How Factoring Finance Works As Your Business Cash Flow Solution / Financial Engineering Via A Canadian Business Funding A/R Strategy

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YOUR COMPANY IS LOOKING FOR FINANCE FACTORING!

  

INVOICE FACTORING &  ONTARIO FACTORING COMPANIES  & FACTORING SERVICES IN CANADA  

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the  biggest issues facing businesses today

ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS  FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8

 

 

 

ACCOUNTS RECEIVABLE FACTORING IN CANADA - YOUR GUIDE TO FACTORING RECEIVABLE FINANCING AND WHAT YOU NEED TO KNOW

 

 

  "Cash is king, but accounts receivable is royalty." - Unknown

 

 

Receivable financing in Canada. Canadian business owners seem to have a major point of confusion around  finance factoring and why this form of ' financial engineering ' differs from bank financing. Let's find out why. Let's dig in!

 

 

WHY CONSIDER  INVOICE FACTORING FINANCING  / INVOICE DISCOUNTING? 

 

Growing your product sales/service and profits is job # 1!  When businesses grow they need cash. Your small business cash inflows are tied up in a valuable asset -  accounts receivable waiting to receive a cash payment from clients,  and suppliers who want to ship your product.

 

UNLOCK THE SECRET TO CASH FLOW TODAY

 

Start accessing these funds through custom-tailored financing solutions from accounts receivable financing companies  for fast funding via 7 Park Avenue Financial so we can help make sure all of your funding needs are met without adversely affecting your company's operations or other business loans that are in place.

 

 

 

A/R FINANCING IS SHORT TERM FUNDING FOR YOUR OPERATING NEEDS 

 

An A/R finance strategy is not tied to long-term financing via debt. That, in general, is a good thing, and it delivers constant recurring cash flow and working capital needs for Canadian businesses as you generate sales and receive cash.

 

  

IT IS CRITICAL TO UNDERSTAND THE DIFFERENCE BETWEEN BANK FINANCING AND COMMERCIAL FACTORING SERVICES  

 

At the core of understanding the A/R financing process via factoring is the need to understand the difference between ' assigning ' and ' selling.' When you finance your A/R through traditional bank loans and financial institutions such as a credit union, you provide them with an assignment of your book debts, i.e. your receivable base.

 

UNDERSTANDING FACTORING RECEIVABLE FINANCING

 

In finance factoring from a third-party financial company, the paperwork around your transaction revolves around the general credit strength of your company's customers ( credit checks are sometimes performed ) and the actual sale of the receivable as you finance them via factoring companies. The total amount advanced against a/r when factors buy your financial rights in an invoice  is always more than a bank typical 75%

 

ADVANTAGES OF A/R FINANCING IN CANADA - WHO USES FACTORING RECEIVABLE FINANCE SOLUTIONS

 

What are some of the key advantages of invoice financing utilizing a commercial third-party finance firm vs. a bank? They might include:

 

Constant availability of a positive cash balance as you generate sales-  The company selling its receivables will occur typically within 24 hours of invoicing get paid! Factoring providers have an easy to obtain and very quick approval process around invoice payment

 

The ability to address seasonal bulges in financing needs via a factoring facility

 

A strong balance sheet relative to the amount of cash you have on hand

 

WHAT IS THE COST OF FINANCE FACTORING

 

When we talk to clients about those advantages, the one negative issue in their mind is the higher cost of this method of financing from a factoring company. Remember, though, this higher cost is what we could term a ' rising and falling ' issue.

 

 

5 KEY FACTORS AROUND RATE AND COSTS IN  A/R FINANCE - MAKING THE RIGHT CHOICE FOR YOUR BUSINESS

 

1. The actual costs of factor finance from many factoring companies depend on several key factors

2. How fast you collect your accounts

3. The discount rate at which your sales are purchased,

4. The advance rate on your cash, which is typically 90% of your  a/r balance. (Banks in Canada only advance or allow you to draw 75%) - that's more cash for your day-to-day needs. The remaining balance is in your reserve account, which is paid back to your firm when your client pays, less the ' factor fee' -i.e. the fee the factor takes - typically in the 1-2% range.

5. The invoice value of your accounts receivable is also a factor in your pricing relative to the average size and amount of your invoices and the given period they are outstanding. Good collections = more cash /lower funding fees!

 

All finance terms can vary depending on the variety of issues we have outlined above.

