Stop Me If You Have Heard This But Isn't Business Credit Still Challenging and what is Asset Based Finance?

It is always surprising to us that asset based lending is still probably less than 5% of Canadian business credit while in the U.S. it accounts for hundreds of billions of dollars of ongoing business financing.

However the trend is reversing and new transaction are being completed everyday in this asset financing category. Canadian businesses who need financing in excess of 250k (the upper limit is almost unlimited) can benefit from this relatively new Canadian business financing strategy.

Clients always have questions as to what the financing actually is and, more importantly, how it works and does their firm qualify.
ABL is simply A business loan secured by collateral (assets). The line of credit, is secured by inventory, accounts receivable and/or other balance-sheet assets, and is non bank in nature .

Lets address the qualification issue first - the reality is that if your firm has business assets in receivables , inventory, equipment , and even real estate those assets can be monetized into a business line of credit that focuses on the asset , not the overall quality or condition of your balance sheet.

We are of course referring to Canadian chartered bank lines of credit that provide a similar and more often than not less expensive form of financing via revolving lines of credit. However most business owners know those facilities focus on balance sheet and income statement strength, ratios that must be met, and heavy emphasis on personal covenants and outside collateral. That is not asset based lending relative to what we are talking about!

Your asset based lending financing facility is secured by business assets. These facilities are typically available through private finance firms that are non-bank in nature. One of two of Canada’s banks offer this type of financing outside their normal business banking, but qualifications and deal size are still somewhat challenging to meet in our opinion .

When you negotiate an A B L facility (that’s the acronym the industry uses) you and the lender agree up front on the market value of your ongoing receivables, inventory, and unencumbered equipment. That collateral becomes the essence of your financing and drawdown capability.

So why is this all different from a bank? The answer is simply - banks have regulated formulaic methods of financing business - in fact many would agree that bank business credit got increasingly difficult to get since the 2008 worldwide debacle.

Finance firms offering asset based lending are not regulated in the same manner, do business in almost every industry in Canada, even those that are deemed ’ out of favor ‘and the management of these firms typically have years of experience in lending against receivables, inventory (yes, inventory!), with the additional enhancement of allowing you to monetize your credit facility by including some borrowing against your equipment for ongoing working capital and cash flow.

Speak to a trusted, credible and experienced business financing advisor in this specialized area and find out how a new financing facility can put you head and shoulders above your competition in overall financing strategy.

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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:
http://www.7parkavenuefinancial.com/business_credit_asset_based_finance.html

Business Credit For Working Capital

Business credit and working capital are consistently one of your firms largest obstacles to innovation and growth in sales and profits. What can be done via either a traditional or alternative method of ensuring your firm has all the financing you need to generate growth? Let’s examine some of those solutions.

You can’t find it if you don’t know what you are looking for. What do we mean by that? Simply that cash flow, working capital, business financing can be sometimes ’ overworked’ ’ catch all’ terms that mean various things to various people. Therefore you must focus on the need first, not the solution. Thankfully those needs can be nicely broken down into several categories as follows: day to day operating capital, immediate growth needs for new opportunities, equipment and asset acquisition, hard asset refinancing.

The easy ’ go to ’ solution is to solicit chartered bank financing in Canada. Companies with strong balance sheets, profits, established history and additional collateral etc can more often than not find all the financing they need with one of Canada’s chartered banks.

That’s easy for us to say, but the majority of clients we meet simply can qualify for all business credit and working capital they need to survive and grow. Typically they have some traditional financing but not enough, or, in a more severe case, do not qualify for traditional bank lending in the Canadian landscape.

When the going gets tough, the tough get going goes the expression, so it is a case of getting somewhat ’ creative’ in your search for working capital .

If your firm has assets and growth prospects we firmly believe you can get most, if not all the financing you need. This financing can be achieved in a number of ways. You can monetize your current assets via a working capital facility for receivables and inventory. If properly set up you should congratulate yourself as you have just negotiated unlimited working capital - because these facilities allow you to borrow on an ongoing basis relative to the size of your current asset investment in accounts receivable and inventory. We referred to generalization of terms such as cash flow, working capital, etc - the lending we have just described is best known as asset based lending, and in many cases can cover off purchase orders and new contracts also.

Equipment financing and sale leaseback financing for new and owned/unencumbered equipment are great solutions to acquire or refinance capital acquisitions. In Canada lease financing is available for all asset and credit qualities for any amount, from 1000.00 to millions of dollars.

Although the majority of clients we discuss working capital needs with are private firms your firm might be public, as a result you might be in a position to consider an equity line of credit, with the equity questions being your stock.

If your firm has revenues under 5 Million dollars and is privately owned you should consider the best financing available in Canada - it’s the government BIL/CSBF loan that is underwritten by our good friends in Ottawa. Loans up to 500,000.00$ are available for hard assets such as equipment, leaseholds, real estate, etc. You can even be a start up and qualify. The financing rate is incredible attractive, guarantees are limited, and terms and structure flexible.

Its always about the bottom line, so whats our bottom line today - simply that you need to focus on what type of financing you need , determine if you qualify for traditional financing, and if you don’t get creative with a multitude of solutions available .

Confused about the Canadian business financing landscape and what and who is waiting for you out there. Speak to a trusted, credible and experienced business financing advisor who will guide you through the maze to what we believe will be the right solution for your firm.

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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:
http://www.7parkavenuefinancial.com/business_credit_working_capital.html

What Computer Leasing Companies Don’t Tell you about Computer hardware Leasing

Because most Canadian business owners and financial managers are tech savvy they are often intimidated and confused by computer leasing companies and computer hardware leasing. We also are always amazed when clients don’t know that computer software can be financed also - not everyone knows or tells you that. If a certain computer leasing company does not by policy finance software, guess what, you have other financing options for that part of your purchase.

You have made the decision to lease of finance your technology, which might include hardware, software, telecom equipment, routers, etc!One of the key drivers in your decision is of course always the tremendous cost of capital equipment acquisition in technology. And it’s not as if that’s an appreciating asset on your books. Have you checked out computer and technology prices - performance goes up and new models come out every year, and price comes down. Other than absolute cost that is of course good news.

What most lease companies don’t tell you is that you have a number of key decisions to make when you lease technology, and their firm might not necessarily be the best one to finance your purchase. Why is that? Simply because financing companies are not technology companies, they are driven by pure return on invested capital. They make money via the actual interest rate on the transaction, as well as the sale of your computers at the end of the lease if you have entered into a fair market lease. (More about fair market leases later)

Other ways in which the lease company makes money off your firm is the ability to lock you into a relationship whereby you become a repeat annuity customer for additional technology financing. Other subtle and minor profit generators for lease firms that you might not know about are:

Interim rents

Pre-pay penalties

Admin fees

Excess use and refurb charges,

Etc!

Let’s move on to major secret # 2 that your computer lease company might not tell you about. That issue is based around the concept that you want to use technology, not own it (Why would you want to own a depreciating and obsolescing asset?). The solution that drives and solves that problem is the previously mentioned fair market lease, otherwise known as an operating lease. That more often than not, for a significant computer lease financing is the best solution for your leasing needs in technology. But guess what; we feel that probably 90% of firms don’t offer that solution, because it involves being a specialist in asset and residual values. Finance lease companies tend not to know too much about the bits and bytes.

Therefore you should ensure that you have options in your lease proposal that identify whether you can finance on an operating lease basis also. It might not necessarily make sense for a small purchase, but a larger acquisition should consider this strategy.

Another significant benefit of leasing in general applies to computer leasing, which is that miscellaneous add on’s can be financed - they include shipment, install, warranty, etc. Not every firm allows you to finance these, most will. And, as we mentioned, don’t forget, Software can be financed!

Investigate carefully the financing of technology - these assets are expensive, depreciate, and you do not want to make an improper financing decision for technology that is driving your accounting, sales and customer relationship data.

Speak to a trusted, credible, and experienced business financing advisor to make sure you know the ‘ secrets’ of computer lease financing.

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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:

http://www.7parkavenuefinancial.com/computer_leasing_companies_computer_hardware.html

What If Inventory Financing Lenders Were the Solution to Your Cash Flow Based Financing

Just what if your firm had a significant inventory component and you had access to cash flow and working capital against that inventory investment in working capital that your firm has made.

A proper inventory financing facility in Canada is one in which you can draw down on a satisfactory level of your inventory value and repaid it as you replenish capital via account receivable and cash collections. Your success in achieving a proper inventory financing component in your overall business financing in effect optimizes your working capital to the extent you need to.

