Thanks for dropping in for some hopefully great business info and on occasion some hopefully not too sarcastic comments on the state of Business Financing in Canada and what we are doing about it !

In 2004 I founded 7 PARK AVENUE FINANCIAL. At that time I had spent all my working life, at that time - Over 30 years in Commercial credit and lending and Canadian business financing. I believe the commercial lending landscape has drastically changed in Canada. I believe a void exists for business owners and finance managers for companies, large and small who want service, creativity, and alternatives.

Every day we strive to consistently deliver business financing that you feel meets the needs of your business. If you believe as we do that financing solutions and alternatives exist for your firm we want to talk to you. Our purpose is simple: we want to deliver the best business finance solutions for your company.

Monday, August 30, 2010

What If .. Accounts Receivable Finance was the Perfect Answer to Your Cash Flow Financing ?

A tale of two worlds – one in which you have unlimited cash flow or one in which you had day to day cash flow challenges that hamper your ability to grow and manage your business . A cash flow financing solution could well be the solution to all your problems .

Canadian business owners and financial managers face, on a daily basis real world cash flow challenges. Lets look at an example at why accounts receivable finance can be your holy grail of working capital financing . Cash flow financing goes by a number of different names in Canada that is part of the confusion we are always trying to wade through on our client’s behalf – various terms apply to this type of business financing. They include: factoring, invoice, discounting, A/R financing, etc. Depending on how you transaction is structured and who you are dealing with is really the key issue, not what the financing is called.

Clients always want to know if they are a candidate for this type of business financing. There are some perfect candidates, so let’s look at a profile or two in order that you can determine if you fit. Generally you will have accounts receivable that pay fairly regularly but are on occasion slow – your overall bad debt experience has probably been quite satisfactory. Your invoice and stated terms for your customers is 30 days, but guess what, most of them seem to be paying in 60 and 90 days – that definitely seems to be the trend of clients we talk to.

Does size count – In cash flow financing it really doesn’t – speaking in general terms if you have at least $ 50,000 of invoices a month you are a candidate for accounts receivable finance. The reality is that corporations with many millions of dollars in receivables actually utilize this form of financing also.

We hasten to say that in most instances the size of your facility will affect your overall pricing. In our experience you can potentially reduce the cost of your accounts receivable finance facility by close to 1% per month if you have a large facility. However, we spend many hours and many meetings educating Canadian business on factoring pricing, which is grossly mis understood by most clients who look into this type of business financing.

So the bottom line is that you should not let your company size, or any other challenges you might be facing – (temporary financial losses, restructuring, etc) affect you ability to successfully achieve an accounts receivable finance strategy.
Many times the decision to consider cash flow financing of your receivables comes from directly related issues to collections – in some cases the slow pay nature of your client may be affecting your ability to purchase inventory or meet payroll – those are some typical factors that drive customers toward factoring.

When you finance (in effect you are selling) your receivables under this type of facility you immediately receive an 80% advance on your invoice- that allows you to meet obligations and expand your business.

Most business owners know that if they had access to working capital they could readily grow their business – yet the traditional sources of business financing in Canada, i.e. chartered banks have made it challenging for firms to finance receivables in a manner that makes sense for the business owner. In some cases, as we noted, your business has or had challenges that prohibit you from temporarily sourcing cash flow financing.

Speak to a trusted, credible and experienced business advisor in this area – determine if accounts receivable finance is right for your firm, and focus on getting into a facility that meets your needs re day to day workings and cost.


Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:

Sunday, August 29, 2010

What If … You Could Cash Flow and Monetize your Canadian Film Tax Credit Today ?!

As a producer , director, or owner of a film, television, or digital animation production in Canada you are,( or should be !) keenly aware ofthe value of financing your tax credit, and using tax credit financing aspart of your overallfinancing plan for your production .

Just imagine that you are now in a position to speak to equity and debt investors with the confidence that you will now be able to monetize your tax credit as a key part of your overall cash flow and working capital requirements.

Canadian players in digital, film, and TV now actively court international investors due in part to the generous tax credits that the Canadian government has provided for the entertainment industry. Ours is not to question that generosity, but to capitalize on it!

These tax credits play a key role in the importance that Canada holds in productions in the entertainment industry.

Tax incentives vary from province to province, but in generally investigation will reveal that production services tax credits, animation tax credits, and labour expenditures have increased fairly dramatically over the last couple years.

The proper utilization of your tax credits often distinguishes your production from a professionally prepared and financed venture, as opposed to one that can simply be viewed as amateurish and newbie in status. The creation of a solid finance plan with the monetizing of your tax credit is a key part of your overall finance plan. In rudimentary explanation you are simply identifying sources of what accountants might call ‘where got’ and ‘where used‘re your cash flow!

The reality of Canadian film tax credits is they play a key role, no matter what the size of the venture, so the tax credit financing can be $ 250,000 or several million dollars. We assure clients that interested parties such as your debt lenders, investors, as well as their accountants and lawyers will all be looking at your finance plan and tax credit strategy in order to assess ultimate financial success.

In Canada the financing of film, television, and digital animation credits is a defined and in some cases we could call it a sophisticated process. You must be in a position to identify which geography and what provinces tax credit you will ultimately be calling upon.Critical information needed to calculate your overall finance plan is of you’re your actual budget for the film, as well as a pre-sales you can qualify. You must at its simplest, as we have said, identify sources of equity and sources of debt for the production.

Completed and filed tax credits can usually be financed within a couple of weeks – the process should be viewed not much differently than any business financing – an application, due diligence around the tax credits, and the manner in which they were prepared, and then legal documentation and funding.

Film tax credit finance can also be accelerated via an accrual approach to the financing of the tax credit – this is simply monetization of your claim as you are in fact expensing the funds, with your full stated intention to complete proper tax credit certification and qualification material.

Speak to a trusted, credible and experienced advisor in this unique area of film, TV and animation finance.Our ‘what if ‘title question now becomes your opportunity to successfully complete and finance your production using an effective film tax credit finance strategy.



What If Your Firm Could Get Funding Today for Your Future SR&ED Tax Credit Financing ?

Most Canadian businesses don’t fully explore the power of Canada’s SR&ED program, but what if you could fully harness the financial benefit of the program. The reality of the program is of course that if you are participating properly in the program you have completed your annual claim and are waiting for your cheque. And hopefully an audit on your claim won’t further prolong the waiting for those funds.

In talking to many clients we can safely say that most firms who have a commitment to r&d probably could use put those funds to alternative uses – those uses might include working capital for daily operations, purchase of new equipment, and yes, even continuing again their whole research and development process . Therefore as powerful a tool as a sred claim is the reality is that it itself can create short term cash flow problems. Those challenges are on top of the ones Canadian business owners and financial managers face every day, slow receivables, demanding payables , opportunities to purchase more inventory , or in some cases invest in equipment and long term fixed assets .

So how would your overall cash flow and working capital position change if you could monetize the sred claim the minute you filed it, or, in some cases even before that. If you could convert the sred claim into cash today you could more easily address the challenges in cash flow and working capital that we spoke of above.

SRED, aka SR&ED tax credits are financeable! So you ability to finance your claim simply allows you to receive approximately 70% of your claim today in the form of a SRED Loan. And remember, that’s not additional debt on your balance sheet, since the sred loan is in fact offset or collateralized by the full value of your actual sred refund. (We tend, like many Canadian business owners, to use the works sred and sr&Ed interchangeably).