 

Finally, factoring charges are expressed as a factoring fee and not confused with an interest rate - a point often misunderstood.

 

SHORT TERM ' FACTORING LOANS ' VERSUS TERM LOANS

 

Remember also that we spoke of finance factoring as being a short-term day-to-day cash flow solution. Yes, the business owner/manager could, in fact, implement a ' permanent working capital solution, 'which might be a less expensive form of financing, but that typically brings debt to a balance sheet.

But when small businesses weigh the costs of borrowing a large sum for a term of typically 5 years at a fixed rate, you will see that the actual financing costs of a permanent bank term loan are, in fact, significant.

 

Using that example, the business owner or financial manager may well find that receivable financing is, in fact, a better strategy!

 

So it is very important to analyze the actual costs and benefits around either pledging (bank) or to factor (commercial finance firm) your accounts receivable base.

 

Your company also has the option of choosing recourse factoring or non-recourse factoring financing, allowing you, in the case of the latter, to transfer bad debt credit risk to the factoring company if there is a non-payment by your client. Invoice factoring for startups is always available as well.

 

CHECK OUT CONFIDENTIAL A/R FINANCING!  THE BEST FACTORING SOLUTION?

 

Most factoring companies offer only traditional ' notification ' type factor solutions. If you use a confidential account receivable finance solution, you can also avoid any notification to your clients traditionally required by old-school finance factors who require third parties to be notified. Collecting payments remains in your control.

 

At 7 Park Avenue Financial, that is our recommended solution for a/r financing for outstanding invoices you wish to finance for short-term cash needs, solid advance rates, and no long-term contract by the way. That’s a key benefit! Talk to our team about business factoring and financing solutions. Get quick access to cash to keep your business moving forward.

 

DON'T GET CONFUSED BY THE TECHNICAL TERMS

 

At 7 Park Avenue Financial we find our competitors to do a good job of confusing clients with some of the technical terms in receivable finance - Here are some straightforward explanations of some of those terms

 

Lockbox - In certain forms  of receivable finance payments for the company's accounts receivable  are made into a secured account established via the financing company

Credit Insurance -  businesses have the option of taking credit insurance that protects them against losses to due non-payment and bad debt

Factoring Line - A factoring line is similar to a business line of credit and identifies the total amount the factoring company will advance on the business's accounts receivables

Concentration - Some factoring companies are concerned about the amount of financing made available to one single customer when in some instances a large percentage of the company's sales are to one or just a few clients

Factoring Agreement- this is a financing agreement that spells out the terms and conditions around the receivable finance facility - The agreement will identify advance rates, fees, etc,

 

"In a tight economy, factoring can provide a quick source of cash flow to help companies stay afloat." - Tony Robbins

 

CONCLUSION - MAXIMIZE YOUR BUSINESS POTENTIAL BY FACTORING RECEIVABLE FINANCING

 

Seek out and speak to 7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor who can assist you with your financing engineering around cash flow and working capital and asset based loan solutions.

 

 

 

FAQ: FREQUENTLY ASKED QUESTIONS 

 

What is factoring finance? 

Factoring finance for small businesses is a  type of business financing often used by small and medium-sized businesses to meet immediate cash flow needs.  Using these financing methods a  company sells its invoices (e.g., unpaid customer bills) at a discount for an advance on future payments from those customers without waiting until they are paid in full or have been collected themselves directly -

 

The actual credit history of your firm is less important than the quality of your client base if your customer pays reasonably well to terms. Invoice financing for growth and expansion is available to any Canadian business selling on trade credit terms to other businesses. Trucking companies and staffing agencies are large users of receivable finance.

The transaction makes it easier for sellers to access funds now rather than wait months before collecting their receivables through regular channels.

 

 What is invoice factoring/debt factoring? 

 

Factoring is an alternative form of financing and is a financial transaction ideally suited to small and medium-sized businesses, especially enterprises that do not have a long and established banking record with a major lender.

Factoring is an innovative way for your business to access funds tied up in accounts receivable through cash flowing your sales immediately. You generate revenues without any obligation to do so if funds are not needed for a specific invoice

 

Why choose  7 Park Avenue Financial for your factoring needs?

 

7 Park Avenue Financial offers customized, flexible financing options and is an expert in working capital solutions. We will ensure you have a solid understanding of all available funding for your business and growth strategy priorities without hidden fees, etc. It's a true form of asset-based lending that strengthens your balance sheet, and your business incurs no debt.