How would your overall financial position change with that additional working capital and cash flow? You would then have the ability to take on additional contracts and purchase orders, your supplier relationships would most probably improve, and faster asset turnover of assets and receivable generates faster profits and return on assets. Those are good things.

The main advantage of an inventory financing or A/R financing component is your ability to accelerate cash flow. Let’s be honest, if you were self financing (i.e. no borrowing facilities) and had to wait for inventory to be sold and receivables collected then you are significantly slowing your growth ability.

In the context of the inventory financing we are discussing this financing is not a loan per se - that’s important to understand. It becomes a part of your revolving facility and is simply collateralized by receivables and inventory.

Your inventory financing arrangement is reflected in a type of document generally known as borrowing base certificate. We also advise our clients that it is highly preferable to have a strong handle on your inventory reporting, and also you should preferably be using some sort of a perpetual inventory accounting system.

Inventory is a very generic term, we hate to do it but we complicate things further by discussing with clients the fact that inventory can consist of raw materials, work in process, and of course final finished goods inventory . As a result the valuation of what is financed varies by industry and inventory type. Slow moving or highly specialized product is much more difficult, but not impossible, to finance.

Could you be more competitive and profitable if you have inventory financing at 40-50% of your gross inventory value - we are pretty sure you could be!

On larger transactions you should fully expect some sort of initial appraisal and valuation on your inventory.

In Canada inventory finance is highly specialized, we can almost call it a niche financing. Speak to a trusted, credible, and experienced business financing advisor to determine if this financing works for you. Through that process you should be able to develop a clear understand of the differences between bank financing, asset based lending, which incorporates inventory finance, and purchase order financing if that is applicable to your business model .

At this point you are now in a position to ensure that inventory financing advances are a great way to acquire mfr and carry inventory for orders and contracts you receive.

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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:
http://www.7parkavenuefinancial.com/inventory_financing_lenders_cash_flow_financing.html

Benefits Of Invoice Factoring And Factors That Affect The Cost Of Factoring Receivables

You know the drill - you have all the working capital you need already - unfortunately its tied up in receivables - so how can invoice factoring help your firm and what is the cost of factoring receivables , because from what you have heard its expensive .

Let’s address those issues around the following key points: Exactly what is factoring, what are the benefits for your firm, what does it cost, and how does it work. That’s a mouthful, but your understanding of these key issues could be the first step in your better understanding of one of the most popular methods of business financing today in Canada.

Factoring is the method by which you ’ sell ’ your receivables as soon as you issue them. Selling anything gets you ’ cash ’ and that’s the core premise of factoring.

Do you have to sell your receivables? Of course not - you can wait 30/60/90 days for your customers to pay you - but you’ve been there already and that’s not working! That brings us to the main benefit of factoring, which is working capital and cash flow in an almost unlimited fashion. How can we say unlimited cash flow - well, simply because if you have receivables you will always have immediate cash for them. Cash flow problems solved!

Part of the problem in our clients understanding the cost of factoring is that they view it always as an ’ interest rate ’. The factor firm does not view or call it that - it is a discount rate. They purchase your receivable (either on, some or all of your invoices) at a discount - That discount in Canada is anywhere from 1-3%. The norm tends to be closer to 2%.

Clients will always ask if their firm ’ qualifies’ for this type of financing. The reality is that if you have receivables you qualify, and this type of financing covers pretty well every industry in Canada. There seems to be a number of industries that are always using factoring - i.e. trucking/transportation, staffing, security guards, etc - but don’t be confused by that point - if you have a receivable, Canadian, U.S. or otherwise , it can be financed - or in our lingo ’ sold’ and ’ cash flowed’.

We mentioned the key benefit of a factor facility is cash flow - you can of course arrange more traditional financing via a bank, Canadian credit union, etc. However, that type of financing comes with stringent requirements, including solid financial performance, personal guarantees, other collateral, etc. You can typically qualify for a factor facility in a week or so - the process simply involving a basis application and the documentation to register the facility, in a similar manner that any bank would, i.e. a security agreement on your receivables, etc.

One other key benefit is facility size - at a bank type revolving line of credit you have of course a limit, and you can’t exceed that limit .That concept goes out the window with your receivable financing facility because your limit grows lock step with your sales and receivable investment. That’s true unlimited financing!

It always comes down to cost and the overall pricing of your facility will depend on several factors - the overall size of your receivable portfolio, its credit quality, how your customers have paid traditionally, etc.

We recently met with a customer who advised us that their total all in rate with a Canadian bank, including the rate and fees for all services, etc, was close to 11-12% when you factor everything in. Let’s say your factoring rate was 2% per month. And lets also say you now had unlimited cash to pay suppliers promptly, take prompt payment discounts, and negotiate better pricing. From our perspective there immediately isn’t that much more difference in factor pricing and bank pricing when you weigh in all the comparables.

Speak to a trusted , credible, and experienced business financing advisor who can assist you in determining the best factoring pricing for your firm , and allow you to focus on benefits that you can reap from this growing in popularity business financing in Canada .

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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:
http://www.7parkavenuefinancial.com/invoice_factoring_cost_of_factoring_receivables.html

How to Finance a Film ,TV , or Animation Project Via a Film Tax Credit Film Financing Strategy

We can almost hear the newspaper crier already – ‘Read all about it, read all about it ... No changes to Canada’s film tax credit financing!”

What we are referring to is a rash of recent articles and TV news stories around the U.S. situation regarding film tax credit financing. Politicians in a number of states are waging a full stage war in some cases to abolish the entire film tax credit system, taking away these valuable subsidies that have become intrinsic in financing many non studio productions.

That’s in the U.S. - That is absolutely not the case in Canada. One can argue all day about the merits and benefits the government in Canada ( at the federal and provincial level ) reaps via their non repayable film tax credit grants, which currently are some of the most generous in the world , as well as efficiently administered . We’re not going to get into that argument here – suffice to say that we understand the government to be very satisfied with the revenues they recoup via productions in film, TV and animation being produced in Canada.

Canadian producers and investors are still very bullish on film tax credits, and the financing of these tax credits is part of an overalls strategy to get most independent productions financed and completed in the Canadian landscape, covering all ten provinces.

We stated previously that tax credits in Canada are both available and generous. Canadians producers and owners use the tax credits as part of an overall strategy to finance their productions. It is certainly very unusual that any single project in either film, tv , or animation would be financed through just one vehicle, i.e. all equity, all debt, all tax credits, all pre-sales, etc .Therefore tax credits, due to their generous nature, are a lynch pin in the overall finance strategy for tax credits film financing .

Tax credits were increased over the last couple years, due in part to re invigorate Hollywood North – aka Canada, which was starting to lose productions to Louisiana, New Mexico, Michigan, etc.

Tax credits when properly accumulated, filed, and financed (financed at your discretion of course – you could wait for the cheque!) are a combo of federal and provincial in Canada. The key credit on the federal side is the Production Services Film tax credit, which finances up to 16% of your eligible labor. That credit is further augmented at the provincial level on a province by province basis. As an example in Ontario where a large majority of filming and production is done the rebate comes to an additional 25% of the total budget spend. ( Manitoba has one of the most generous programs – Thirty % all-spend tax credit, or offset up to 65% of local labor costs on projects that start location spending/filming in that province!)

We can be forgiven for sometimes not mention Digital Animation credits which in some cases go up to 42% or more of the total spend . Only several years ago digital animation was a weak sister to the industry, but is gaining significant traction due to the popularly of animation, 3D, Shriek ! Etc. Many major animation productions are done in Canada directly by Canadian firms or offshoots of the well known major animation studios.

So the strategy and recommendation we make to clients is quite clear – understand what credit you are eligible for, select where your production creation or filming makes the most sense ( Manitoba has very cold winters !) and finance your credits as a part of your overall cobbling together of a success and profitable venture in film, tv or animation .

Is a film tax credit strategy the holy grail of your financing? Probably not , but used as one tool among your equity, debt and pre sales strategy and you have a strong chance of pulling of a successful financing for your Canadian venture.

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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:
http://www.7parkavenuefinancial.com/tax_credits_film_film_tax_credit.html

How To Finance CRA Tax Credits For Sred for Cash Flow Now in Canada !

Let’s kill two birds with one stone actually … should you consider financing your sred sr&Ed claim, and, how do you do it once you have made that decision.

As a Canadian business owner and financial manager your recognize that cash flow is king, and for many companies ‘ unlocking ‘ the cash flow they have tied up in CRA tax credit research claims is a solid business financing strategy . We are all familiar with the age old expression... ‘Pay me now or pay me later ‘. In the case of sred financing it becomes a similar question ‘ should I wait for my cheque from the government, ( which could actually take a year or more ) or should I finance that claim and put that cash back to work now . Your sred research keeps you competitive, so why not re invest those funds and get them working as quickly as you are able to.