So , all of a sudden you have double kick started your participation in sred , as you are receiving non repayable grant money today, and putting that to purposes such as expanding your business, hiring additional staff, reducing obligations to suppliers, or finding yourself in the position ( perhaps for the first time ) to take supplier discounts for prompt payment . Can you only imagine that one!?

So how difficult is it to finance your sred claim. That answers in two words – not very! It involves a very typical business financing application, as well as full backup for your sr&Ed claim, including who prepared it, details of any previous year’s submissions and approvals, etc. Even if your firm is experiencing financial challenges you are still very much in the position of being able to discount, or in effect factor your sred claim, because that is the asset that supports the financing .

Clients often ask how long the whole process takes, and we indicate that with your firms full co operation a sred financing can be completed in a couple weeks. There are numerous smaller issues that need to be addressed or clarified, so we encourage clients to speak to a trusted, credible and experienced sr&Ed finance expert who will no doubt help them accelerate the sred financing.

So our bottom line is not now ‘what if ‘you could finance your sred claim, it’s now ‘what would your firm do with that additional cash flow and working capital. That’s a good problem to have.


Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:

Friday, August 27, 2010

Financing a Franchise – Whats the Deal on Franchise Financing in Canada?

Minor details. You have made the commitment to purchase a new or existing franchise in Canada and must attend now to that final detail – you need to figure out how financing a franchise works in Canada! Franchise financing is a specialized industry in Canada, and your ability to investigate and source and finalize the proper franchise financing will of course be one of the reasons for your success as a Canadian entrepreneur operating within your franchise segment.

Whether you are Canada’s largest corporation, or the owner of a Canadian franchise its all about debt and equity. Simply put it’s the balance between how much you will borrow and how much of your own funds will go into the business. The franchise finance landscape in Canada is littered with many cases of business owners who did not match up, so to speak, the right amount of debt and equity.

There is an interesting point we can make about whether there is in fact a perfect formula or combination to the optimal amount of borrowing or personal funds that go into your new business. It’s a financial concept called R O I – which stands for return on investment. Let’s use a simple example to illustrate our point. If a franchise cost you one hundred dollars, and you paid all cash for it with personal funds and your profit in the first year was one hundred dollars then your overall return on investment is not great, as you can see. . However, if you borrowed 90 dollars, and put in ten dollars of your own money and your profit was that same one hundred dollars then you have generated a ten fold return on investment.

So that’s a good thing , right – well not necessarily, because your business has a lot more debt than ownership equity, as a result you are deemed to be very leveraged – if sales go down or profits aren’t achievable the owner has , in the creditors eyes, very little stake in the business .

Enough though of some of our textbook financial analysis we have just illustrated – what happens in the real world of franchise financing is what our clients want to know. The reality is that over the past several years, due in part to the current poor financial environment, owners have been obliged by lenders to put more and more equity into a new franchise. Although in some cases a 10% down scenario is possible, the reality is that number approaches 30-50% in most situations.

So a large part of the planning around financing a franchise should involve a couple things; your business plan or cash flow model should understand what amount of debt the business can handle, and in particular you should also understand the working capital needs of the business. It is not recommended to only focus on buying the business, as sooner or later you will have working capital or growth needs, so take that into account also.

Your financial planning around your financing should take into account the franchisors experience in the financial needs of the business – in a perfect world it is important to try and talk to some existing franchisees as to how their overall financing strategy works.

In Canada the majority of franchises are financed by a special federal government program called the BIL, or in some cases aka CSBF loan program. You need to ensure you meet the general criteria of this program. In our opinion no one financing method can really accommodate all your franchise financing needs, so we advise clients to consider a number of approaches including the above noted program, equipment financing where relevant, and in some cases a working capital term loan. Naturally all of this financing is under pinned with your own personal equity contribution into the business, which we discussed earlier.

So what is our take away on financing a franchise in Canada – there are a couple as we noted. Plan the financing of your franchise early on in the process and integrate it into your overall decision to purchase the business. Calculate what works out best for you relative to the ROI equation – what do you need to borrow, and what funds are available to put in yourself.

Speak to a trusted , experienced and credible business financing advisor in franchise financing to ensure you understand your financing options and that they can be presented to the lender in the best possible light . That’s a successful Canadian franchise financing strategy!


Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:

Thursday, August 26, 2010

Why an ‘ABL’ Might be your Best Choice for a Business line of Credit

Canadian business owners and financial managers will quickly acknowledge that is more challenging than ever to successfully obtain a business line of credit. That same challenge is why an ABL is fast becoming the business financing vehicle of choice for many Canadian firms. Great, say our clients, but what is an ABL?!

ABL is an acronym for an ‘asset based line of credit ‘. This business line of credit is a working capital facility, similar to your bank facility that provides working capital on a regular basis against inventory, receivables, and in many cases equipment and real estate if that is applicable. We can argue the case forever on whether Canadian banks are providing the right amount of financing and support for small , medium, and yes even large businesses in Canada – we don’t think we’ll get full closure on that discussion .

Therefore let’s simply assume you either can’t qualify for a chartered bank business line of credit or that you perhaps do, but the facility doesn’t meet your needs. That’s where an ABL, or asset based line of credit comes in.
So whats the solution and how does it work ask our clients. It’s a simple, no nonsense form of financing provided by non bank type firms. You can choose to call it alternative financing, but we can assure you this form of ‘alternative financing ‘is becoming more mainstream and popular every day.

Because the chartered banks focus on traditional metrics such as your overall financial performance, outside collateral, personal guarantees, etc you will find the overall ABL process much simpler and common sense. It’s simply a case of borrowing against your real assets, with little or no reliance on the issues we outlined above relative to a bank type facility.
The specialty of an asset based line of credit provider is simply their strong knowledge of your industry and assets – so because of that your ability to generate almost unlimited working capital becomes very obvious very early on in the picture. What do we mean by that? Simply that if you have receivables, assets and equipment you can always borrow against them on an on going basis – typically you can draw down on 90% of receivables, 40-70% of your inventory values, and pre agreed upon amounts on the appraised value of unencumbered equipment .

Typically companies that are the best prospects for this type of financing are firms with fast growth and in some case a limited track record – i.e. a start up, etc.

In some cases this type of business line of credit could possible be complimentary to your existing bank facility, but more often than not if replaces it totally.

While there are a number of key advantages to an asset based line of credit they do normally cost more than bank facilities – Depending on the size of the facility and the overall nature of your firm, its industry, and other challenges you might be facing the final pricing will reflect a realization of those issues. But let’s keep in mind that you have in effect just negotiated unlimited working capital, and have the ability to turn assets more quickly and generate increased cash flow, revenues and profits. That’s a true business financing triple threat if we have every seen one relative to your competition in your own particular industry.

The bottom line is to ensure you understand that you have a non bank alternative when considering a business line of credit via an asset based facility. Yes, it will cost more, but those costs can be significantly offset by increased cash flows via inventory turns, ability to purchase smarter with that cash, and to convert receivables immediately into cash for additional sales efforts. Speak to a trusted, credible and experienced advisor in this area to ensure that you determine if you can benefit from such a business financing arrangement.


Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:

Asset Leasing – What You Need to Know for Leasing Financing In Canada

Canadian business owners and financial managers rely on asset finance and leasing as a key part of their overall business financing strategy. But what do you need to know properly access this type of financing and where do you source the financing? Those are the key questions we’ll discuss.

