Single Family Financing vs. Commercial Financing
Find good financing in advance. Commercial loans are a different animal than residential loans, and in some ways better. The down payments needed are usually a higher percentage than loans on single-family houses, which means you’ll have to put more down (or get your partner to put more down).
Do commercial finance solutions seem out of reach?
Want a simple solution?
Consider a Canadian chartered bank and get all the business credit you need! Unrealistic… maybe, maybe not, but one sure-fire solution for your problems might be an asset-based lender.
For many years now the nonbank asset-based lenders have been working with firms such as yours on credit facilities that fit the real-world need of your company when it comes to inventory, receivables, equipment, and real estate.
Canadian business owners and financial managers are probably asking themselves why they haven’t heard of this before – we’ll hit you with another shocker, some of the Canadian banks even have internal divisions of asset-based lenders that compete with their regular commercial banking business!
Anyway, the bottom line is that this Canadian business financing solution might be your ultimate cash flow and working capital solution.
For the uninformed asset-based lending is essentially a revolving line of credit that provides you with working capital, cash flow to cover your operating expenses, and growth needs. Why is it different from a typical bank type operating loan? Simply because there is only one focus, the assets. And because the asset-based lender is a specialist in commercial finance and the value of your assets your ability to draw on those assets intensifies greatly – in many cases, you will obtain 50-100% more leverage on your current assets than you ever have before.
Again, why is this so different – It because the focus is on your personal credit, your company’s current or past challenges… it’s solely on, you guessed it ..’ the assets’!
In certain cases, even a purchase order financing type facility can be put in place, and more often than not the asset-based lender will accommodate what we term as ‘ bulges’ or unusual temporary needs of your business based on seasonal cash flow, large new orders or contracts, etc.
As a business owner, we think you can see that the total focus now seems to be on your future sales ability and the overall bench strength of your assets. It certainly is not untypical to receive 90% financing on receivables and 50% or often more on your inventory as ongoing advances for your cash flow needs. We also tell clients that unencumbered equipment can be factored into the facility also, so you in effect have a fixed asset that provides you with working capital. That’s creative financing!
Clients always asked what the approval criteria are – the truth is that the criteria that an asset-based lender requires are significantly less demanding than those imposed by the bank, the latter focusing on rations, covenants, external collateral, the strength of persona guarantees, and on it goes.
Commercial finance made easy is a great byline for an asset-based line of credit. After a standard business financing application and submission of back update which would include aged receivable, inventory listing, equipment list, recent financial statements, etc you would typically receive an expression of interest. After initial due diligence on your overall asset size and quality typical security documentation and registration takes a couple of weeks.
Speak to a trusted, credible, and experienced Canadian business financing advisor who can provide you with clarity on cost, process, and most importantly, the benefits of an asset-based line of credit or working capital facility.
Is a Sole Proprietorship the Best Structure for a Real Estate Investment Company?
There are many ways to structure your real estate investing business. A sole proprietorship is the most simple business structure in which you can operate a real estate investment business.
Commercial Real Estate Investing
Commercial real estate investing is probably not where most people will start out investing. But I do know a few who have purchased a commercial property as their first investment.
If you are a newbie in the business, you might get an overload of real estate investing strategies to choose from. Choices like flip, buy and hold, go commercial, go for REITs, partnership, and many other different options.
No one chooses to start investing in commercial real estate overnight. The savvy investor conducts a lot of research into commercial leasing and triple-net leasing before making any decisions, and it’s important to know with certainty that you will be able to give your investment your full commitment.