Talk to the 7 Park Avenue Financial team about what your cash flow needs are directly related to day-to-day changes in cash needs and when cash reserves are low in your business cycle as specific industries have different funding needs. Find out how a factor provides the cash you need today

 

Who are the parties directly involved in a factoring transaction?

The three parties in a transaction involving invoice financing and factoring services via factor loans are the company selling its accounts receivables, the factor that purchases those receivables and finally, your customer. 

 

 What are the benefits of factoring receivable financing? 

 

The benefits of factoring receivables include the ability of a business to improve cash flow and access funding immediately upon sales made to clients - This financing process improves cash flow and makes cash management more predictable. Companies using traditional notification factoring can utilize the credit risk services of a factoring company.

When a business uses receivable finance solutions such as debt factoring no debt comes on the balance sheet - the business is simply monetizing assets. Businesses that are unable to access traditional financing from banks and other financial institutions still qualify for factoring solutions. Using a/r finance solutions generates cash available to reinvest in the business and take advantage of prompt payment discounts from suppliers

 

 

 What is the difference between recourse and non-recourse factoring? 

 

The difference in recourse and non-recourse factoring facilities revolves around the amount of risk a company wishes to take in accounts receivable as it relates to bad debt and non-payment. Companies using recourse fatoring assume full credit risk for products and services they sell t clients - Non-recoures finance facilities transfer bad debt and collection non-pyament risk to the factoring company - This additional risk is priced into the factoring fee and is more expensive given the higher risk assumed by the finance company. 

 

Businesses can also choose to offset credit risk by insuring accounts receivable via trade credit insurance.

  

 What are the qualifications for factoring in receivable financing?  

 

The qualification for a business to be successful in obtaining a factoring facility revolve around key actors such as the general overall creditworthiness of the client's accounts receivable. The age of invoices is also important, as invoices over 90 days old are not generally considered financeable . Factoring companies also look at overall facility size, invoice volumes and what industry the company is in.

Many firms such as freight companies and staffing and placement agencies are good client prospects for a factoring company, but any company selling on a b2b basis can access factoring solutions, While the client a/r quality for unpaid invoices is the main focus a company must also be generally financially stable and not in a downward financial spiral, Companies should be able to demonstrate they can provide proper financial statements and a generally reasonable debt to equity ration, and accounts receivable agings with accurate invoice documentation for goods and services delivered.

 

 What is the cost of factoring in receivable finance?  

The cost of factoring in receivable finance for financing fees is determined by the accounts receivable financing business/company and is based on a number of factors including the overall size of average invoices and the creditworthiness within the accounts receivables of the business as it relates to how fast customers pay. Companies choosing non-recourse solutions that transfer bad debt risk to the finance company will pay more for that service compared to a traditional business loan bank arrangement, - Miscellaneous fees also must be taken into consideration and include a setup fee, ppsa search fee, etc,  - A/R financing via factoring and accounts receivable firms is a more expensive solution than bank financing and typical rates from an accounts receivable financing company in Canada range from 8% per annum to .75% per month.
 

 

Selective receivables financing is also available for companies wishing to fund a specific or small amount of invoices - this is also known as ' spot factoring ' in the context of receivables financing.

 

 

Click here for the business finance track record of 7 Park Avenue Financial

Is This The Golden Age Of Business Capital In Canada? Financing And Funding Your Company Credit Needs Unlock The Secrets To Business Capital In Canada

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YOUR COMPANY IS LOOKING FOR  BUSINESS CAPITAL!

YOUR GUIDE TO CANADIAN BUSINESS FUNDING

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the  biggest issues facing business today

ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS  FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

 

 

NAVIGATING THE BUSINESS CAPITAL LANDSCAPE IN CANADA

 

Business capital in Canada. Is this in fact the  ' GOLDEN AGE ' for Canadian companies seeking financial capital and business credit and funding?

 

 

WHAT IS  BUSINESS CAPITAL  

 

While most  business owners and entrepreneurs think of  ' money ' as being capital, and  cash that is in the business for generating a profit and return on investment, in general terms capital is actually the value  and financial assets of the business which might mean everything from hard assets to patents and intellectual property in the business

 

While your business can generate a return on capital from the ongoing operations of the business a company also has the choice of raising more equity as well as taking on debt to fund the business.