Canadian independent leasing companies provide hundreds of millions of dollars of business, asset, and equipment financing for business in Canada. They are a strong alternative to bank financing because they are very focused on their product and service delivery, and in many cases will always go the extra mile to ensure you have received a transaction that has the proper rate, term and structure. Because of the perceived, or real?

Complexity in asset financing us strong recommend to clients that you work with a trusted, credible and experienced advisor in this area. Your ability to even generate one major benefit on the transaction could save you thousands of dollars depending on your overall deal size. It is important to understand that these firms only finance the assets, they do not service them, and unless they are a captive finance firm , ( i.e. owned by a manufacturer) it is of course up to you to negotiate the sources and pricing of your acquisitions .

The key benefit of leasing finance is that the equipment you are looking for will be paid by the lessor – you receive the equipment, confirm it’s in working order, running, etc, and then you use that asst to generate hopefully profits and revenues.

One of the biggest decisions you need to make around an asset leasing scenario is simply the type of lease that you want to enter into – they are two types of leases, one is called capital lease, the other is an operating lease, and your decision should be driven around really one key question – do you want to own the asset ultimately, or do you want to simply use it and have the ability to return it at the end of the term. That latter type of lease is an operating lease – not all our clients are familiar with this type of leasing finance strategy – but it can bring significant benefits to your firm.

Other critical factors you have to focus on are the term of the lease, and special options you might be able to negotiate around payments. We spoke of the two types of leases, capital (lease to own) and operating (lease to use).
In Canada the major banks have a limited focus on lease financing. They certainly are also not able to offer operating leases, as their interest is certainly not to own assets at the end of term. Leasing finance through a bank is usually a much better overall rate to your firm, however you have to be in a position to meet the more stringent credit criteria that they require – Also it is our observation that banks that do lease financing in Canada will want to solicit all of your business financing – which may prejudice any other relationship you have in place.

So whats our bottom line – simply that asset leasing and lease financing in Canada is the proven alternative for your asset finance strategy. Speak to an expert, focus on your options, and know which type of lease makes the most sense for your firm. There is not panacea of perfect financing decisions in Canada, in fact it might make sense on occasion not to choose lease financing, but weight the advantages and disadvantages and you will be in a solid position to ensure that the proper evaluation of benefits will lead you to the right business financing decision.


Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:

Wednesday, August 25, 2010

Working Capital Financing – Methods of Financing A Business

We hate to use an old cliché when we talk to clients, but ‘cash flow is the lifeblood of your business ‘is not the worst cliché you have every heard, especially when financing a business has become one of your biggest challenges. The downside of not having, or being able to arrange cash flow and working capital financing is simply that you have a lesser ability to grow sales, maximize profits and take advantage of new opportunities .

So sitting down with business owners is a great method of ensuring they know what their working capital challenges are, and what the real impact of that phrase ‘ cash flow ‘ means to their business . There is a bottom line here, which is a simple one, you have to know what working capital is, and you then have to know how to get or achieve it. To most business owners and financial managers in Canada the term working capital or cash flow simply means - ‘what cash do I have in the bank?’ But that’s a very weak definition, and that wont get you business financing success – you need to understand how your receivables, inventory, and other assets come together to drive working capital and cash flow.

Your business financing or working capital requirements are driven in a number of manners, it could involve solely the growing of your sales, but it also could mean a major expansion of your business. Most clients we meet cannot hardly imagine having too much working capital or cash flow, but the reality is that if that ever was the case you then cross the line and you are in a position of not being able to use those funds to grow your business – so, bottom line – it’s a balance act, which is as with most other areas of your business.

One of the main things you should focus on is your ability to pay your current debt – On the balance sheet your accountant shows that as ‘ current portion of long term debt ‘ – You always want to be in a position to meet these obligations as failure to do that means you are bordering on insolvency . All of that snowballs into major issues with your bank, your suppliers, and other creditors such as leasing or finance firms.

So as we have said, you need to be able to calculate, or measure working capital, and then address how you will satisfy the need that comes out of those numbers. There are some easy calculations you can perform in measuring your overall cash flow – it’s really simply understanding your inventory and a/r turns, as well as having a handle on your accounts payable days outstanding.

If it was a perfect world you could raise all the working capital you need internally. How would that work?! Well, using an extreme example if you collected your receivables in 45 days, and turned your inventory in 45 days, and were able to pay your payables every 90 days you would be very self financing. Sounds great, except you can hear your suppliers and creditors now I bet... Also, the profits that you generate out of your business obviously become a new additional part of the working capital component and would even further benefit your overall position.

But let’s get back to the real world, which states that if you have more current assets than current liabilities you 99% of the time need external working capital.

Canadian business owners achieve that additional working capital in a number of ways – the most beneficial is bank lines of credit, or in some cases, if your firm meets the criteria, a cash flow working capital loan. If you are unable to meet bank criteria, and are still in a challenged or growing position then we advise clients to consider a non bank working capital or asset based lending facility. If receivables tend to be your main current asset than a factoring or invoice discounting facility makes the most sense.

Most Canadian business owners don’t fully understand how factoring in Canada works, and are often confused by the costs and process – so we strong recommend you speak to a credible, experienced and trusted advisor in this area of Canadian business financing . In some cases you Canadian business owners and financial managers are looking for an interim or intermediate timeframe solution, so a short term bridge loan with using unencumbered assets has helped many clients get over the hump.

So whats our bottom line recap – its simple – a three point scenario : understand what working capital is and isn’t, know how to measure it for your business, and finally understand which cash flow solutions make the most sense for your firm at this point in time .


Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:

Tuesday, August 24, 2010

Canadian Equipment Leasing - How To Get The Best Lease Deal!

As a Canadian business owner and financial manger you need a certain amount of skill and knowledge to successfully source and negotiate a Canadian equipment leasing strategy. Equipment financing in Canada can be simple or complicated – the business decisions you make around the financing and acquisition of your asset involves a number of factors which have to do with credit quality of your firm, the way in which you will account for the lease, as well as any business or legal considerations around the transaction.

From the viewpoint of your lessor we can probably safely say they are most interested in simply getting paid back, so the ability to present your firm as a reasonable credit risk will allow you to get the asset and amount you want approved, and, as what seems most important to many of our clients, you will get what we would like to call a ‘competitive rate and structure. You also want to know if you are making the right financing decision as opposed to considering an outright purchase or some type of term loan for your asset financing. So at the end of the day you want to know what type of lease and benefits are available to your firm, and who is the best ‘lessor partner’ for this particular transaction.

We meet with many clients who spend countless hours, if not longer sometimes in talking to a large number of lease companies on any given transaction. What they don’t understand ( other than wasting their time ) is that lease companies in Canada are organized by asset and credit quality, and many lease firms are funded in different manners, and in some cases offer only one type of lease , which is not necessarily the lease financing you might need for your asset finance decision. So how do you wade through all this clutter and noise? It might be proper to consider working with an expert who knows the Canadian lease industry, and is a trusted, credible and experienced advisor to your firm in this area.

When we meet with or get a call from clients who have been out in the market ‘ shopping ‘ for a lease it becomes very clear that they appear very un organized and have spent an inordinate amount of time . Also, they are looking for ‘ all ‘ the ‘ benefits’ of lease financing in Canada, when in reality only a certain number , or even a limited number of those benefits might apply to their transaction . Countless firms recount stories of having paid too much for a lease or having focused on an option that ultimately had limited benefit to their firm. Again, understand the market, or work with someone that does.

