Secrets To Business Loan Success In Canada . Financing A Company The Right Way

A business loan when you're financing a company..

. your company can be a heck of a challenge in Canada. Let's focus in on some proven ' secrets ' to Canadian business financing success.

Loans are for different purposes, and that's actually our first point, the ability to focus in on the differences in the type of financing you believe you need. That comes down to the differences between equity and debt.

We often talk to clients who have spent a lot of time putting together a package or business plan that feels like it is focused on equity or some sort of venture capital, when in fact its a debt financing, or ' loan ' that they are really attempting to close .

Bankers and other commercial debt lenders in Canada focus on collateral and cash flow . The private equity and angel type investors focus in on in things like product sales, customer acquisition, and exit strategies... What a difference!

So in focusing on your plan of attack, when it comes to a business loan, emphasize collateral (internal and external), some basic ' ratio' analysis, and historical financial statements or projections.

When we look at plans and packages that customers have shared with us they seem to focus on product and market ... what they really should be focusing on is management, profitability, and repayment of loans via cash flow generation.

When approaching Canadian banks for financing, either by you or with an advisor focus not on the bank, but the banker. Our experience is that good business bankers are in many ways a part of your team in the long run. Remember also that unlike 20 years ago, your banker probably does not have the authority to approve a loan, so you need their support and the ability to piggy back on their credibility with the underwriters.

Are there a couple of tried and tested rules for business loan packages -?

Here's a couple:

It's actually impossible to give a bank or another commercial lender too much info

Consider Canadian financing strategies when you don't need the capital or a loan, not when you're in dire straits

Be prepared to answer all the gaps in your package - loan approvals flow towards zero risk

Loan packages should identify the amount of funds you need, the term, use of funds, and repayment ability. 99% of the time your repayment will come from internally generated cash flow and profits.

Canadian business owners and financial managers deserve business credit. The challenge is ensuring you know how it looks on the ' inside ' when it comes to dealing with your bank or any other commercial lender.

Extra assistance needed? Speak to a trusted, credible and experienced Canadian business financing advisor for a business loan when financing a company in Canada. A little expertise in finance goes a long way.

by: sprokop

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