 

So capital can come from a number of sources:  owner investment, equity via angel investors, VC's, and private equity firms as well as traditional or alternative financing firms such as banks and alternative finance lenders - the new kid on the block in the Canadian business landscape.

 

Working capital and debt capital are often the most sought-after Canadian business financing solutions

 

We're not 100% sure ourselves; we read that rates are low and capital is abundant - while at the same time clients tell us it's never been as tough to satisfy lender criteria or access innovative capital solutions for their business needs -  especially for the small business owner as well as medium-sized corporations looking for information for funding needs.

 

The reality is that many business owners who aren't in the Financial Post top 1000 in Canada spend a lot of their time ' finding ' financing. The goal seems kind of easy - find enough financing for your business at a cost that makes sense and gives you the amount of risk that the Canadian business owner and financial manager are prepared to live with. At 7 Park Avenue Finanical we want to provide the help that business owners and their financial managers are looking for in their search for funds.

 

That ' risk ' of course comes with the fact that too much debt, and might we add the wrong kind of debt can cripple a firm.

 

5 WAYS TO FINANCE YOUR BUSINESS 

 STRATEGIES FOR SECURING BUSINESS CAPITAL

 

At the end of the day, we can maintain there are essentially 5 ways to finance your firm when it comes to business loans and your capital structure  - two of them, raising equity and issuing a bond or debenture are NOT the subject today.

 

What we're talking about is innovative ways of supplier financing, lease and asset financing for capital assets , and business lines of credit from banks or independent commercial finance companies.

 

 

DON'T FORGET SUPPLIER FINANCING! 

 

Many businesses don’t fully realize of focus on the fact that supplier credit is in fact a key driver of your firm’s cash flow. Just negotiating long terms with your key vendors allows you to generate positive cash flow - That’s a fine line though as you ultimately need the support of suppliers. The last thing you want is for them to turn the ' credit tap ' off.

 

EQUIPMENT LEASING FOR ACQUIRING NEW AND USED ASSETS

 

Yes, you can buy the fixed assets you need for your firm - but over 80% of companies in Canada in fact lease their assets. Whether its trucks, cars, computers, telecom equipment and heavy machinery the business owner has the option of leasing assets for anywhere from, typically, 2-5 years. That allows you to use up the ' useful life' of your equipment and match it to cash outflow vis a vis the payments.

 

Accounting has specific rules around the type of leasing arrangements that you enter into, primarily revolving around whether you are entering into a capital lease ' to own', or an operating lease ' to use '.

 

 

 

THE BUSINESS LINE OF CREDIT IS A KEY FUNDING TOOL FOR DAY-TO-DAY OPERATIONS  

 

Bank and commercial credit business capital in Canada supply businesses with revolving lines of business credit and funding. A credit line allows  your firm to draw down and pay back up, based on pre-set limits, the amount of funding you need for your business. The security of course is the assets of the business, allowing you to constantly replenish working capital

 

 MONITOR YOUR DEBT-TO-EQUITY RELATIONSHIP  

As a business owner, you have to choose the right amount of debt and equity. The finance guys call that your ' capital structure’. Is there a perfect mix or ratio for that?  The answer is... not really; it depends on the risk, flexibility, and amount of control you have in any particular financing.

 

 SOURCES OF BUSINESS FINANCING 

 

So, is it the Golden Age of business borrowing?  Our opinion is... not really. But you do have options and there are probably many innovative ways to finance your firm and achieve access to capital that you have not contemplated ; from government programs to commercial financing.

 

These include:

A/R Financing

Inventory Loans

Access to Canadian bank credit

Non bank asset based lines of credit

SR&ED Tax credit financing

Equipment / fixed asset financing

Cash flow loans

Royalty finance solutions

Government Of Canada Small Business Loan Program  - Guaranteed federal business loan -  Arguably the best financing program for a startup and franchise acquisition

 

THE STARTUP FINANCING CHALLENGE - STARTUP TO SCALE UP!

 

Financing a new business start-up in Canada is always a challenge - In connection with their own savings and investment into a business many entrepreneurs recruit friends and family type investments - as well as explore crowdfunding options.