Your ultimate goal in a lease financing strategy in Canada is to ensure you have, at the start, outlined what makes sense for your firm regarding the lease structure and the appropriate partner.

When you are soliciting lease pricing you should do that selectively with firms who are interested in your overall credit quality, asset type, and dollar size of your transaction. We tell clients to get a ‘market sense ‘of the type of lease financing that is available as the industry has the ability to use jargon that can be considered confusing to say the least!

One strategy you can use is to outline a basic lease financing request and solicit a number of bids – by clearly showing who you firm is, the asset you wish to finance, and the dollar value of the transaction, and the type of lease you require (there are two types) you can quickly eliminate a lot of wheat from the chaff!

In summary, understand what key benefits you want to achieve from a Canadian Equipment Leasing transaction get a sense of who can deliver on those options, and ensure you have a level playing field for lease firms you might want to work with.


Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:

Monday, August 23, 2010

P O Financing and Inventory Financing – Benefits … and Risks!

In the old days Canadian business owners went to their bank for PO Financing and Inventory financing... no really, they did... yes really! Most companies now know that the financing of your inventory, purchase orders, contracts, etc is a formidable challenge in the Canadian business financing landscape.

Simply speaking, your purchase orders, or inventory were collateralized by the bank and you borrowed against them. Therefore cash flow and working capital that was in effect tied up, or rather invested in your inventory and contracts was monetized, and you had the ability to draw down against those dollars.

Well the business financing landscape changed – yet your firm still has inventory, you have growth needs, and you need the financing to drive that growth into sales and profits. If you can acquire inventory financing then the ability to borrow against that inventory and purchase order is a key benefit.

So if the banks aren’t really that into inventory and p.o. financing in Canada, then who is. Well the reality is that it’s done via a select and specialized group of private finance firms who have a total knowledge and focus on the value of your inventory, and furthermore usually carry significant knowledge about your industry and the overall business model you operate in.
You should approach inventory financing with a positive attitude – by that we mean that your presentation for the financing should focus around the positive aspects of your business – those should include inventory turns, marketability of your product, and, very importantly, the gross margins associated with your business. We can categorically say that businesses with very low thin margins are not the best candidates for inventory and PO financing, simply because the financing costs around this type of financing chip away significantly at those final remaining profits.

We mentioned in our title that you should be cognizant of the risks associated with inventory financing – by all means don’t consider the financing of out of date of very slow moving or unsaleable stock – this quite frankly will be viewed simply as a ‘ cash grab ‘ that doesn’t make sense .

You will obtain a better inventory financing and p.o financing deal if you have good controls on your products – that typically might include a perpetual inventory accounting

Clients always ask if there are any special tips or tricks around the financing proposals around p.o and inventory financing. We tend to focus on the basics, which always work - a listing, or preferably an appraisal of your inventory – updated financials, copies of pertinent purchase orders or contracts, and a business plan or cash flow forecast.

The bottom line is that 9 out of 10 financiers have never even heard of p.o financing or inventory financing, so seek the services of a trusted, credible and experienced advisor in this area to assist you in putting the right type of facility in place. An experienced advisor in this area will help you avoid some of the potential risk, pitfalls, and financial ‘damage’ associated with inventory and p.o financing gone awry. They might include higher than market rates, requests for additional hard collateral, locked in contracts you can’t get out of, or inordinate appraisal and inventory count costs.

If you are successful in avoiding those risk the benefits will clearly be obvious - the ability to grow sales with unlimited financing of new sales or contracts, quick turn around for approval, and cash flow benefits derived from your suppliers being paid directly by the finance firm. Additionally you may be in a position to negotiate better pricing on products, thereby improving those gross margins we talk about.

PO and inventory financing, its all about risk and reward – understand those risks, seek an expert to minimize them, and reap the benefits of increased sales and profit growth.


Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:

Factoring Accounts Receivable – Cash flow Strategy 101!

Factoring accounts receivable is fast becoming one of the most popular ways to generate cash flow and working capital for your business. Thousands of firms in Canada utilize this strategy as a primary method of funding their business.

Let’s examine why this business financing strategy works and how you can best assess if a factoring receivable solution is the best choice for your firm. We also point out to clients that the Canadian landscape for this type of financing is somewhat different from the U.S. models of this type of financing, and one of the most important decisions you can make after choosing to enter into such a strategy is simply picking the best partner for your particular needs .

Factoring is becoming more popular for Canadian business financing simply for one reason – which is that some of the other more traditional forms of business finance have dried up and are not available due to the world economic meltdown of 2008-2009.

Business prospects have clearly improved, but business access to capital has been very slow to catch up. Most Canadian business owners and financial managers turn to banks when they need financing; if your firm is established, has decent financials, is profitable, and means a number of ratios and metrics required by the banks then this clearly is your option of record for business financing – certainly from a cost perspective.

However, if your firm can meet, or qualify for traditional business financing (we are referring mostly to business lines of credit for receivables and inventory) then you must search out and explore additional sources of working capital.
One great piece of mis information out there is embodied in the question many clients come in and ask us about – namely ‘Are there any government grants or loans for my business?”. The reality around that is that there are two programs that consistently deliver on the governments promise to fund small business – one is what is commonly known as the Small Business Loan; the other is the government’s research and development non repayable grant, commonly called the SRED program. That’s great news, you say. Well yes and know, because neither of these programs touch on nor affect our subject matter, which is working capital. The SBL loan covers only equipment and leaseholds, and the SRED program covers a refund on your R&D, if in fact that is applicable.

So we come full circle to how does factoring work and why are it a potential solution for your firm. It works in a very simply manner - you sell you invoices, either one at a time, all at once, or regular periodically at your choice . The key word is selling. When you sell something you get cash, and factoring receivables is your method of obtaining immediate cash.

The complexity of factoring, if we can call it that, is simply how it works on a day to day basis within your own business model, and more importantly, how it affects your customer base. Using traditional factoring as our explanation your firm issues an invoice, you are advanced immediately approx. 80% of the funds, i.e. almost the same day!, and when your customer pays you get the rest of our funds immediately, less a financing charge .

That aforementioned financing charge becomes the most important point of focus for many of our clients – as rates in Canada on a monthly basis range from 1-3% per month .When clients address that issue of cost we point out to them that if they have solid gross margins, can turn over receivables, and have the ability to purchase more effectively with the new cash that the cost of factoring inevitably becomes somewhat of a non event, based on the fact that this facility provides you ‘ unlimited’ working capital on a long term basis.

In Canada the challenge becomes finding the firm that works best for you with respect to the receivable strategy we have outlined. Many of the small nuances around how factoring is marketed, explained, and works on a daily basis becomes the bone of contention for our customers. Seek out a trusted, repeatable, and experienced business financing advisor who can guide you through the factoring maze relative to price, size of facility, and most importantly, how the facility works on a daily basis to augment your cash flow and working capital.

Factoring accounts receivable, when done properly, is a solid tool for you cash flow and working capital needs.


Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:

Sunday, August 22, 2010

SR&ED Financing – How to Cash Flow Your Sr&ed Tax Credit for Cash Flow and Working Capital

First of all lets get the name calling out of the way, you can call it SR&ED, or you can call it SRED ; whatever you call it you can finance your research tax credit !