When you finance your sred claim you are in effect discounting, selling, or we can even use the word ‘factoring ‘the claim. You may or may not have chosen to book the sred as an account receivable, that’s your call, but we can assure you if your claim is valid that it is a true receivable and can be monetized for cash flow and working capital now.

In general in Canada banks and tier one institutions do not finance sr&ed claims, so you should seek the advice and assistance of a experienced, credible, and trusted sred financing advisor who will assist you in monetizing your claim . The entire process can be completed in a matter of a couple weeks , and we often liken the sred financing process to any other business financing that you would contemplate – meaning simply you apply, you supply documentations on your business and the sr&ed claim, and if you qualify then your claim is financed.

We hate to hit you with another age old cliché, that being ‘time is money ‘, but quite frankly the essence of our info focuses on that statement. By that we mean that if you have a sred claim, and you have filed it already, and you are days, weeks, or perhaps a month or so away from getting your cheque, well... clearly it might not make sense to fiannce your claim. However if you haven’t filed your claim yet, or you have just filed it and haven’t had a technical or financial audit on the claim then clearly if you need the cash flow back from your r&d investment then consider financing the claim .

A ‘how to ‘for financing your sr&Ed couldn’t be easier – let’s cover off the simple basics chronologically.

They are as follows:

Determine you are eligible for the sred program
Prepare a claim
File a claim
Do some math around how long it will take you to get your money and what you could do with 70% of the claim funds being in your bank now. ( Claims are usually financed at 70% loan to value)
If the math makes sense work with a sred finance partner to submit an application with back up on your claim, who prepared it, and other very basic info on your firm.
It’s as simple as that. Weigh the cost of the financing against your opportunity cost of capital and how you would employ those funds to generate sales, profits, and greater return on capital.

The SR&ED program is probably the best government support program out their for Canadian business and industry. Take advantage of your share of the billions of dollars that go out to you in the form of non repayable grants for your investments. If it makes sense finance the claim and accelerate your cash flow and working capital.
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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:
http://www.7parkavenuefinancial.com/finance_cra_tax_credits_sr_ed_financing.html

5 Franchise Business Financing Tips for Entrepreneurs in Canada

Expert advice is always a good thing – so wouldn’t it be great to get some solid advice on one of the larger decisions you’ll make in your business life – buying and financing a franchise in Canada. Franchise business financing is specialized and you want to ensure you have the proper ammunition to make the acquisition of your business successful. And that means of coruse a new turnkey franchise, or, in some cases, the purchase of a franchise from an existing seller or franchisor.

Let’s explore 5 key tips that should ensure your business financing success – they are as follows –

Pick the right franchise finance partner

Ensure the type of financing offered meets your needs

Don’t count or rely on the franchisor itself for financing – that rarely if ever happens

Understand franchise lending criteria in advance, and then ensure you can qualify for those criteria
Ensure your franchise is financed for purchase as well as ongoing needs


Let’s walk through some of the key points in those 5 tips – allowing you to feel more comfortable about the franchise financing process.

In Canada franchise financing is broadly available and at the same time very boutique and specialized in nature. What do we mean by that statement? Well the majority of franchises in Canada are financed under a special government program called the BIL or CSBF program. It is underwritten and supported by the government, but in case you haven’t seen a government franchise financing office on your corner, here’s the deal on that! The program is administered by Canadian banks, but under the government auspices. We tell clients that only a limited number of Canadian bankers understand the program, can move through it efficiently, and get you approved.

We mentioned a key point in our Tips that indicated you must understand the criteria for both the above mentioned program, as well as other financing available. We advise clients that general criteria for a franchise loan are as follows : decent personal credit history , a respectable down payment ( more about that later ) , some industry experience in the type of franchise you are purchasing, and you must be a Canadian citizen or landed immigrant – bottom line – can you legally borrow in Canada . Broadly speaking satisfying those criteria should allow you to get out of the gate quickly and commence your franchise financing process.

That brings us to another tip we noted, who exactly is your franchise finance partner. For a starter, given the unique nature of franchise financing we recommend you work with a trusted, credible and experienced franchise financing consultant. He or she will guide you through the finance maze and make you aware of all issues and conditions on an up front basis.

Secondly, don’t count on your franchisor to provide financing – they like selling franchises, not borrowing on their own account to get you started. Having said that a good franchisor will give you guidance on their own chains experience in how their franchisees are typically financed. Alternative to the bank franchise finance program sponsored by the government are a handful of specialized financed companies. We also have actively recommended working with equipment financing firms to finance some of the hard assets in your new business. That rounds out the strategy quite nicely.

Purchasing the right franchise and getting it financed is job 1. Job 2 should be ensuring that you have ongoing financing needs covered for things such as working capital, additional equipment or assets that might be needed down the road, staff and sales expansion, etc. You can address this most properly by carefully tuning your initial business plan to ensure that ongoing sales and costs can be financed properly.

Make sure the business can support any debt that you take on at a future point in time.
If you cover off carefully our 5 ‘Tips’ you are well on your way to entrepreneurial success in franchise financing in Canada.

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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:
http://www.7parkavenuefinancial.com/franchise_business_financing.html

Why A Business Asset Based Loan Financing Is The Perfect Solution For Cash Flow In Canada

You are a Canadian business owner and financial manager looking for info and guidance on a business asset based loan. What is asset based loan financing, sometimes called cash flow factoring - how does it work, and why could it be the best solution for your firm’s working capital challenges.

Let’s cover off the basics and find out how you can benefit form this relatively speaking new form of asset financing in Canada.

A good start is to always understand and cover off some basics around what this type of financing is. Simply speaking the facility is a loan arrangement that is drawn down and repaid regularly based on your receivables, inventory, and, if required, equipment and real estate should your firm possess those assets also.

By collateralizing your assets you in effect create an ongoing borrowing base for all your assets - this feasibility then fluctuate on a daily basis based on invoices you generate, inventory you move, and cash you collect from customers. When you need more working capital you simply draw down on initial funds as covered under your asset base.

Your probably can already see the advantage, which is simply that if you have assets you have cash. Your receivables and inventory, as they grow, in effect provide you with unlimited financing.

Unlike a Canadian chartered bank financing your business asset based loan financing in effect has no cap. The alternative facility for this type of working capital financing is of course a Canadian chartered bank line of credit - that facility always comes with a cap and stringent requirements re your balance sheet and income statement quality and ratios, as well as performance covenants and personal guarantees and outside collateral . So there is a big difference in the non bank financing we have table for your consideration.

Your asset based lender works with you to manage the facility - and you are required to regularly report on your levels of A/R and inventory, which are the prime underpinnings of the financing.

Smaller firms use a particular subset of this financing, often called factoring or cash flow factoring. This specific type of financing is less transparent to your customers, as the cash flow factor might insist on verifying your invoices with customers, etc. A true asset based loan financing is usually transparent to your customers, which is the way you want it to be - You bill and collect our own invoices.

If our facility provides you with unlimited working capital then why have you potentially not heard of it and why aren’t your competitors using it. Our clients always can be forgiven for asking that question. The reality is that in the U.S. this type of financing is a multi Billion dollar industry, it has gained traction in Canada, even moreso after the financial meltdown of 2008.Some of Canada's largest corporations use the financing. And if your firm has working capital assets anywhere from 250k and up you are a candidate. Larger facilities are of course in the many millions of dollars.

The Canadian asset based financing market is very fragmented and has a combo of U.S., international and Canadian asset finance lenders. They have varying appetites for deal size, how the facility works on a daily basis, and pricing, which can be competitive to banks or significantly higher.

Speak to a trusted, credible and experienced business financing advisor and determine if the advantages of business asset based loan financing work for your firm. They have the potential of accelerating cash flow , giving you cash all the time when you need it ( assuming you have assets ) and essentially liquefying and monetizing your current assets to provide constant cash flow, and that's what its all about .
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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:
http://www.7parkavenuefinancial.com/Business_asset_based_loan_financing.html

Choose Your Sources of Working Capital Finance for Business Credit

You have choices in sources of working capital finance and in business credit solutions.

It is all about understanding the problem and knowing where to go for the solution, so let’s look at those two key issues. Understanding the problem is not something you have to read about, as a business owner and financial manager in Canada you live the working capital ‘ crunch ‘ or ‘ challenge ‘ every day .