 

The majority of start-ups in Canada, if not 99% or more do not qualify  or meet the criteria for business capital from  venture capital or angel investors

 

Many startups can benefit from local ' business incubators ' that are more often than not in the high-tech sector. These organizations don't provide financing per se, but they will often provide mentorship,  job creation, and sharing of facilities and hosting.

 

While ' grants ' are often sought after funds from the federal and provincial government in Canada this can be a time-consuming process, and often assistance from grant writers is required to source funds in areas such as r&d, productivity, etc. Talk to the 7 Park Avenue Financial team about grant financing strategies when grants require matching funding.

 

Business loans are available for the majority of small and medium-sized established businesses in Canada the startup has a large challenge in accessing financing. Good credit ratings and solid personal net worth will often attract some bank financing, but the best program by far, from a business loan perspective for startups is the Canada SBL loan - Recent changes to the program in 2022 increased the loan cap to over 1.1 Million dollars, and several different types of the financing were added to the program. The loan guarantee is provided by the federal government to the bank or credit union. A business plan should be provided with your financing request. SBL loans are one of the best financing solutions for small businesses in Canada, and the government loans out billions of dollars every year to thousands of firms.

 

 CONCLUSION - TAKING YOUR BUSINESS TO THE NEXT LEVEL 

 

Talk to the 7 Park Avenue Financial team - we know that the majority of businesses can access venture capital and Angel investments - Government funding and grants can consume management time - Let us show you how debt and cash flow financing solutions are available to your business today can work to take your business to new heights.

 

Speak to 7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor for small business owners, who can assist you with your business capital and funding needs in Canada.

 

  

 

  

 FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION

 

 

 

What is the most effective form of business for raising capital?

 

Although a sole proprietorship or partnership can raise capital and borrow money the best form of business organization is the corporate legal entity. Equity capital can come from venture capital firms but venture capitalists or private investors will want a sizeable portion of the ownership of the business - as the goal and exit strategy of the VC is an initial public offering. Financial institutions prefer to deal with corporate entities as opposed to individuals when business lending is required. Economic growth is often easier to achieve by a company versus a private individual.

 

 

What is business capital in finance?

Capital in business financing is value creation and is often primarily identified only as cash and business assets. The financial statements of a business complete a full picture of balance sheet assets and profits.

 

What are some types of capital in business?

Different types of capital in business include debt financing, allowing companies to borrow from different sources such as banks, alternative lenders, and the government at interest rates commensurate with overall credit quality and type of financing.

Business owners have the choice of selling equity in the business via private financing or public equity offerings versus additional personal investment.

Working capital finance funds current assets such as accounts receivable and inventories and profit-generating assets can be financed on a long-term basis.

  

Business Credit Lines In Canada - Eliminate The Crash Landing Aspects Of Funding Your Company

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What You Need To Know About A Business Line Of Credit

Business credit lines in Canada.  We sometimes think it’s a lot like ' sensible shoes '.  You suddenly realize how important they are! So when it comes to working capital funding in Canada the business owner quickly realizes the importance and value.

 

WHAT TYPE OF CREDIT DOES YOUR COMPANY NEED

 

But is the Business ' LOC’ something that only the Ouija board can discern as to what's the best business credit for your firm? Some firms even use a business credit card as their line of credit/short term financing solution - that's one of the ways to bank your firm, but not the best of course, it just takes some drilling down into what is available and what's best.

 

 

WHAT IS THE MAIN USE OF BUSINESS CREDIT LINES

 

If there is one solid use for business credit lines it’s simply their ability to finance your business as you move along in growth. If you're not self-financing and don't have a huge equity position (coupled with slow-paying clients) the corporate credit line gives you cash flow.

 

ASSED BASED LENDING SOLUTIONS CAN ALSO FINANCE ACQUISITIONS!

 

Don't forget also, as we've been known to preach that solid a/r and inventory balances can even be used to partially finance acquisitions - all the better if the firm you're acquiring has those same type of current assets.

 

2 KEY CHOICES IN A BUSINESS CREDIT LINE - WHICH ONE WORKS BEST FOR YOUR FIRM

 

In Canada, you have 2 Choices for access to business revolving credit. One is the ' go-to ' - our Canadian chartered banks. Interest costs with banks are of course low, and these days they actually couldn't be much lower.  Bank requirements for business credit lines might be viewed as 'strict' by many borrowers.

