Fund the costs around the equipment
A machine can be ready to work before the business is paid for the job. A landscaping company may need materials and labour before its first seasonal invoices clear. A snow contractor may buy salt and prepare its fleet before winter billing begins. A construction business may have payroll, fuel and mobilization costs before a customer pays.
These are working capital needs. An equipment financing request funds an identifiable asset; a working capital request focuses on the cash the business needs to operate and the cash flow available to meet the new obligation.
Choose the funding source around the timing gap
The best starting point depends on why cash is tied up. If the need is connected to completed, invoiced work, accounts receivable factoring may be worth comparing. If the business owns equipment with usable equity, an equipment refinance or sale-leaseback may be another option. If the request is based on operating revenue and repayment capacity, a working capital financing review starts with the business's cash flow.
These structures have different costs, security requirements and payment schedules. Merrit Capital can discuss the available options once the purpose, amount and business information are clear.
Start with a cash-flow forecast
List when money is expected to arrive and when payroll, suppliers, rent, existing debt payments and other expenses must be paid. Show how the requested financing changes that forecast. Include a slower-payment scenario so you can assess whether repayment remains manageable if a customer pays late.
A temporary timing gap and a continuing operating loss need different responses. New financing adds a payment obligation; it does not make an unprofitable contract profitable. BDC's working capital guidance explains why forecasting cash receipts and expenses helps identify a funding need.
Information that helps a working capital review
- The Canadian business's legal name, ownership and time in operation.
- The amount requested, timing and specific use of funds.
- Recent business bank statements and financial statements as requested.
- A summary of existing loans, leases and other payment commitments.
- Accounts receivable and payable aging where relevant to the cash-flow cycle.
- Contracts, revenue history or forecasts supporting the repayment plan.
The required documents depend on the request and lender. Tell us about existing security registrations or restrictions in other financing agreements early, so those can be considered.
Compare repayment frequency and total cost
Review the net amount your business receives after fees, how often payments are taken, the full amount to repay, any security or guarantee, and the cost of early payout or renewal. A payment schedule needs to fit your actual collections cycle, including the quiet season. Ask for a written explanation if a quoted fee or rate is difficult to compare with another offer.
For Canadian businesses across the country
Merrit Capital serves Canadian companies only. We work with businesses in Northern and Southern Ontario, Atlantic Canada, Manitoba including Winnipeg, Saskatchewan, Alberta, British Columbia, Quebec, Yukon, the Northwest Territories and Nunavut. We do not offer financing to businesses in the United States. Explore our Canadian service areas.