Working capital is best understood as your operating capital, and you have investments in receivables, inventory, that’s where your investment currently lies, and your goal is to monetize those assets in the best manner possible.
The textbook definition doesn’t really help us out – our accountants and analysts tell us to go to the balance sheet, subtract current liabilities from current assets, and , voila! That’s working capital!

One of the biggest contradictions in working capital that you need to understand is the issues of assets, profit, liquidity and turnover. Once you have a handle of those the concept of working capital and, more importantly, the solutions start making more sense.

We hate those textbook definitions we referred to, but we will agree that the calculation we shared needs to be positive – you do need more inventory and receivables combined as measured against payables and other short term liabilities. How you manage those short term assets of A/R and inventory is what working capital is about.

Many business owners quickly realize that one of their liabilities, i.e. payables, is actually a large asset in measuring working capital and managing it. That is because if you can continue to convert inventory into A/R into cash, and slow down payables you are achieving working capital progress.

Is there a perfect way to measure your working capital needs and progress? One of those methods is to check into the ‘cash conversion cycle ‘– It’s a tool you can use to measure how low a dollar takes to flow through your company. It simply takes your inventory and receivable days outstanding, subtracts your payables days outstanding, and there is your final number. It’s a great long tool to understand your working capital progress over long periods of time.

In order to achieve solid working capital you need to increase turnover – that can be done by accelerating cash flow by borrowing against receivables, or selling receivables via a factoring process.

Your working capital solutions in Canada are limited, but they are very focused and real. Your can increase working capital today with no ones assistance simply by accelerating turnover of your assets such as receivables and inventory. If you feel your challenge is more of a long term nature a working capital term loan (if larger these loans are called subordinated debt) is the solution.

You can also generate unlimited working capital by entering into an asset based lending or working capital facility with a non bank finance firm. Don’t forget that term loans for working capital add debt and obligations to your balance sheet, so we often suggest to clients that the best solution is in fact monetizing your assets, not borrowing more – that where asset based lines of credit work best.

So whats working capital all about – it’s a case of understanding what it is, looking at how your firm performs in key metric areas of turnover, etc, and then choosing a solution that works best for your firm, whether that is long term in nature, or a bulge type facility that augments your daily cash needs. Speak to a trusted, credible and experience working capital business financing advisor to determine what choice is best for your firm.
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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:
http://www.7parkavenuefinancial.com/sources_working_capital_finance_business_credit.html

Business Leasing and Equipment Financing in Canada

Your firm is growing, and guess who else is? Equipment leasing in Canada gets bigger every day. Doesn't it make sense that you have a basic understanding of equipment financing and who to turn to when you want to utilize this great asset acquisition technique? The reality is that almost 80% of all companies in Canada utilize lease financing when acquiring assets, from computers to plant equipment to specialized equipment.

There must be a reason businesses choose this type of business financing - ' ADVANTAGE'! When you utilize lease financing you are sharing the risks of asset ownership with the lessor and depending on which type of lease you actually choose - there are two types - you can actually use the equipment for the agreed upon term and return the asset . This type of financing, known as an operating lease, also lowers your overall financing expense. The other key advantage of course is simply lowering your cash outlays - allowing you to use your borrowing facilities for other purposes.

When we meet with clients exploring the leasing option a large part of the discussion is on rate and credit - that is what drives leasing approvals! You need to be able to understand, in advance, the financial requirements of a lease approval, and ensure you have positioned your company in the best manner possible.

The best news about equipment financing in Canada is that it covers all asset categories - even intangibles such as software when it comes to technology financing.

In Canada you can obtain lease financing via a couple of the chartered banks, independent finance firms, and captive lessors tied to manufacturers.

We recommend to the majority of clients in pursuing and independent finance company lease partner - credit conditions are more lenient, they are specialized, and highly motivated to do the one thing they do best, approve and write leases! Your most valuable partner in this industry is a trusted, credible , and experienced lease financing business advisor who can guide you very efficiently through the maze of firms in the industry . That relationship can be a very valuable one.

Business owners should never forget that when they adopt a long term leasing philosophy they are making their firm more competitive, because assets acquired to run the business can be easily upgraded and replaced, allowing that equipment to generate optimum revenues and cash flow . When you think about it almost all the assets you purchase depreciate, so why would you tie yourself to a depreciating asset. The Canadian Equipment leasing industry doesn’t want you to do that - the days are long gone re ' pride of ownership ' in assets, now its all about outsourcing, lower cost, newest model, etc . Probably the best example of this is computing and software, all of which can and should be leased.

Speak to a trusted, credible and experience business leasing advisor who can assist you in maximizing your knowledge of the Canadian asset finance industry, allowing you to use this valuable tool to grow sales and profits.
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http://www.7parkavenuefinancial..com/business_leasing_equipment_financing.html

Purchase Order Financing Tips and Secrets for Canadian Firms Seeking Trade Finance

Your worst business nightmare just occurred. You got the order/contract! Now what?!

Purchase order financing is a great tool for firms that have unusual purchase order and contract sales financing needs but are potentially unable to access traditional financing via banks or their own capital resources within their firm. How does trade finance P O financing work, does your firm qualify, what are the costs, and how does it work? Great questions, now let’s explore some answers!

Typically Canadian firms looking for this type of financing are distributors, manufacturers, or perhaps wholesalers. A variety of industries in Canada have access to this type of financing, but those certainly tend to be the typical firms needing assistance.

Your need for purchase order financing arises out of what we call the classic working capital gap. What do we mean by that? It’s a case of your suppliers requiring payment either up front or within 30 days, with your firm unable to generate those funds for payment and therefore unable to fill large purchase order and contracts in your favor . Your supplier is asking your for payment in advance or 30 days, and you wont receive payment for at least 60-90 days, perhaps more depending on your build cycle, etc.
Naturally you don’t want to turn down orders or lose competitive market position.

The obvious solution for low cost large amounts of funds are Canadian chartered banks, but our observation is that many firms simply cant satisfy the banks requirements for this type of financing to occur. If your firm is growing, profitable, has a clean balance sheet and strong historical cash flows and history you of course have a solid chance of meeting bank requirements, however that typically is not the case, certainly in the amount of clients we talk to who are looking for alternatives to their growth challenge !


When you access p o financing you can have comfort that your suppliers will be paid, and at the same time you generally have access to all the funds you need. Typical purchase order financing applications take anywhere from 2-4 weeks to complete and involve basic financial due diligence on your firms ability to fulfill the order, who your customer is (they must be credit worthy), and your proper supplier sources must be identified and vetted. It’s as simple as that.

So what are the basic pre requisites for a solid P.O. Financing deal? Naturally your company must be in possession of a contract or order that is not cancelable by your client. The P O finance firm arranges to pay your suppliers directly, that alleviates all you cash flow and working capital concerns. The transaction is completed when you ship the goods and your receivables are generated on the sale. It is at this time the purchase order finance firm expects to be paid, and this is traditionally handled by your firms monetizing of its receivable via a bank or factoring facility. Factoring facilities are great partners to the P O financing strategy, because use of them guarantees payment to your P O firm.

Let’s cover off a couple tips and secrets around the cost of purchase order financing – It generally is in the 2-3% per month range in Canada, and that means you have to have solid gross profit margins in order to be able to sustain the finance charges. But let’s be honest, let’s say your firm has been doing 750k of revenue for the last couple years and you finally get the large order from a major customer for 1 Million dollars. Wouldn’t you give up 2-3 % of your profit margin in order to make one sale which is the equivalent of your entire year’s business? We think you should positively consider that! Clearly the higher cost of this type of financing covers off the complexity and risk that the P O finance firm takes in paying for goods , waiting to get paid, and having the belief that your firm will fulfill the contract order .

It has been our observation with certain clients that your successful completion of a purchase order finance deal typically significantly enhances your relationship with your major suppliers and of course customers, that’s a secret benefit that is intangible but invaluable at the same time.