 

Quite frankly we have never felt they were necessary strict - it's just that we must assume if the bank is lending unlimited amounts at low rates that they can be easily forgiven for asking for companies with good financials, profits, positive cash flows, external collateral, and good personal credit history/credit score of owners, including of course the proverbial ' PG ' - the dreaded personal guarantee.While the business owner may wish to separate their credit profile from the business the banks do not see it that way - they want to know if you manage your personal finances similar to the way you run or will run your company!

 

ASSET BASED CREDIT LINES ARE THE NON BANK SOLUTION FOR WORKING CAPITAL

 

When your firm can't access bank credit for revolving facilities your other choice is in fact a lot more accessible. It's the ' ABL ' - The asset-based business line of credit.  Although 98% of the time asset-based credit facilities are more expensive they are easier to access from an approval perspective.  Facility sizes run on the small size to the 250k range - and large facilities run to the tens of millions of dollars, usually funded by independent commercial finance companies. There is no reason for your firm to be using business credit cards to fund your business on a day to day basis!

 

WHAT IS THE COST OF ASSET BASED CREDIT

 

When it comes to interest rates in asset-based lending is more costly, but your firm has access to more business cash - and of course, you only pay interest on what you are using in the facility. Subject to credit approval both a variable or fixed rate is available in most credit facilities both in traditional banking and alternative finance.

 

DO BANKS OFFER ASSET  BASED CREDIT FACILITIES

 

An interesting thing about ABL credit is that it's offered by the Canadian banks as a part of their business loan offering. but they don't run many TV commercials on that one. We won’t get into why we think that’s the case, but give us a call anytime and we'll tell you why we think that way!

 

ALL ASSET CAN BE FINANCED UNDER AN ABL FACILITY

 

Surely most business owners know they can't really access business credit line facilities if they don’t sell on commercial credit terms.  From the occasional call, we get we're never quite sure they do in fact realize that. However, an interesting point is that ABL lending has subsets of inventory and equipment financing, so you in theory could have an ABL line that simply margins inventory and equipment. A good example might be a retail chain.

 

Our banks are very trusting when it comes to letting you run your business on a credit line. They in some cases only do an annual review of your financials, in certain cases, you might be reporting monthly on some basic business metrics. By the way, you maintain the use of the same business bank account in ABL lending.

 

ENSURING  YOU HAVE PROPER FINANCIALS AND UP TO DATE BUSINESS INFORMATION AND AGINGS

 

Asset-based lenders offering credit lines are more giving but less trusting with small businesses . By that, we mean that they trust, and they verify! So be prepared to do a bit more reporting and expect the odd personal visit here and there!  We meet many business owners who wonder what their bank looks like!  But of course, there are a lot of great bankers in Canada who know their clients business. There is no defined credit limit in asset based financing as the facility grows as your assets and sales grow for your products and services.

CONCLUSION

 

Don't feel that the non-access to funds via a business credit line puts you in 'crash landing' mode. Take advantage of different financing options in order to get approved for the funding you require . Understand your needs, alternatives, and seek out a trusted, credible and experienced Canadian business financing advisor who can assist you with your funding needs.

7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



Business financing for Canadian firms, specializing in working capital, cash flow, asset based financing, Equipment Leasing, franchise finance and Cdn. Tax Credit Finance. Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations.

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR

Stan has had a successful career with some of the world’s largest and most successful corporations. He is an experienced

business financing consultant

.

Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.


Stan has over 40 years of business and financing experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in-depth, hands-on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020

The Federal Small Business Loan In Canada. There’s No ‘ What If ‘ When It Comes To SBL Loans

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There’s No Shenanigans When It Comes To SBL Loans In Canada

The federal small business loan.  When we think of the term ' shenanigans ' it conjures up images of fooling around. There are no shenanigans when it comes to Canada ' SBL' loan. It's a straight forward program for small businesses, start-ups included, to get the financing they need to start/grow their business.

 

Is the program a great idea? We think so and here's why, so let's dig in.

 

  

THE SBL IS NOT A GRANT!

  

For starters, any connotation you have with grants or handouts need to be dispelled right away. You don't have a ' right ' to receive approval for such financing, so it’s a bad idea if you think you are on the ' auto qualifies ' path. You are not.

 

WHO RUNS THE SBL PROGRAM - WHO CAN APPLY

 

What SBL loans are about is the fact that it's a government-guaranteed financing program that is the cornerstone of at least 7000-8000 businesses every year – for Billions ( yes that’s with a  ‘ B’ ). The government, under ' INDUSTRY CANADA ' guarantees the majority of your loan to Canada's chartered banks.  The general theory around the federal small business loan is that the bank is making a loan under conditions they otherwise might not be able to make to Canadian businesses with revenues up to 10 Million $, which is the size cap for companies wishing to apply for a loan amount.

 

  

BENEFITS OF THE CANADA SMALL BUSINESS LOAN ARE SIGNIFICANT   

 

When you are approved for such an SBL loan financing it's safe to assume you have a good deal. Why?  Simply speaking rates, terms and structures are both attractive and competitive. Loan rates are 3% over prime, financing is repayable at any time without penalty, and the whole issue of personal guarantees is often allayed because of the need to provide only a 25% personal covenant for the loan.  Those sorts of terms, especially when it comes to startups, or franchises, are ultra attractive and simply not available with other more traditional loan financings. A small registration fee is required upon approval, and that amount can actually be bundled into the financing. The interest rate on the program is very competitive and terms and conditions are flexible regarding term and repayment.

 

THE BASICS AROUND CREDIT APPROVAL

 

So how does the bank, which administers the loan program for the government, assess credit criteria? As we said, there are no shenanigans here; it’s a very simple shortlist of criteria. Owners must have reasonable personal credit, they must be able to make a 10% permanent down payment (equity) contribution, and they must have a proper business location backed up by a premises lease.

 

  

WHAT CAN, AND CAN'T BE FINANCED UNDER AN SBL LOAN  

 

By the way, the SBL program in Canada is really one of the only vehicles that allow you to finance leasehold improvements which typically are difficult to finance under normal circumstances. Contrary to the belief of some this is not a working capital or term loan - it finances equipment, leaseholds, and real estate.

 

You also must ensure you supply a business plan and cash flow projection that demonstrates your ability to repay the loan, which has a maximum borrowing of $ 1,000,000.00. Remember that the SBL lender, aka our Chartered banks, are not equity players. They have no upside! They’re just happy that you can make the loan payments out of cash flow from profits.

  

  

CONCLUSION  

  

Most Canadian business owners and managers never seem to feel that business borrowing is straightforward. In reality, we agree its a bit of an art and science ... so seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your SBL small business loan needs.

7 Park Avenue Financial :
South Sheridan Executive Centre

2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



Business financing for Canadian firms, specializing in working capital, cash flow, asset based financing, Equipment Leasing, franchise finance and Cdn. Tax Credit Finance. Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations.

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR

Stan has had a successful career with some of the world’s largest and most successful corporations. He is an experienced

business financing consultant

.

Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.


Stan has over 40 years of business and financing experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in-depth, hands-on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Click here for the business finance track record of 7 Park Avenue Financial



Stan Prokop
7 Park Avenue Financial/Copyright/2020

Confessions Of An SBL Government Loans Super Fan . The Canada Small Business Loan

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INFORMATION ON GOVERNMENT SMALL BUSINESS LOANS IN CANADA

SBL government loans . I guess you could call us a fan, even a super fan. The word fan comes from the root word ' fanatic ‘, denoting an ' enthusiastic devotee. So why is the Canada small business loan the recipient of our full support. Let's try and preach to some of the potential unconverted.

More and more businesses in Canada, new, and established, are seeking loans backed by the government. Talk about a great co-signer! And remember that we are talking about a loan, not a grant. We're always being asked about ' grant money’... free money in essence. We're sure it's out there somewhere, we just haven't found it, and we're equally believers in the ' there is no free lunch ' concept!

The SBL loan is a great choice for business when you're in a touch economy; it’s all about choosing the right lender under the program and ensuring you are aware of some basic rules and regulations that allow you to qualify for the program. We feel quite strongly that every Canadian business owner can actually do a great job of pre-qualifying themselves in advance.

Let's recap some of those basic qualifications. They include being a Canadian citizen or being eligible to legally borrow in Canada. That's just common sense. Although you only have to only guarantee 25% of the loan personally that comes with the understanding that you have a reasonable personal credit history. In Canada the credit bureaus work on a ‘scoring ' basis, and for purposes of SBL government loans you should at least have a score of 650.

The questions of rates and structures always comes up in connection with questions from clients. Interest rates are ultra competitive given that you business is either completely new, or has under 5 Million dollars in revenue (That’s the revenue cap under the program). Rates on the SBL small business loans are in the 3% over prime range and a small government fee can usually actually be added into the financing of the loan.