Canadian business owners and financial managers in a variety of industries have the ability to of course file sred claims, and at the same time, if they choose, they can finance their claim and generate immediate cash flow and working capital from this valuable government grant program. And it is of course a grant because those funds are non repayable.

You can’t take advantage of the program if you do not file a claim, so understanding the basic around a claim, as well as the characteristics that claim needs to be financed is valuable information for Canadian business owners and financial managers. You essentially want to ensure you are getting your piece of the multi billion dollar ‘pie; that is held out to Canadian business for this program.

As we stated, your claim must be filed and substantiated under the normal program guidelines. Canadian firms recoup, as we said, billions of dollars each year for research and development and experimental work for their products and services. One of the misnomers around the program is that your R&D has to be successful in nature, and that’s actually not correct, you just have to be in a position to document what you did and how you did or tried it.

With the information we are sharing here we want to be able to ensure you understand how the quality and size of your claim affect its overall financeability. SRED claims are applied for in all sorts of amounts, we have seen clients file as low as 20,000 – 30,000$ per annum, and as high as 1.5 million dollars, and we are sure there have been higher claims

The actual claim preparation has an effect on your claims financeability – as your goal, should you need the cash flow and working capital, is to monetize that claim into a short term sred loan – with the sred itself being the collateral for the loan.

Although claims prepared by owners and management can be considered for financing, the reality is that if you are applying for sr&ed financing it makes a lot more sense to have your claim prepared by one of two parties, either your accountant , or what is known as a ‘ Sred Consultant ‘. Claims require special documentation and wording, and the reality is that just very recently the government introduced paperwork and online processes in their effort to ‘streamline ‘the program. We tell clients that we are all for the government streamlining things, but if you don’t understand the ground rules things can get confusing.

Depending on the type of expenditures and the exact nature of your claim you should be in a position to get as much as 40% and in some cases the 60% range of your funds back. When you choose to finance a claim the general advance is made at 70% - so let’s do some rough arithmetic around a sample claim and it’s financing.

Let’s say your firm, in tandem with your accountant or sred consultant file a claim for expenditures of $ 575,000.00 – Lets further pick the mid range of our estimate on what your final tax credit rebate will be, so lets assume 50% - That’s a sred tax credit rebate of almost 280,000.00$ .

As a business owner you can wait anywhere from 1-12 months to get your cheque in from the government, which is reimbursed at the federal and provincial levels. Or, if you choose to utilize those funds now under a sred loan, you can get an immediate advance of 70% of that claim, or in our example: 200,000.00$. Could your firm put 200k to go use for either working capital purposes, equipment purchases, or even more on going sred activity?

Furthermore, if you have successfully financed sred claims in the past you could be very eligible for sred accrual financing – which is a special program that reimburses your for your sred expenses as you go along during the year.

Traditional financing institutions such as banks and business credit unions are poorly equipped to understand and finance sred tax credits .As a result we recommend you work with a trusted and credible business financing advisor to ensure your claim can be financed quickly and with a modest amount of preparation. Quite frankly we tell clients that as esoteric as a sred claim might be they should view as simply as any other Canadian business financing – i.e. complete an application, provide back up on your sred claim itself and of course you’re firm, and to be prepared to collateralize the sred for your sred loan funding.

If you feel you are in a position to file a sred claim of any significance then think what the discounting, or cash flowing of that claim could do to your firms working capital .Oh, and by the way, no payments are made on your sred loan, financing costs are calculated at the back end of the claim when you receive your funds, including the previously mentioned 30% that was held back on the financing.

So our bottom line is simply that you should apply for sred tax credits if you qualify, and, as importantly, consider cash flowing those claims if you need funds now.

Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:

Financing Your Film Tax Credits Canada

Canadian film , television, and digital animation producers and owners continue to leverage Canada’s generous tax credit program , and are increasingly being joined by their partners and investors in U.S. and other parts of the world as the momentum in filmtax credits gains traction almost on a daily basis .

The overall challenge however, hasn’t really changed – Simply put –how do owners put together a sensible financing package that includes a proper combination of debt, equity, gap, and tax credit financing that properly leverages and monetizes their production.

As consumers we tend to gravitate towards ‘ experts ‘ in any field, and that should clearly be the focus of your production when you are considering afilm tax credit financing strategy in connection with your overall financing . We therefore recommend to all clients that they seek the advice and guidance of a trusted, credible, and experienced advisor in this area of entertainment finance.

One of the reasons for dealing with an expert is that, while Canada’s tax credits are currently among the best and most generous in the world, the reality is that it is a combination of a federal and provincial effort in Canada’s ten provinces – each province has varying credits, and some are more generous than others! As an example B.C.’s film incentive tax credit is currently 21%, with a 33% production services credit on labour that qualified.Although in conversations with clients we tend to more often than not discuss film tax credits, we should not forget the sister credit, ‘ digital media tax credit ‘; again using B.C. as an example that credit is 17.5%.As an example, Ontario’s production services tax credit is 25%, so you can see the subtle difference in choosing various geographies for domiciling or completing your projects.

Film tax Credits in Canada can primarily be financed in one of two ways, you can arrange financing on completion and certification of your project, or, more popular with clients, you can arrange for an accrual financing. Under this accrual financing of your tax credit you receive funds as you spend them, therefore significantly augmenting your overall working capital and cash flow strategy for your project.

In order to have your film tax credit in Canada properly financed, and as important, in a timely fashion you should focus on some key elements of criticality in advance. First of all you should be in a position to present an overall fiancé plan for your project – that should include timelines, a budget, and your ability to produce proper records around the projects special purpose entity, i.e.Ensuring your filings is up to date. Most productions we see are domiciled under a separate legal entity for the project.

When submitting a tax credit for financing consideration, either when filed, or using our accrual financing scenario you should ensure the numbers have been vetted by a proper accountant, one with entertainment credibility and experience. That simply helps validate the numbers and ensure that you can obtain maximum loan to value for your project.Generally tax credits are financed, when filed, at 70% or more of their overall value – accrual financing tends to be a lower loan to value because of some of the final uncertainties around the size and quality of the filing.

Film, TV, and digital animation productions in Canada can be significantly assisted by a proper tax credit financing strategy.



Friday, August 20, 2010

Franchise Financing – A Canadian ‘ how to’ Model !

Franchise financing – you’ve made the decision about your future as a Canadian entrepreneur and selected your franchise of choice. Now the only minor detail involves how to pay for and finance this major investment on your part!

The purchase of a franchise is an investment in your future, the ability to operate your own business and generate personal income and wealth – it therefore makes sense to ensure you finance that purchase in the right manner.

If you have purchased the right franchise you should first feel comfortable that you have selected a solid business model, and, where applicable, a good location. Franchises have a strong ability to generate sales and profit from the beginning because they have proven marketing plans, solid training for franchisees, and sources of supply and support. All of these factors are necessarily harder to obtain if you are starting a business that is a non franchise.

So we agree you have aligned yourself with a winning franchise model. How do you finance that franchise when you in fact read that business financing is as challenging as ever in the 2010 environment. The ‘ trick ‘ if we can call it that, ( its actually hard due diligence and working with the right people ) is to match the proper amount of debt and equity that leaves you with the right financing options for both the purchase of the franchise and future growth .