Is P O financing for everyone. Maybe not. Could it be possibly the solution to major working capital needs if your business is growing and can’t be financed traditionally – we certainly think so? Speak to a trusted, credible and experienced purchase order finance expert to explore your options.
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http://www.7parkavenuefinancial.com/purchase_order_financing_trade_finance.html

How to Assess Prices for Equipment Leasing And Other Benefits with Equipment Leasing Providers

As a Canadian business owner and financial manager you want to ensure you can obtain best prices for equipment leasing, and at the same time maximize other benefits under the entire lease financing proves. How do you address these issues with equipment leasing providers, and who are these firms and how do you locate them?
There are a number of considerations when you choose to acquire assets through the lease financing process. There are consequences to each decision with the business equipment finance process. And then there are those benefits we mentioned – what are they and which ones should be maximized by your firm. Let’s explore some basics on these critical financing points.
We have of coruse assumed you have made the decision to enter into an equipment financing arrangement. We should say however that hopefully you have also evaluated the alternatives, such as a bank loan or term loan, and, dare we say it, paying cash for the asset. While lease financing is often deemed a bit more expensive than those two options in the long run at the same time it is in many ways the ultimate cash flow conservations strategy when acquiring new assets for your firm, so any perceived or real additional cost has to be factored against that point .
That analysis we referred to above can be performed by yourself, or your accountant or business financing advisor with a simply template known as a ‘lease versus buy ‘template. It takes into account key aspects of the lease such as the term of the transaction, i.e. how many years you want the lease for, the interest rate, and also factors in as an example what you could do with funds based on the return on equity that you traditionally achieve for your firm .
You also want to carefully consider the type of lease that you require – there are two key asset financing strategies, and the ultimate answer to each is simply achieved by asking yourself on key question – is your focus owing the asset or using the asset . If you want to focus on using the asset then look at what is known as an operating lease. This gives you maximum flexibility, and quite frankly usually has the best cash flow analysis because the lessor retains ownership of the equipment. However, at the end of the lease operating leases give you some great flexibility – those flexibilities include returning the asset, buying it for an agreed upon fair market value, or simply extending the lease, which usually also has a lower monthly payment at that time.
The key really to all pricing for equipment leasing is to ensure you have a competitive rate, and one that affects your overall credit quality. The beauty of equipment financing in Canada is that financing is available for all credit types and asset categories. Your overall credit quality as perceived by the lessor dictates your price, with other key factors being the size the transaction, the asset quality and remarket ability , and , unbeknownst to many business owners, the ownership and structure of the lease provider you are dealing with . Lease financing firms have different asset appetites, some prefer small leases, some only do multi million dollar leases, and they in turn have their own funding and capital structures which dictate pricing to you.
We tell clients that as a general rule they should expect the best pricing when they are established businesses, are profitable, and have positive cash flows and clean balance sheets and income statements. Unfortunately not all our clients fall into that category, but as we said, the good news is still that equipment leasing providers for all credit quality and asset types and deal sizes exist in Canada .
Speak to a trusted , credible, and experienced lease financing advisor who will guide you thought the process of how the lease marketplace works, which firm is the best partner for your specific financing needs, what economic advantages you can hope to achieve, and how do you do a true benefits assessment for this valuable type of business financing in Canada .
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http://www.7parkavenuefinancial.com/prices_equipment_leasing_equipt_leasing_providers.html
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How Commercial Factoring works in Canada -Receivable factoring Costs and Benefits

Commercial factoring in Canada addresses some of the major issue your firm faces everyday in cash flow and working capital challenges. You know the drill – customers have always been slow to pay, they seem even slower these days. Your cash flow requirements change daily as you address working capital needed to finance inventory and receivables, and at the same time manage your investments in ongoing operations, debt payments, commitment to suppliers, etc.
Is there a solution to those challenges, we think there is. Is it as expensive as you may have heard, we are pretty sure it is not.
Commercial factoring is the ongoing sale of your receivables for instant cash. For many customers it always comes down to the rates and pricing they have heard about this type of financing. In Canada those costs range from anywhere from 9% per annum to 1-2% per month. So let’s address that cost issue a bit. When many customers calculate their ‘all in ‘cost of borrowing from banks it is often in the 11% range as an example. So it is important not to get ‘seduced ‘by your low rate expectations around traditional Canadian bank financing. Furthermore most clients we meet with simply can’t meet the requirements, (the banks call them covenants) for borrowing on a revolving ongoing basis for working capital, particularly receivables and inventory. So the conversation around pricing becomes somewhat moot.
Instead of worrying b about the cost of factoring consider the following – If you have money tied up in accounts receivable for , as an example, 60 days, then you are losing the opportunity to receive payment and re invest in your business and increase your overall return on equity . The more quickly you can get paid allows you to reinvest in further sales for your firm, those sales create more profits.
If you complete a receivable factoring agreement you have successfully negotiated a great coup – what is that coup? You have in essence provided your firm with unlimited working capital, because as your receivables and customer backlog of orders grow your cash flow from commercial factoring works lock step with that same growth. The bottom line is that most business owners view cash flow as unpredictable, and commercial factoring removes that unpredictability – you in effect control the cash flow valve – financing all or a part of your receivables when you chose.
Receivable financing is growing all over the world, North American no exception, and certainly in Canada it has been on the rise also. Many clients are in industries which might be viewed by others as ‘out of favor ‘. In general factoring doesn’t discriminate – if you have a receivable you can generate cash flow from that A/R – today!
Some of Canada’s largest corporations use this type of financing – when it comes to larger corporations fancier finance terms like ‘ securitization ‘ are used . Bottom line, General Motors factors, why you shouldn’t. That brings up a further point , which is that we do acknowledge that firms that have particular, unusual, or one of challenges are often the mainstream candidates for receivable financing . So your firm may have had some financial losses, be in a turnaround situation, etc – you are still a solid candidate for this type of business financing.
Factoring is the ultimate in off balance sheet financing – you are simply monetizing your receivables and generating cash instantly. The secret of factoring costs, or their perceived costs, is your utilization of those funds. You can use cash flow generated from receivables sales to pay invoices from suppliers and take a discount, or negotiate better terms and pricing for your products .

When you have additional working capital you can grow sales and revenue and increase profits – that financial flexibility is what this type of financing is all about. Sometimes it is a ‘bridge ‘solution, in certain cases it can easily become your long term ongoing working capital solution.

So whats our bottom line? Simply that you do have choices in working capital solutions. Commercial factoring is one of them. Understanding the true cost of the financing, how it works, and utilizing that cash for the right reasons just might be your best alternative for cash flow longevity.

Speak to a trusted, credible and experienced working capital advisor to ensure you understand the benefits of this unique type of business financing in Canada.

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http://www.7parkavenuefinancial.com/commercial_factoring_receivable_factoring.html

Purchase Order Financing Tips and Secrets for Canadian Firms Seeking Trade Finance

Your worst business nightmare just occurred. You got the order/contract! Now what?!

Purchase order financing is a great tool for firms that have unusual purchase order and contract sales financing needs but are potentially unable to access traditional financing via banks or their own capital resources within their firm. How does trade finance P O financing work, does your firm qualify, what are the costs, and how does it work? Great questions, now let’s explore some answers!

Typically Canadian firms looking for this type of financing are distributors, manufacturers, or perhaps wholesalers. A variety of industries in Canada have access to this type of financing, but those certainly tend to be the typical firms needing assistance.

Your need for purchase order financing arises out of what we call the classic working capital gap. What do we mean by that? It’s a case of your suppliers requiring payment either up front or within 30 days, with your firm unable to generate those funds for payment and therefore unable to fill large purchase order and contracts in your favor . Your supplier is asking your for payment in advance or 30 days, and you wont receive payment for at least 60-90 days, perhaps more depending on your build cycle, etc.
Naturally you don’t want to turn down orders or lose competitive market position.

The obvious solution for low cost large amounts of funds are Canadian chartered banks, but our observation is that many firms simply cant satisfy the banks requirements for this type of financing to occur. If your firm is growing, profitable, has a clean balance sheet and strong historical cash flows and history you of course have a solid chance of meeting bank requirements, however that typically is not the case, certainly in the amount of clients we talk to who are looking for alternatives to their growth challenge !


When you access p o financing you can have comfort that your suppliers will be paid, and at the same time you generally have access to all the funds you need. Typical purchase order financing applications take anywhere from 2-4 weeks to complete and involve basic financial due diligence on your firms ability to fulfill the order, who your customer is (they must be credit worthy), and your proper supplier sources must be identified and vetted. It’s as simple as that.

So what are the basic pre requisites for a solid P.O. Financing deal? Naturally your company must be in possession of a contract or order that is not cancelable by your client. The P O finance firm arranges to pay your suppliers directly, that alleviates all you cash flow and working capital concerns. The transaction is completed when you ship the goods and your receivables are generated on the sale. It is at this time the purchase order finance firm expects to be paid, and this is traditionally handled by your firms monetizing of its receivable via a bank or factoring facility. Factoring facilities are great partners to the P O financing strategy, because use of them guarantees payment to your P O firm.

Let’s cover off a couple tips and secrets around the cost of purchase order financing – It generally is in the 2-3% per month range in Canada, and that means you have to have solid gross profit margins in order to be able to sustain the finance charges. But let’s be honest, let’s say your firm has been doing 750k of revenue for the last couple years and you finally get the large order from a major customer for 1 Million dollars. Wouldn’t you give up 2-3 % of your profit margin in order to make one sale which is the equivalent of your entire year’s business? We think you should positively consider that! Clearly the higher cost of this type of financing covers off the complexity and risk that the P O finance firm takes in paying for goods , waiting to get paid, and having the belief that your firm will fulfill the contract order .

