Posts Tagged ‘toronto business financing’
Business Financing Timing
August 1st, 2010
“Acquiring Business Financing Can Be a Very Much Be a Point In Time Exercise”
I recently worked with a client seeking financing from their business where the business is well established, has an excellent balance sheet, and is very profitable. The Owners were experienced, established, and had a solid track record of performance.
So why were they looking for financing?
Their primary and only institutional lender could no longer underwrite the type of business they were in.
In the current economic climate, this is becoming a more and more common occurrence for even well established small businesses.
For this particular client, they were actually able to secure better business financing than the package they had.
But while you might think the debt financing could be easily replaced given the financial strength of the business, this is not always the case. For this particular client, while the end result was positive, there were not many interested lenders at the very point in time they required financing. And with the institutional lender they are working with now, there is no guarantee they would have done this deal 6 months ago, or would considering doing it at all 6 months from now.
The point here is that business financing can be all about timing where the needs of the business need to line up with the needs of a lender.
And even when everything lines up, there is no way to know how long that relationship will continue. As a business owner, you have to always be prepared with plan B in the event that a lender changes their business model or portfolio focus and leaves you as the odd man out, even though you’ve never missed a payment and have complied with all the lender requirements.
So the second takeaway from all of this is that as a small business owner, you always need to be on the look out for a better source of financing and an alternative source of financing. There is no true loyalty in this game, and for the most part it is a game in that both borrower and lender rarely disclose everything to each other in terms of their go forward business plans, leaving a certain amount of uncertainty in play.
Unfortunately, most business owners or managers only focus on business financing when they need money. Because of the “point in time” aspects of business finance, this can be a very dangerous and expensive approach to take.
Even for the most well established and profitable businesses out there, if they still rely on third party financing from lenders or investors, they always need to be asking themselves “what do we do if the lender or investor want their money back right now?”.
By proactively staying on top of the market and your relevant options, you stay ahead of the curve and ready to deal with the unexpected.
Click Here To Speak With Business Financing Specialist Brent Finlay
Business FinancingMarket Opportunities For Business Lenders
July 3rd, 2010
“The Recent Turmoil In The Capital Markets Has Created Opportunities for Business Lenders”
Not only have we been witness to a large number of global bank failures in the last two years, but there have also been a number of high profile lenders that have downsized their operations in certain areas and completely pulled out of some jurisdictions all together.
The resulting shifts in the business financing sands have created both holes in the market and opportunities. The business lenders that remain now are presented with additional opportunities to expand their portfolios, provided they can adapt their services and risk management towards a new opportunity.
For the business owner or business manager, this has created new commercial financing options in the market to replace what has recently disappeared. Although the level of overall financing competition in all slices of the market is still down overall, the expansion by existing players is a welcome improvement.
At the same time, don’t expect these new programs to hit the market with any great force. While the lenders involved are going to be serious about exploring the identified opportunities, they are most likely to start by wading into the shallow end of the pool as they take their time getting used to water of a new market or niche.
So while it may be very much worth your while to explore these new options that could now be available in your back yard, you’re going to have to have some patience as market expansion in the world of business financing is more of turtle versus hare approach.
But as time goes by, positive experience will also lead to program expansion and more aggressive lending practices. And as the economy continues to turn around, more changes can be expected in terms of the lender mix and offerings in any market.
This will also have a dramatic impact on supply, rates and terms in certain locales where the dominant lender in a category has completely disappeared and competitors decide on their interest in filling the void that remains.
In a time when lending markets continue to trend through uncertainty its good to see some of the participants prepared to venture out into new areas where opportunity has become available.
Hopefully this will soon become more of the norm versus the exception.
Click Here To Speak To Business Financing Specialist Brent Finlay
Business FinancingBusiness Financing Toronto Ontario
June 19th, 2010
“Do You Have a Toronto Based Business That Requires Business Financing?”
One thing about operating a business and having a business financing requirement in Toronto, there are no shortage of commercial financing options available to you.
The Big smoke is the center of the Canadian financing universe with several lenders present in virtually every conceivable business financing classification.
Because of the population concentration within 50 miles of down town Toronto, many sources of business loans, leases, and equity investment don’t even consider deals immediately outside of the Greater Toronto Area and prefer to only work on projects in their own back yard.
As a result, the physical location of the business, especially for anything that is asset intensive, will have significantly more financing options within the GTA area than even a short distance beyond its boundaries.
Because many sources of biz financing come from what we refer to as boutique lenders (niche focused sources of financing with typically one physical location and limited staff), there is a need for the business to be close enough for the lender to do a sight visit in the application stage of the process as well as to be able to easily come out to the location to monitor the account or work through issues that may arise.
Of course all the national lenders are also going to be present in the Toronto area. But the presence of this higher concentration of niche lenders compared to other areas of the country can provide many more short term and long term financing options to a business that would not otherwise be available if they were located even a 100 miles away from the GTA.
These expanded lender options also extend to private mortgage lenders that have a much higher concentration in Toronto than anywhere else in the country. Because of the woes of the stock market over the last decade, there are more and more people becoming private mortgage lenders to gain a more predictable and secure return, especially those in the baby boomer category that are at or near retirement and have a desire to reduce the overall risk level of their investment portfolio.
As a result of all the new entrants into the market, private mortgage financing has gotten more and more competitive, especially for small and medium sized commercial properties where private mortgage lenders can come close to rivaling bank interest rates in some cases.
All of this provides more choices for Toronto based businesses which can allow business owners and managers to consider different business financing strategies to meet their capital needs.
Click Here To Speak With Business Financing Specialist Brent Finlay
Business Financing