Let’s look at a real world example - We recently worked with a client who wanted to open a high end grocery chain. The client was under the impression that the entire 1 Million dollars + he needed was readily available from various single financing sources. The reality is that many lenders still view franchisees, as proven as they are, as start ups, and no one is ever going to lend one million dollars for a new venture. So what do I do now, asked the client? A practical solution for this client is what we call the ‘ cobbling together ‘ of various financial mechanism that will allow the franchisee to meet his goals, in this case that was a government small business loan, a term loan for equipment and working capital, and lease financing .

So we can’t over emphasize that franchise financing in Canada is about ‘options ‘. Investigate those options thoroughly, match benefits to risk and reward and cost of financing, and pick a suitable combination that works for your risk appetite. The largest corporations in the world have Chief Financial Officers that wrestle everyday with two terms – debt and equity. That is, how much do they borrow, and how much do they ask their shareholders to put in.

Guess what , you’re now the CFO of your own corporation and you are wrestling with that same conundrum – how much of your personal resources will you put in, and how much can you, and are you willing , to borrow . The proper balance of debt and equity in your Canadian franchise is what will bring you financial success.

Buying a franchise and then financing a franchise successfully is the key to your overall business success. Speak to a trusted, credible, and experienced franchise finance expert who will guide you through the maze of franchise finance options. Be prepared to make the proper amount of personal financial investment into the business, but at the same time don’t be afraid to take on good debt that makes sense for proper leverage and growth .That’s a solid financial strategy!


Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:

Thursday, August 19, 2010

What is the Solution to Finance Inventory for Canadian Business?

Canadian business owners and finance mangers are continually challenged to finance inventory as a component of their overall business financing and cash flow needs. There are solutions to this challenge and we’ll discuss and review some critical factors around inventory finance in Canada.

Inventory financing is the collateralizing of your inventory for financing purposes .Where it gets trick is that it has to work for all parties, yourself, and the lender, when you in fact have existing financing arrangements in place re your overall business finance strategy.

Working capital in Canada generally consists of receivables and inventory – if your sales are growing , and you are collecting receivables and turning over inventory you have a continuous need for more working capital as those two ‘ current assets ‘ grow .
The key to facilitating a solid inventory financing, or purchase order financing in Canada is to help your lender get the feeling they will never have to realize on that inventory to collect their loan or financing proceeds! You want to be able to demonstrate that your inventory is marketable, and that you have the ability to control and count the inventory. A perpetual inventory accounting systems helps a lot in that process – so investigate that with your accountant.

Similar to inventory financing a purchase order financing solution is very complimentary in nature. It is a case of your firm having product to ship but are in effect lacking in your ability to replenish inventory and fulfill orders and contracts.
When clients ask us what can go wrong in an inventory financing scenario we often simply state that you must be in a position to be able to turn inventory over and demonstrate your products are marketable in a worst case scenario .

Inventory and purchase order financing in Canada is specialized – seek out the services of a trusted, credible, and experienced business financing advisor who will be in a position to present your overall financial situation and prospects in the best light – this will include an overview of your current financial position, most importantly also your prospects, and the ability to define a facility based on the overall market value of your particular inventory.

We talked earlier about the challenge of managing through an inventory financing facility based on your current borrowing arrangements. In a perfect world (we know it’s not a perfect world!) you secure both inventory and A/R financing via a chartered bank. The alternative to this is an asset based lending facility, or what is known as an ABL line of credit. This facility margins inventory and receivables to the maximum value, which great increases your ability to draw down on cash flow needs.
In a working capital or asset based line of credit situation you will usually have a larger drawdown on receivable, but a proper inventory financing scenario can easily secure 60-80% of your overall inventory values – that is a lot of additional cash flow if you need to draw down on it.

The key benefits of a properly structured inventory financing facility are that it supplements your overall working capital needs. The facility should revolve, and you should only be paying for what you use. You should also have defined borrowing limits on inventory, and the ability to repay, or draw more financing at your option.

Your best inventory financing ability will ultimately come from your ability, as we said, for you to demonstrate proper accounting and reporting of inventory, as well as information on customer prospects, contracts, etc.

If you structure a proper inventory finance facility you will have access to significantly more working capital , inventory will easily be replenish able, and you should have additional purchasing power based on increased access to cash . Pricing on inventory and purchase order financing varies with the size of the facility, lenders interpretation of the marketability of your product, and your ability to turnover inventory at equal to or better than industry standards based on your own business model.

A proper inventory finance application should be no different that any other type of financing you apply for, so don’t view it as a mysterious type of business financing. Focus on demonstrating clearly how inventory financing will grow your sales and profits, that’s a win win situation for you and your inventory lender.


Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:

Why An Asset Based Loan Might Be Your Best Business Line of Credit Solution in Canada

Canadian business owners and financial managers fully realize that based upon their working capital and cash flow needs a business line of credit is a necessity for the overall financing needs of the business.

An asset finance strategy can sometimes be the best solution for your overall business financing needs. Clients we speak to have trouble differentiating this type of solution from a regular Canadian chartered bank line of credit.

The difference is simply the overall focus of the financing – an asset based line of credit focuses solely on the variety of different business assets youhave – they include predominantly inventory, receivables, equipment, and in some cases real estate .

When you successfully set up an asset based loan facility you are in effect monetizing these assets to their maximum, and borrowing against them as you need funds, on a daily basis.Naturally the main and most liquid assets in this type of financing tend to be receivables and inventory, but those other hard assets can nicely shore up an even higher credit facility for your firm.

So let’s get back to the difference between this type of facility, which some companies have never heard of, and a bank revolving line of credit. Your asset based business line of credit, unlike the bank facility, focuses 99% on the value of the assets in your business – so the bottom line is that as those assets grow you have unlimited working capital to grow ! – And that’s a good thing.

Another way of looking at this or explaining it more clearly is the manner in which these loans are set up and approved. Asset based loans for a business line of credit in this asset finance strategy focuses on collateral and its value. If you have now, or in the past secured a bank facility on the other hand you of course recognize the banks puts a lot of emphasis on non asset issues such as overall financial statement quality, external collateral, personal guarantees, etc. That is the main difference between these two types of financing. If you can demonstrate positive cash flow and cash flow from operations to a Canadian chartered bank it is unlikely you can obtain a business line of credit that suits your overall needs. Asset finance on the other hand is collateral based – if you have A/R, inventory, and perhaps equipment and real estate you can draw down on a daily basis against the value of those assets!

One other critical difference is that less covenants and ratio requirements are in place in an asset based line of credit.So if your firm has ongoing liquid and fixed assets you are in an excellent position to negotiate a business line of credit for an asset based financing facility.

How does this facility work on a daily basis? Is a question we always get from clients? You still of course do your banking at a bank or perhaps a credit union – but you supply on a regular (perhaps a weekly or monthly basis) what is known as a borrowing base certificate for your assets. The asset based lender then advances funds into your account which you can use to finance your business.

Asset based loans, or working capital facilities as we also like to call them have different levels of pricing based on overall facility size and with whom you are financing the line with. We recommend you review the benefits of an asset based business line of credit and speak to a credible, trusted, and experienced business financing advisor to determine if this type of working capital arrangement suits your firm. Many Canadian businesses are moving to this type of facility to fund future growth and profits.


Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:

Wednesday, August 18, 2010

What is the Financing Cost and Options of Different Sources of Financing

What are my available sources of financing and what is the financing cost of those sources and options ask our clients? When we are talking working capital it all comes down to your firm’s ability to raise and utilize cash flow on an ongoing basis.
We will discuss what some of those sources of financing are, and more importantly the costs and benefits associated with those different types of financing for Canadian business owners

When you understand what working capital is you are obviously in a better position to source it! You therefore need to know how to measure working capital in terms of your overall business needs. That’s part of the problem and challenge, because when we sit down and work with clients on working capital and cash flow needs we quickly determine that working capital and cash flow mean different things to different business owners .

The problem usually starts with the business owner assessing his working capital needs by looking at the ‘Total Cash ‘line in his bank account. That is of course cash on hand, and doesn’t reflect working capital, which is the funds he has tied up in receivables, inventory, prepaid, etc.

We can go to the text book definition also ( not our favorite way of doing things ) and finding out that working capital is simply current assets minus current liabilities, calculated by a quick look at your balance sheet . We are not a big fan of that calculation, simply because it doesn’t give you a true sense of the turnover of those critical balance sheet accounts such as A/R and inventory. A quick example simply is that most business owners assume the larger the ‘working capital’ numbers the better shape they are in – in fact the exact opposite is true because they require cash flow to fund that higher investment in receivables and inventory.

The best way to measure working capital efficiency is on a regular basis to calculate your receivable and inventory turnover. They are either getting better or worse, and your working capital improves or deteriorates in the same relation.
You should also focus on business liquidity because suppliers and creditors will bear the brunt of your inability to fund your business – and deterioration in supplier / creditor relations is the worst thing that can happen to your business.

So now you have a better handle on working capital – what next. Well you clearly recognize that cash on hand and growing inventory and A/R isn’t helping your cash flow at all – you need external financing. You achieve external financing by the profits you generate from your business, plus working capital facilities via a bank or independent finance company. Your needs might be seasonal, or on going, depending on what industry you are in.

So back to our sources of financing and the costs associated with those sources. You of course have the option of either generating a working capital term loan, or, if it’s a larger facility, it might be called a Sub debt or mezzanine loan. Essentially they are unsecured cash flow loans with rates in Canada ranging from 10-15% - they are traditionally on a fixed term, fixed rate basis – 5 years is common. You also have the option of putting more permanent equity into your business via an equity injection of bringing in a new shareholder. We are perfectly clear with clients that this is the most expensive form of financing, because you are giving up future ownership.

If you can’t raise capital for a working capital loan call your suppliers. Are you kidding, customers ask?! Well partly, what we mean to say is simply that your working capital increases when you slow payments to suppliers – that’s a double edged sword re supplier relationships, so tread cautiously on that one.

Other more traditional alternatives are bank operating lines of credit, these come with the best rates, current in the 4-5% range in early 2010 in Canada. The only problem – great rates but difficult financing to achieve as Canadian chartered banks demand solid financials when they are granting this type of facility. A better way to achieve full liquidity via this method is to consider a factoring or asset based facility – Rates in Canada range for 9% / annum to 1-2% per month based on your overall financial position and size of facility . But, they offer you 100% working capital for all your business financing needs, so that’s a good trade off.

Many clients approach us for other working capital sources, such as a sale leaseback of unencumbered assets, or a bridge or bulge loan on equipment and real estate to shore up working capital. These are great short term, but no long term fixes.
Understand what sources of financing are available to your firm, knowing their costs, and executing on facilities or solutions that make sense for your business is the true working capital and cash flow solution for Canadian business. Speak to a trusted, credible, and experienced business financing advisor to guide you to the right business financing decision.


Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:

Equipment Leasing Canada – Why Equipment Lease Rates aren’t Important!

How can equipment lease rates in Canada not be the most important part of your equipment leasing in Canada acquisition strategy? That’s what clients want to know when we advise them the while an overall competitive leasing rate is important they must not miss the several other factors that play a huge part in making the proper lease financing decision.

Leasing in Canada has of course been around for many decades, we venture to say at least back to the 19 50’s, if not older than that. As a Canadian business owner and financial manager you recognize that it is clearly one of the most viable methods of acquiring assets for profit and sales growth – Profit through use is one of the buzzwords of equipment leasing in Canada.

The key thing you quickly realize about lease financing in Canada is that it encompasses all types of assets - from heavy industrial equipment, used equipment of all types, and of course technology such as computers and telecom equipment, etc . The reality is, and this is a surprise to many, that even ‘soft’ items can be financed such as computer software, or installation costs and warranties for shop equipment, etc.

So fine, we recognize that leasing is important, and we recognize it’s available to us as a financing option. So why isn’t rate the most important factor, isn’t it all about cost and payments?

We don’t think so, because the reality is that if you don’t properly address or thing about the other key factors that are involved in the whole ‘should I lease or should I buy?” decision then the last thing you should be worrying about is your rate. Let’s cover off one key point about rate before we move on to some of the other factors you must consider – it is as follows - Business is competitive in Canada – There are a number of lease financing sources. Customer doesn’t believe us but we actually spend a lot of time talking to them and advising them that they get to pick their own rate! How is that possible they ask? It is simply based on the statement that your overall credit quality determines your rate within a very close band of competitive offerings of lease financing in Canada.

So if you can properly demonstrate your own overall credit quality re ability to pay, historical cash flows, future cash flow ability, overall business prospects, etc then categorically will be in essence determine your own interest rate on the transaction. End of story on rate!

So, those critical other factors you need to consider - they are as follows – you should discuss with your accountant or a trusted, credible, and experience lease financing specialize what financial statement implications your lease will have – You want to determine if you choose a lease for ownership of the asset, or a lease for use of the asset, the latter being called technically in the industry an ‘operating lease ‘.

Are there any risk to leasing equipment .There might be. This is where you want to talk to your accountant about what the tax advantages or disadvantages are of the transaction. You mighty want to ask him to run what is known as a lease vs. buy analysis to determine, with your input, what is the best way to acquire the asset in questions.

Despite what leasing companies might tell you in their literature or on their website you might find that a true analysis of the transaction shows that leasing is not necessarily the lease expensive way to acquire assets. If you and the leasing company borrow at the same rate (it could happen – leasing companies borrow also to fund your deal) then clearly lease financing might not be the best option.

When we sit with customers we find that the true real life day to day advantages of leasing tend to be quick credit approval, ability to structure payments in a fashion that makes sense for your business, and also the ability to structure purchase options and returns or purchase of the asset at the end of the lease. All of this flexibility makes a compelling case for lease equipment leasing in Canada.

In summary, make sure you consider a number of key factors when you are out shopping for equipment lease rates. Structure your lease properly with a solid analysis and assistance from a trusted credible advisor – focus in on what advantages of equipment financing make most sense to you. And yes, the equipment lease rate will take care of itself!


Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:


Equipment Financing Companies Canada – 3 Things You Must Know

Canadian business owners and financial mangers need to know a couple critical pieces of information when contemplating an equipment financing and leasing transaction in the Canadian marketplace. We tell clients that if you don’t have good info and insights into these three factor you are poorly equipped to enter into a lease financing strategy.

We can summarize those items as follows:

1. Know the type of lease you need – there are several types, and the wrong pick in this area can nullify the benefits you are seeking in a lease financing strategy
2. Focus in on what advantages of leasing are important to yourself and your firm – Not all advantages will usually apply to everyone
3. It’s not a perfect world, there might be disadvantages to lease financing in your particular case – Understand what those might be.