Any business financing application has strong elements of one thing - and that’s common sense questions. You should therefore be prepared to address some very basics, including a resume or bio on yourself, a description of your business, a cash flow repayment plan (that’s critical). Additionally some supporting documents are required, all of which in our opinion are again. very ' common sense ' oriented. They include a copy of your tax return, your incorporation data, a premises lease, etc.

It's a great idea to also have a clear idea of the financing you are requesting. The three categories of assets that can be financed under the program are equipment, leaseholds, and real estate. Unfortunately it’s not a cash loan per se, so there are no working capital or cash flow borrowings under the program. And by the way that’s a popular misconception.

We should also add that you need to inject a minimum of permanent equity, in effect your ' down payment ' of 10% of your total borrowing.

It’s strongly recommended that you investigate the power of the Canada small business SBL loan. You just might find you will become a super fan also! Speak to a trusted, credible and experienced
Canadian business financing advisor for help with this great program.








7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com


Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations .

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.



Stan Prokop

Asset Based Lending Lines of Credit Canada

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Is This Type Of Business Credit Line The Future of Business Borrowing For Many Companies In Canada



Information on asset based lending lines of credit in Canada. These facilities are an alternative to bank credit lines and are used successfully by companies in every industry

Asset based lending in Canada is a solid financing alternative for firms that require financing for the traditional build up of accounts receivable and inventory that come with sales and revenue growth .

More and more Canadian firms who purchase product overseas or in the United States marketplace are finding of course that to achieve economics of scale in pricing and shipping they have to purchase in significantly larger quantities, and also allow for shipping time. And, even more critical is the questions of how to address the supplier’s payment request which often includes hefty deposits or full payment in advance.



Although established firms have access to operating liens of credit with Canadian chartered banks even these facilities often cannot provide the full financing resources that come with strong, explosive, or seasonal bulges in revenue growth.



Enter asset based lending, or the actual facility which is called an asset based line of credit. The simple definition and explanation is as follows – it is an operating or revolving line of credit facility that totally focuses on the assets of your firm, those being primarily inventory, receivables, and fixed assets such as equipment.



When your Canadian firm applies for a chartered bank line of credit there is a very strong focus on your operational metrics and your overall all balance sheet and income statement rations. A line of credit is set up with your bank that is very much related to your firms tangible equity, its debt load, historical cash flow, etc. ( Yes, we said historical cash flow! Which means that the banks focuses on how you have generated cash and profits in the past! That is little solace to the mfr, wholesales or distributor in Canada that needs cash flow now to fulfill order, contracts, etc.



The asset based line of credit places only a small reliance on those issues, what if focuses on instead is the true current value of your inventory, receivables and unencumbered equipment assets. Asset based lending specialists have a very strong sense and experience around the true liquidation values of your inventory , receivables, and fair market values of your equipment .

Therefore the final amount of the asset based line of credit you are approved for is often, almost 99% of the time, larger that a bank facility. That allows you to draw down immediately on the values of those assets, generated more cash flow. Many companies who have bank lines in Canada actually do not even have an inventory component in those facilities – so just the fact that you can now generate today cash flow out of inventory values is a huge cash flow benefit.



While asset based lending in the U.S. and, more recently in Canada was considered a non – traditional form of business financing it has clearly now entered the mainstream. You would be very surprised at the medium and large corporations in Canada that utilize this type of financing.



Different financing strategies achieve different benefits for each company. The main benefits of this type of financing facility are:

Easier to set up , get approved, and administer



Although facilities are set up with an initial cap the reality is that as your assets grow via increased sales the facility grows also – Why? Because, as we said, its asset based, not covenant or ratio based



Higher advance margins are place on receivables, usually 90%, and inventory, which in many cases hasn’t been or couldn’t be financed before is now immediately financeable



The facility usually always includes a/r and inventory , but more often than note has a fixed asset equipment or real estate component also



ABL facilities, which is the acronym these financings are known as, are specialized financings. They are an alternative to bank or traditional financing. They are becoming more popular everyday, and business owners are encouraged to speak to a specialist who is trusted, credible and experienced in this exciting new area of Canadian business financing.




7 Park Avenue Financial :

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com


Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations .

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.

Stan Prokop