It has been our observation with certain clients that your successful completion of a purchase order finance deal typically significantly enhances your relationship with your major suppliers and of course customers, that’s a secret benefit that is intangible but invaluable at the same time.

Is P O financing for everyone. Maybe not. Could it be possibly the solution to major working capital needs if your business is growing and can’t be financed traditionally – we certainly think so? Speak to a trusted, credible and experienced purchase order finance expert to explore your options.

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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:
http://www.7parkavenuefinancial.com/purchase_order_financing_trade_finance.html

Film Tax Credits Canada – Creative Finance That Is Real And Works!

If your production in film, television or digital animation requires financing then Film Tax Credits in Canada are solid ways to augment your overall finance plan. In order to finance your credits your tax credit certificates must of course qualify for Canadian content in the appropriate categories and must satisfy the rules set out by Ottawa and your province relative to personnel and production costs.

In the last couple years the government has made a commendable effort to streamline the application processes for film tax credits and we must remind readers that these credits apply equally to the television and digital animation areas.
In the digital animation areas you might also be eligible for SR&ED credits under what is known as the Scientific Research and Experimental Development program. This is without a doubt Canada’s largest program for tax credits, far surpassing the film, TV and animation area

Financing of productions can be very traditional or very creative, but without a doubt tax credits can play a key role in either total finance strategy. Typically productions are financed in the following manner: Non studio producers, i.e. the independents arrange distribution and pre sales of the project. Typically you are entering into an agreement to give the other party the rights to display your production via TV, DVD, etc in that particular geography. Many pre sales budgets we have seen show a best case and worst case pre sales scenario. The pre-sale financing are, in effect, promissory notes to your special purpose entity for this production. The next financing challenge is to ‘finance’ those promises to pay for a number of different finance entities, including banks, specialized firm finance firms in Canada, etc. In Canada 2 or 3 of the nations banks are somewhat actively involved in this area – while others shun the industry as too high risk for traditional lending.

You of course are also required to post a completion bond covering cost over runs and the ultimate completion of your project.
Film tax credit financing is one of the final elements of your overall finance strategy. Your tax credit is, in Canada, in essence a government subsidy, so why shouldn’t you take advantage of it. Tax credits finance a very large part of what is known in the industry as the ‘below the line ‘budget. These are, in effect, your actual production expenses.
You therefore must ensure your production qualifies for the right expenses, and typically those are validated by an accountant or firm with entertainment accounting experience. By utilizing a Canadian actor component , as well as technicians and other resources you have set your project up to both qualify for the tax credits, and, then more specifically to cash flow or sell these credits .

In order to finance your credits you should have an overall finance plan, and a strategy for the equity and debt components of your production. Validate your budgets and ensure your productions have the required ‘points’ in order to qualify. Film tax credits can be financed on filing, or, more popularly, as you spend funds, which are then re imbursed via the tax credit financing.
Speak to a trusted, credible, and experienced film tax consultant around your ability to maximize and capitalize on this critical strategy within ‘Hollywood North’, aka Canada!
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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:
http://www.7parkavenuefinancial.com/FILM_TAX_CREDITS_CANADA_FILM_TAX_CREDITS.htm

What If Your SR &ED Research Tax Credit Grant Could be Financed For Funding Today via a SRED Loan?

If your company is filing what is known as Scientific Research and Experimental Development Tax Credits, (SR & ED) your firm has expended significant funds on developing or improving products, processes, etc. Receiving that cheque from Ottawa is of course always a great thing, but why waits?

One of the smartest things you can do is to consider the financing of your claim – that can be done via a short term sred loan – we could almost call it a bridge financing loan for your sr&Ed claim. Why is that a good strategy? Well , one main reason might be that since the tax credit is in the form of a non repayable grant then receiving funding for it today , ( rather than several months or a year from now ) allow you to put that money back to work into your business . That valuable cash, which you have already spent, can be re directed to general working capital, further re investment in r&d, reduction of payables, investments in new equipment, well you get it, for an general worthwhile corporate purpose .

To finance your claim it only makes sense that, first of all, you are eligible, and that you have in fact filed the claim. Your claim is of course filed by yourself and your accountants at your fiscal year end, via policies developed by Canada Revenue. Each province might have a little different spin on the amount you can claim but the federal portion of the claim always stays the same.
When financing a SR and ED claim the lender pays careful attention to who prepared the claim for your firm. This is typically via what the industry calls a SRED consultant, who typically has expertise in one or a variety of industries, including such areas as computer science, technology, physics, chemistry, manufacturing, etc.

SR ED claims can be financed whether your claim is a first time claim, but the process often goes quicker and easier if you have filed successfully in the past. Our point is simply that you should not be deterred if in fact you are filing for the first time – however as a cautionary note you should note that more focus will probably be paid to the overall quality of the claim and who prepared it for your firm. You can actually claim for a 2 year period, i.e. your current year and the previous fiscal year.
Clearly most business owners and financial mangers who utilize the program recognize the tremendous benefit of increasing your overall return on R&D by filing a claim and recapturing your funds. And if you can utilize those funds sooner rather than later, why not consider financing, or in effect monetizing the claim.

Financing your SR and ED claim can of course assist in your overall cash flow and working capital position. Claims are generally financed at 70% of their filed value, that allows a 30% buffer in case adjustments are made to the claim , and , guess what, you make no payments on the sr ed loan . Funds you receive are netted out against the final cheque from Ottawa and your provincial jurisdiction when your claim is ultimately audited, approved, and funded.

Clients often ask how complex a sred loan is, and what the timing is to receive funds. With your full co operation funding can usually be done within a couple weeks of your application, and the reality is the sred funding is no different than any other business financing your might entertain. It’s that simply, you complete a standard business application, and at the same time provide details of your sr Ed claim which in effect is the collateral for the financing. You aren’t incurring debt, which is a relief to business owners; you are simply ‘monetizing ‘your asset, in the same manner as you would if you were financing a receivable .

Speak to a trusted, credible, and experienced advisor in sred loans, and determine the advantages of monetizing your sred claim into valuable cash flow and working capital. That’s solid use of one of Canada’s greatest programmes for industries of all type.
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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:
http://www.7parkavenuefinancial.com/sr_ed_research_tax_credit_sred_loan_sr_ed_loan.html

What You Need To Know About Franchise Financing In Canada

Franchise financing in Canada has to work for you as the franchisee as well as your franchisor and of course your lender(s). How do you access franchise finance after you have made the critical decision to purchase a new or existing franchise – in many cases you may be fighting timelines and need to ensure that you have access to all the proper information about financing your business , and , more importantly, ensuring you have put together the best franchise financing package . Let’s examine some of those issues.

Financing is available for pretty well very type of franchise in Canada , and most people are very surprised to hear that franchising as a whole in Canada accounts for close to half of all our retail sales – that’s a staggering figure, so franchisors must be doing something right !

We are all probably keenly aware that many franchisors in Canada are in fact branch organizations of U.S. based systems. That is ok as long as your franchisor has an acceptable and successful franchise model. Financing for your Canadian purchase should not be affected by a U.S. ownership of your franchise system.

There are a couple of major questions that, if clarified early on in the process, will allow you to finance your new business in a successful manner. One of those key questions is whether your franchisor has a program in place that they either self fund, or perhaps work in partnership with a Canadian financier such a bank. However, in our experience we caution clients not to rely or think they will receive a huge amount of assistance, particularly financial, in setting up their business. There is one clear reason for that, the franchisor is in the business of selling franchises and using your funds to build the next one – that’s how it works, and there is of course nothing wrong with that.

What the franchisor can in fact do though is to give you guidelines around how their franchisees have been financed in the past, and provide you with sample breakdowns of financing needs. Financing needs for a franchise come in a couple concise categories – they include the franchise financing fee itself, equipment and leaseholds that may be required to open the business, and of course on going working capital .

On going working capital is a key point, imagine the disappointment or stress of financing a franchise for purchase and then slowly discovering you don’t have enough working capital to fund receivables, inventory, growth, equipment and expansion needs, etc .

Clients are always asking if financing a franchise in Canada is different from financing any other business. The answer won’t be one of your favorites – the answer is yes and no! Any business, franchise or not, requires a finance plan to purchase the business, a business plan to map out costs and growth, and ongoing working capital financing. In that manner franchise finance is similar to starting any business. Where it differs is that there are a limited number of ways in which a franchise is financed in Canada. It may surprise most entrepreneurs that banks and other lending institutions and firms view the industry fairly positively – we think that’s because there is strength in a proven business model, resaleability, and the branding that comes with your purchase.