Let’s elaborate on those key points. First of all there are two types of leases in the Canadian marketplace – you can answer which one is best for yourself by simply asking the basic question – Do I want to ultimately own the equipment, or in fact do I simply want to use the equipment. There a big difference there that affects both the overall pricing of your transaction, and how it is structured financially on your books.

The two types of leases in technical terms are capital leases, and operating leases. In a capital lease transaction you make fixed payments over a period of time and then gain ownership of the equipment. The payments to the lessors cover the cost of the equipment and the interest or financing charges. Again, the bottom line is that you retain ownership at the end of the lease.
In an operating lease scenario you pay for the equipment and its use for a specified term, the most typical rate we encourage clients to enter into on an operating lease is 3 years. These types of leases have significant cash flow and balance sheet advantages and make sense when leasing items such as technology, i.e. computers.

Let’s focus in on critical factor # 2 – what leasing advantages are important to your firm. There are several very obvious ones which include:

- Cash flow and working capital conservation
- Higher loan to value financing – usually only a nominal down payment is required
- Your other credit facilities remain untouched – we strongly recommend to clients that they match long term asset acquisition with a long term lease financing strategy, You don’t want to purchase assets with your revolving credit line or receivables financing facility
- In 90% or more of lease financing deals the only collateral is the asset being financed
- Your accountant will advise you that you have a number of tax, write off, and investment tax credit scenarios which may further maximize your transaction.

Let’s close off now and move to final critical item # 3 which we can simply start out by saying – It’s not a perfect world! No single financing strategy is beneficial for all firms. Some of the potential and that’s important, potential disadvantages are that leasing in some cases has a real or perceived higher cost. Also, if you are doing a sale lease back financing in some cases if your asset is below the sale price there might be a capital gain tax to pay. Although they aren’t ‘ disadvantages’ per se, you should also thoroughly understand insurance, install, purchase options, and any restrictive covenants that might come into play in a lease financing strategy .

Leasing continues to be one of the most important sources of long term working capital .Don’t over look it, but do clearly understand how our 3 factors can assist you in making an informed equipment financing decision.


Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:


Monday, August 16, 2010

Factoring In Canada – Invoice to Cash Conversion – Benefit of Alternative Financing

In the current economic and business financing environment Canadian business owners and financial managers keep hearing about alternative financing and they want to know how factoring in Canada works . It would help to understand the benefits also!

Clearly factoring in Canada, also called receivable financing, or receivable discounting is a new emerging strategy for business financing in Canada. The reality is that is has been around for only a hundred years! But has become increasingly popular as business owners of small, medium, (and yes, large corporations!) struggle to find methods of financing cash flow and working capital.

Let’s try and clear up some of the myths and mysteries of this method of financing your business. As a business owner or financial manager you have options when you consider asset financing. Let’s focus on the key issue we are considering, which is working capital and cash flow financing.

You can finance your business via a working capital term loan, this is available through really only one source in Canada, and is essentially a cash term loan that is repaid via fixed monthly payments. Naturally this type of financing is ‘debt ‘financing and brings a certain level of debt to your balance sheet and overall leverage. You also have the option of putting in additional equity into your company via your own resources or bringing in an additional partner /owner – This of course tends to dilute your ownership and is not really high on the list of most of our clients!

So, we don’t want to necessarily borrow and incur debt, and we certainly cant or don’t want to dilute ownership. Is there another solution. There certainly is, and that’s financing the assets of your business. In our case we are talking about current assets, receivables and inventory, and for the purposes of our discussion here we are talking receivables.

When we focus on the monetization, or cash flowing of your business we can see the eyes light up in our clients faces, as we are now talking about a financing strategy that doesn’t bring debt to your business, uses your liquid assets for cash flow, and keeps your ownership intact. That clearly is what factoring as an alternative financing mechanism becomes more popular everyday.
Factoring is simply the immediate sale of your accounts receivable invoices, at your option. You have the ability to factor one invoice, several, or all. You remain in control. Using our invoice to cash conversion allows you to immediately pay suppliers, purchase more inventory or product, and continue to generate sales and profits for your business.

Factoring in Canada is not the challenge – the challenge is working with the right factoring partner to make sure you have a competitive rate, and that you have the ability to control the overall process, including customer relationships . Pricing is also a huge discussion point in Canada, and without the use of a trusted, experienced and credible business financing advisor you run the risk of setting up the wrong facility at pricing that does not make sense for your firm.

In summary, factoring in Canada remains one of the most popular financing strategies in Canada – it is not debt per se, you are just liquidating your current assets as you need to. Funds are available instantly the same day you generate your invoice for goods and services, and the overall benefit is that you are in a position to grow sales and profits.


Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:

Sunday, August 15, 2010

How to Finance Production Tax Credits in Film, Television and Digital Animation in Canada

We read very recently that critics of film tax credit financing in the U.S. ( This was in Philadelphia ) felt strongly that the benefits of tax credit financing were negligible and did in fact not stimulate economic growth or tax revenue .

We certainly don’t intent to weigh in on U.S. politics, but it seems very clear that the Canadian governments , both federal and provincial still strongly feel that the economic benefits of the recent tax credit increases over the last year or two in fact do bring in some cases a multiple of 5-10 times in financial benefits to the government . The bottom line is that film, television and digital animation credits in Canada are some of the most generous in the world, and these credits play an integral part in the financing of many productions in our aforementioned 3 key entertainment areas.

In order to stay on top of film TV and digital animation financing it is necessary to understand key elements of tax credit financing in the Canadian environment. Financing of a production can be a daunting, frustrating, and complex journey. Ultimately you want to also ensure you have access to an experienced, credible and trusted financing advisor in this specialized area of finance.
Two key strategies are most commonly used in tax credit financing - essentially the actual financing of a tax credit when it is certified and in fact filed, and , equally ,or perhaps more popular, the financing of tax credits now on the assumption they will be certified and eligible for government financing . This 2nd process we have describe here could be called ‘accrual tax credit financing ‘.

As a producer, director, or owner of a project (Perhaps you are all three?!) you want to ensure you interpret the different tax credits properly – that will allow you to maximize the financing you are eligible for.
Most commonly use also want to set up a separate legal entity for each project, one that allows you to maintain specific and separate legal and financial records for that project.

As unpopular it might be to focus on areas such as payment of taxes, keeping filings up to date, etc you must ultimately attend to these key issues as they are intrinsic to the proper financing of a tax credit.

The financing of a tax credit is clearly one of the most innovative methods in which you can generate valuable cash flow and working capital for your production. In many cases other parts of your debt and equity financing will always come back to your ability to both generate tax credits, and even moreso, finance them in a timely and economical fashion.

When you utilize a film finance tax strategy you are in effect helping to reduce part of the complexity of the film financing process. We can’t keep forgetting that our advice also refers to television and digital animation credits also.

Monetizing your film tax credits demonstrates your ability to ensure you are exploring the latest trend in entertainment finance – While equity and banking credit are more challenging to obtain then ever the tax credit finance strategy clearly creates a win for all parties .

It monetizes a great source of financing, and the fact that you are not giving up expensive equity or taking on additional leverage debt clearly makes for a positive financing strategy. No payments are made on tax credit financings, and your advance is ultimately set off against final receipt of government funds, which can be sometime in the future.


Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details: