which non-bank financial lenders that have the most attractive offer that would optimally benefit your business.

Read also: Merits and Demerits of Purchase Money and Non-purchase Money Loans in Short Sales

Loans should be your last option

Don’t be too hasty to take up loans. Before ever approaching a bank or other non-bank financial lending institutions, make sure you have exhausted all your available options. Try out you family and friends, business associates and even government grants for small businesses where available. Loan from a bank or non-bank financing firm should always be the last resort.

Asset is a key criterion to obtaining loan

Lenders are risk takers because they cannot always guarantee that every business owner would be in the best behavior and payback the money they have borrowed. This is the one reason why they would need you to have some assets or cash flow to boost their confidence. Assets that can be tied to lending include real estate, inventory, receivables and equipment.

Read also: A Cash Business Loan might Just be Perfect for a Working Capital

There are four factors that are tied to a loan

Like every transaction, loans have their terms and conditions and unless you agree to them, the business cannot hold. An interest rate is fixed, that is the way the lender makes profit from the money they have given out. Your collateral would be properly scrutinized, there is an amount you pay monthly and there is a fixed term of agreement. Study all of these carefully to see how beneficial they are to your business before jumping in.

There are various forms of debt financing

Different forms of debt financing exist and each of them has their unique requirement. Among the different debt financing products are inventory line of credit, A/R financing, bank and non-bank revolving credit line, refundable tax credit financing and the famous invoice discounting and factoring.

Read also: What You Never Knew about the Small Business Administration Loans

A lot of options are available for debt financing

The good news for those that are willing to take the direction of debt financing is that there are lots of options to choose from. The Canadian bank is one of the leading lenders for debt financing. Other alternatives are asset based lenders, bridge loan lenders, equipment lessors and online lenders. No matter how small your business may seem, there are alternative financing that would be willing to lend you money and many of them don’t require too long procedures.

Let a debt financing professional guide your decision

Earlier you have been told how taking a bad loan can be detrimental to your business. It is very important therefore to consult a professional debt financing advisor before taking a loan. Let them analyze your business to know which type of loan best suits your business. Working with a professional debt financing advisor will also help you to avoid the common fraudulent lenders that have hidden charges and unpronounced interest rates.

Read also: Looking for Ways to Finance Your Company: Try Asset Based Lending

Article highlights

  • Small businesses have a lot of financing options to choose from.
  • Different financing options have different requirements.
  • The success of a business is often measured by how debt free they are.
  • The interest rate is the major factor to be considered before taking loans.
  • Asset is a key consideration by lenders before giving loans.
  • It is good to understand the various debt financing options.
  • A good financial advisor can help you make the best decision for your business.
  • Canadian banks are one of the major lenders.
  • Lenders make money in the form of interest.
  • Alternative lending sources are always faster.

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