Financing your business purchase has to be a carefully followed roadmap. In Canada the majority of franchises are financed by a special program called the CSBF program, which in fact is a program supported by the government and administered by the banks. As an owner you have to put some of your own equity into the business. The key challenge is whats the right balances for that amount – you don’t want to borrow too much, and conversely you may or may not have a huge amount of equity to put into your purchase of a new or existing franchise. We say existing franchise because it is perfectly acceptable to purchase a business, and finance it, from an existing franchisee. In some cases the financing is actually easier because there are financial statements and a finance history to the business already, as well as possible existing assets to the business.

In order to finance your franchise you require a breakdown of the different asset categories – as well as a business plan that shows cash flows and projected profits. As a business owner you should have some experience or skills related to your purchase, and we already have mentioned that fact that you must put a ‘reasonable ‘down payment into the business from your own funds. Business owners with spotty personal credit histories have a larger challenge in getting financed, as there is an emphasis on how you have run your affairs in the past.

In summary, focus on getting the right franchise that suits your skills and risk tolerance. Understand your finance plan as it relates to the purchase and ongoing needs of your business. Speak to an experienced, credible, and trusted franchise financing expert to ensure you can successfully complete your acquisition and commence your entrepreneurship journey!

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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:
http://www.7parkavenuefinancial.com/franchise_financing_in_canada_today.html

What If ABL Was Your Secret Weapon in Business Financing in Canada?

Do you believe there is a business financing tool that works perfectly when other forms of financing, traditional or otherwise will not? Is there a secret acronym for this tool? Yes, there is, it is ABL.

You know the next questions clients ask, what is ABL?! It stands for asset based lending, and it is something that just might be your best choice for financing your business in Canada.What if you have a financing mechanism that was a non bank type financing that covered all every size of business, all industries in Canada, and did not place a major emphasis on your balance sheet, income statement, profits or lack thereof! And was, relatively speaking easy to arrange.

We can hear you lining up as we speak! Let’s talk a bit about what this financing is, how it works, and cover off some key questions that clients have about costs, day to day paper flow and reporting, and the key advantages. If there is a ' downside ' to this financing we will cover off a couple of those concerns also, and we'll let you make up your own mind.So what is ABL, or asset based lending. It simply allows you to borrow, on a regular, ongoing basis, against; you guess it, ' assets '! Your assets in any business are always going to be the same and they can be categorized into a few key categories which include receivables, inventory, equipment, and, in some cases real estate.

When you are in a traditional Canadian chartered banking relationship your lender lends against those same assets, but probably not to the extent that a true asset based line of credit would provide you with. And the pre requisites for that banking facility are all two clear for Canadian business owners and financial managers - they include profitability, solid balance sheets, profits, personal guarantees of owners, and potentially external collateral. That’s now what ABL is about, it’s about only your assets, and monetizing them in a fashion that makes them as liquid as you need them to be.

A typical asset based revolving line of credit would margin all your receivables, a significant extent of your inventory, and include drawdown ability on unencumbered equipment and real estate if they in fact were available and required. You therefore only have to remember one thing in ABL lending, ' assets ' - if you have them they can be financing.

Clients always want to know if and how they qualify for such a facility. You must be in a position to provide some decent reporting around the aging of your receivables, the turnover of your inventory, and the market value of your equipment. We would respectfully suggest if you can’t do that you might not even be a candidate for staying in business, so those certainly aren’t onerous requirements.

Business that are the best candidate for this type of financing are those with high growth patterns, or firms which are coming out of a challenging period in their history . A frequent misunderstanding around this type of financing is that it is ' debt ‘. That is not the case. It is simply the monetizing and cash flowing of assets, which are accelerated by your borrowing ability and your management ability to create a further turnover, and hopefully profit around those assets.

A perfect world rarely exists in business financing - but ABL could be your solution. The two disadvantages, or potential concerns are the higher cost of this financing, as well as the additional reporting we spoke about.

Looking for a secret business financing weapon or tool to stay ahead of the competition? It just might be ABL, or asset based financing - Speak to a trusted, credible and experienced advisor in this area who can help you gain the competitive financing edge you are looking for.

The #1 Reason Your Best Business Financing Choice Could Be Asset Based Lending

There is one overriding reason why asset based lending could be your best choice for business financing in Canada. What is that reason? Simply that it works when other types of financing are not available or don’t fit your current financial status.

The reality is that asset based lending works for all firms in all types of industries, and is not dependent on your overall financial performance that might be the focus of a more traditional based financing. That’s a powerful statement, so let’s examine what the financing is, how it works, and answer some key questions that might help business owners and financial managers determine if this financing is the solution to many, or all of their financing challenges.

So let’s back step a bit. What is asset based financing. Focus on one key word in that phrase – assets! This method of financing simply allows you to monetize and draw on the market value of the assets of your firm. Those assets are in very predictable categories, they are receivables, inventory, equipment and real estate. If you have one or all of those your firm is a prime candidate!

In some cases this method of financing is confused with factoring. Factoring is the sale of one of those asset categories – your receivables. An asset based line of credit lends against receivables, but also includes, inventory, equipment, etc. That is the difference!

The prime difference in qualifying for such a facility is really the difference that exists when you compare this type of financing to a Canadian chartered banking relationship. That banking relationship comes with a number of requirements that are often not needed when an asset based line of credit is in fact your real and best solution. Some of those traditional requirements might be profitability, years in business, the type of industry you are in, guarantees of shareholders and owners, etc. Those qualifications are not the focus of asset based lending. However the assets are.

On a day to day basis how does this type of business financing work. It’s quite simply. You and your asset based lender determine on a regular basis, i.e. weekly, monthly, etc what your asset categories total - a borrowing based is then developed on those categories and funds are depositing into your bank account for use as working capital by your firm. In Canada a 250k facility is more or less the bottom level of this type of financing, and facilities can be arranged into the many millions of dollars.
So if you want an easy way to remember the difference between this type of financing and a bank revolving line of credit simply remember that the bank focuses on overall financial strength and cash flow, our facility focuses on assets!

Because your assets are being financing as the primary focus of this type of facility you will have to report on those assets probably on a much more regular basis , so your firm should be in a position to prepare regular reports on receivables, inventory turnover, etc. When fixed assets are being financing, i.e. unencumbered equipment you own, etc then in many cases an initial appraisal will be required. This small dollar investment though can generate thousands or hundreds of thousands of dollars in working capital.
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For "asset rich" companies, an asset-based loan may make more funds available because it is not based strictly on the anticipated levels of cash flow. Additionally, the structure often requires fewer covenants, providing more flexibility for many borrowers.

So why is this then in many ways the best method of financing your business? Does it actually add cash to your firm? That is where some confusion comes in, but simply think of it as no adding new cash per se to your firm, it simply accelerates or quickens the cash flow that is traveling through your business. By financing your receivables and inventories to the maximum possible you turn over new sales and generate increased profits, and that’s what business financing is all about.

You may not even have heard of asset based lines of credit, perhaps you have but didn’t understand how it works or how it compares with other types of business financing. Investigate how this facility can become potentially your best choice in the overall financing of your business. Speak to a trusted, credible and experienced advisor who can work you through the Canadian landscape of asset based lines of credit.
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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:
http://www.7parkavenuefinancial.com/business_financing_asset_based_lending.html

Your Company Needs Business Credit - Commercial Loan Alternatives in Canada

As a Canadian business owner and financial manager you realize you need business credit or a commercial loan, if not all the time, some of the time. Funds for your business are required for what everyone refers to as ‘working capital ‘. That challenge is wrestled with everyday by your firm – purchasing inventory, paying employees, investing in assets, and, unfortunately, waiting for customers to pay. And you of course are still waiting – for those customers to pay.
Business credit is achieved in a variety of manners. Financing alternatives are available for the start up firm to major corporations – there are only 4 ‘minor’ challenges around those alternatives.
1. Are you as a business owner aware of all the different financing alternatives
2. What are the advantages ( and disadvantages ) of those options
3. What do they cost, how do they Work?
4. Where do I get them?!

And yes, we were being a bit facetious, because those are not MINOR challenges!
We can safely say that if your company is credit worthy, has solid financials, is profitable, is in the right industry, and has lots of assets and collateral that you can be financed in totality by a Canadian charted bank .But there are thousands of businesses in Canada that don’t have those qualifications, but they still require credit lines and receivable financing, inventory advances, equipment financing, potential real estate mortgages, etc
If you business can’t access all the financing you need then its time to look at some of those options and alternatives we spoke about. Receivable financing is right up there today in popularity .Also called ‘factoring’ it is the immediate sale of receivables that generates immediate working capital for your firm. It is easy to obtain, efficient, and eliminates a lot of the requirements that come with typical lending standards. This is probably the fastest growing part of business financing today in Canada, and we encourage business owners to speak to a credible, successful and experienced expert in this field to ensure they understand the basics around cost, daily paperwork flow, and potential pitfalls around some of the loopholes some factors insert in their paperwork with your firm.
One of Canada’s quasi government entities offers a specialized working capital term loan. The loan is essentially unsecured, has a competitive interest rate, and injects positive and permanent working capital into your firm. Check out that option.
Many clients always refer to the term ‘Government grants and loans ‘. The two most popular programs, if we can call them that, are the government Small Business Loan as well as the SR&ED program which provides non repayable grants on your research and development. The former, the infamous ‘ SBL ‘ loan, finances equipment and leaseholds at great rates, terms , and structures, with even limited personal guarantees.
So whats our bottom line on business credit and commercial loan alternatives – keeping it simple we can say that you should be aware of alternatives, they do exist. Traditional financing is available, and alternative financing is abundant – work through the mechanics with some experienced assistance and determine what type of business credit options work for your company.
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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:
http://www.7parkavenuefinancial.com/business_credit_commercial_loan.html

Business Leasin g - How to Get Approved for Lease Finance For Your Equipment Needs

Business leasing and lease finance continue to play a main role in your overall equipment acquisition strategies. In Canada the equipment financing industry is very mature and developed, and as a business owner and financial manager you have a number of financing options. Most lessors are non bank entities and are much focused on certain types of assets and lease types that are offered.

Let’s examine how you can maximize your chances for approval for your asset finance acquisition. It is important to know how the other side thinks and behaves – That other side is your lessor. Your lessor is motivated in three ways, and if you know those motivations you can focus on maximizing the benefits in leasing and, of course, get approved.
We can safely say that the three motivators for any lease company are the tax and accounting benefits they derive from leasing you equipment, the interest rate they charge you on the transaction, and finally the asset re sale or disposition if the asset is structured as a return to a leasing company.

Let’s focus on lease company motivator # 3 for a moment – the remarketing of the asset. If you do not want to retain ownership of the asset at the end of the lease you are probably going to want to enter into what is known as an operating lease. The key elements of any lease structure are: term of the lease, interest rate, value of your transaction, the monthly payment, and you obligation at the end of the lease.

Therefore it is important to focus on a firm that specializes in operating leases if you intend to approve the equipment – and getting to the core of our subject matter, your lease approval on an operating lease becomes much easier if you structure a financing that meets both your requirements and the lessors.

We can safely say the most critical element in getting your transaction approved is the overall credit quality that your firm portrays on your lease application and supplemental business info that might be required by the lessor. You should know that the smaller your equipment lease the less attention will be paid to overall credit and due diligence – that just makes sense. In Canada many leases under, say $ 50,000 as an example are credit scored via some basis info that the lessor acquires on your firm or the business owner. This data might be a commercial credit report, a credit report on the owners, and viewing some payment experience with some of your other suppliers. Small ticket leasing in Canada is very easy to acquire.

The larger challenge comes when you are acquiring assets over the 50k range. If your overall credit and financial position is weak you can well be expected to offer up items such as additional collateral, a down payment, or a guarantee buyback from the vendor.

Your focus on getting approved is the challenge, so you should know that there are different tiers of credit quality, and the lessors adjust the rate on your transaction to reflect the overall credit quality of your business, taking into consideration the asset also. So if your firm does not have pristine credit you should still be 100% aware that lease financing can still be approved and is available. Factors that now come into play under this scenario are the higher rate, a down payment request, etc.
Clients are always asking how they can position their transaction for approval. The reality is that you are, in many ways, in charge of your own approval. What do we mean by that .Simply by putting together a basic package that focuses on key areas such as your years in business, your ability to make the lease payments in question, your industry experience, etc can often garner a positive approval?

Financial statements may or may not be needed for your lease approval – this often depends on the amount and the policies of that lessor. If you are required to provide financials then the focus will be on historical cash flow. We tell clients that it is a bit of an irony that many lessors use your historical cash flow to approve your future dealings. From our perspective that was then and this is now!

In summary, you as the lessee can be key factor in your business leasing and lease finance approvals .Understand the type of lease you want, position your company in the best light possible by preparing the data we have shared with you that lessors focus on, and be fully aware that lease approvals of any size can be properly structured to make sense for both parties, your firm, and the lessor. Speak to a credible, trusted and experienced business lease financing advisor to ensure you get the approval you need and deserve for equipment leasing in Canada.

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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:
http://www.7parkavenuefinancial.com/business_leasing_lease_finance.html

How to Take Advantage of Commercial Finance Factoring Services in Canada

Commercial finance factoring Services may be the solution you are looking for business financing and working capital for your firm. You may or may not be aware that this type of cash flow financing is used by Canadian firms from start up to major corporations.

So what are the benefits of such a business financing and how is your firm able to take advantage of these. The bottom line in business usually always come back to cash flow, and a commercial finance factoring service or facility ( we like to call them working capital facilities ) gives you a form of predictable cash flow . Essentially your working capital grows lock step in pace with your sales growth, and handles all those up and down fluctuations in between.

When we discuss this financing with clients we often use a term ' you pay only for what you use ‘. That is because your firm essentially controls the cash flow spigot, if we can call it that. You have the ability to finance one invoice, a number of invoices, or all your receivables. It's your call!

Invariably the discussion around factoring, also known as ' invoice discounting ‘turns to cost of this service. First of all you have to know how the financing works, at which point you can then assess the costs and the advantages.

Let's look at a quick actual example to ensure we understand the process and cost. Let’s say one of your invoices has just been issued and it’s for $ 10,000.00 - we'll use a clear example and round number in our demonstration. So what happens next? Your firm is advanced, immediately, i.e. almost same day, approx 90% of that invoice amount. So you receive $ 9000.00 at the same time your customer receives their invoice! Your factor discount, i.e. ' the fee' might typical be 2% on this transaction. So if your customer pays the invoice in 30 days (*we’ll be back o you on that one!) your firm receives the balance owing to you, i.e. the holdback, less a 200.00$ fee. ** We realize that not all customers pay in 30 days!

So what just happened here? You made a sale, you got cash immediately for 90%, and you got the balance of the cash (in our case $800.00) when your customer paid. Your cost was 200.00$.

Astute business owners and financial managers can use that immediate cash wisely and productively. You could pay a supplier invoice that you just received, and take a 2% discount for prompt payment. You have just strengthened your relationship with a supplier, and saved 2% - and wait a minute, didn’t we have a 2% factor fee. If you net those two out your financing cost has been effectively reduced to almost zero.

Are all fees in Canada the same, and do all facilities have the same sort of business model and paper flow? The answer is no, they don’t. Your final factor fee, or discount fee depends on your client profiles, how much of a facility you need, the invoice size, and, the most important - how well your clients pay. Remember you can now finance those clients that pay in 60-90 days and have tied up your working capital, but ensure they are profitable clients because at 2% per month carrying cost that erodes your profit margins.

In business it’s all about turnover and your ability to turnover your inventory and, in our case, receivables ultimately determine your financing costs to carry your A/R investment.

Think of commercial finance factoring services as your own ATM machine for cash flow. It becomes a solid potential alternative to term loans with fixed interest, or bank financing that has the requisite requirements that come with a bank deal - solid financials, profitability, guarantees of owners, external collateral, etc.

For those business owners and financial managers that want to get a bit more analytical about the numbers here is another way to look at it - let’s use our same example: If you factored 10,000 once a month all year would have had the use of 120,000.00 in total capital. So your total finance costs on that would be 2400$.

If you borrowed 120,000$ in working capital from your bank at a rate of 6% per annum on a typical 3 year term you would pay over 10,000$ in interest for the same capital . The factoring financing using that logic was cheaper than the bank by at least 8000.00$.

So whats our bottom line? It’s simply that our basic arithmetic has shown us that if we take advantage of commercial finance factoring services we are in control of our own cash flow destiny as well as having the ability to increase sales and offset financing costs with careful use of cash flow and working capital from this unique type of business financing. Speak to a trusted, credible, and experienced business financing advisor in this area to maximize the advantage!

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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:
http://www.7parkavenuefinancial.com/commercial_finance_factoring_services.html