What Types Of Loans Are Available For A Canadian Franchisee When Financing A Franchise ?

Successfully Navigate Franchise Finance in Canada



Information on financing a franchise in Canada . Does a Canadian franchisee have options when it comes to types of loans and finance that are available ?



What types of loans can a franchisee in Canada expect to attain when he or she is financing a franchise in the Canadian market? Even more importantly how do you qualify and access that financing?

Those are typical questions clients ask us all the time , so lets examine some critical info that will allow you to be successful in completing a franchise finance acquisition.

A good way to start is to build up a bit of a ' checklist ' on what you need to both investigate a franchise opportunity, as well as to present a finance proposal for that opportunity.

We add also that you have the option of course of purchasing a franchise from an existing franchisee, or working directly with the franchisor on a new unit acquisition. There is a big difference in purchasing an existing franchise for a number of reasons, some good, some not so good. First of all an existing unit of course allows you to independently validate the financial results and assets of that business, that’s a good thing. Your accountant, a Canadian business financing advisor, lawyer, or appraiser can assist in various ways to validate the true value of your purchase.

When you are financing an existing franchise it is important to ensure you are completing the transaction as an ' asset sale ' as opposed to a ' share sale '. It is extremely difficult, if not impossible to finance a share sale arrangement.

When you are financing a franchises types of loans dictate what will be financed and how. The key aspects of any franchise acquisition revolve around the following: the franchisee fee, the royalty arrangement, equipment, leaseholds, and sometimes forgotten ' working capital ' to ensure the future growth and health of the business.

If your franchise requires that you have physical leased premises it is critical to ensure that the term of the lease for those premises will at least match the term of the loan financing you are hoping to achieve. Simply speaking, a franchisee can’t get a 5 year loan for a business that has a one year lease! Makes sense, right?

Prior to starting to focus on the financing of your new business and life as an entrepreneur you should of course have completed what the legal and business folks call ' due diligence ' on your franchisor . That might include references from another franchisee, whether they are compliant with franchise regulations in Canada how royalties are paid and structured, etc. The bottom line? There are a lot of rights (and obligations) for you and the franchisor... ensure you understand wha they are.

As we referenced earlier start up capital and final approval can be challenging if you are not well armed with info and resources. In Canada the banks and some other institutions, (but mostly the banks) are the ' approved lenders' for the government BIL/CSBF program.

The vast majority of franchises in Canada are financed under this program. You would be totally missing the boat if you did not at least investigate why this program is one of the best methods of financing a franchise in Canada. The simple reason - just that it has great rates, terms, structures, repayment without penalty ability, and yes, even a low personal guarantee or ' covenant ' requirement.

Maximize your financing potential as franchisee by speaking to a trusted, credible and experienced Canadian business financing advisor who can help you navigate a path to entrepreneurial financing success.




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 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


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

How Asset Based Lending Loans Competes With A Bank Business Line Of Credit Loan – Do You Understand ABL Finance?

Don’t accidentally discover asset based lines of credit!


Information on Canadian asset based lending Finance . Why ABL Loans are a direct competitor to a bank business line of credit . A finance alternative for business owners in Canada .


We're the first to endorse healthy competition in Canadian business finance (although it’s not as fun when we're doing the competing) so it seems a good time to profile ABL asset based lending and business line of credit loans which compete directly with Canadian chartered bank facilities.

To say that Canadian business finance has changed over the last ten years or so would be a dramatic understatement. The reality is that a whole new wave of offerings to commercial business borrowers are available, and they come, you guessed it, not always from the Canadian chartered banking system.

Independent finance companies, some from the U.S. and even overseas have a multitude of new products for the Canadian business borrower. Even the internet empowers the Canadian business owner and financial manager as it often reveals a multitude of varied choices to those willing to search. Entering a keyword such as ' abl asset based line of credit ' will get you tons of info on alternative business credit facilities.

While banks often command the first train of thought when it comes to business finance for a revolving line of credit asset based lending finance is gaining more traction everyday.

So let’s provide some clarity around ABL finance in Canada. If there is one differentiator of the product it’s simply that the total focus of the facility revolves around one word, ' assets '. Non bank asset based loans are more flexible than a traditional bank offering, and at a time when more is better they leverage your assets significantly greater than a bank facility. Remember that an ABL loan is typically from an unregulated lender; they have different sources of capital and don’t require key elements that are necessary in the Canadian chartered bank system.

Clients, and we can forgive ourselves also, often make the mistake of viewing the asset based business line of credit a as a term loan... in fact its not. It’s simply a monetization of assets with the intent to liquidate the assets or collateral in the event of a default. A good way to look at it is to view it as thinking of your assets having to perform, not our ratios which tend to become the prime fixation in a commercial business line of credit.

So why the sudden and growing popularity in asset based lending in Canada. We think the answer to that is the fact that it covers every type of industry, retail, manufacturing, service, etc. But more importantly it also addresses your company life cycle.

An asset based ABL finance facility can be achieved for a start up, an established growing firm, and yes, those firms that have suffered severe financial challenges. In the ' old days' (yes we remember them) it was not uncommon for forms of asst based lending to be viewed as a ' last resort' type of financing. Fast forward to today and some of the largest corporations in the world, in Canada included; utilize this financing as opposed to a traditional bank facility. So something must be working!

So what would you need to start discussion around this type of facility? Typically it’s just the basics: your financial statements, aged receivables and payables, and detailed asset listings of any fixed assets. And by the way those fixed assets can easily become part of your revolving day to day facility - that’s clearly a major advantage when it’s required.

Speak to a trusted, credible and experienced Canadian business financing advisor to better understand how asst based loans can monetize your firm’s assets into an ABL facility that provides you with maximum working capital and asset leverage.



ABOUT THE AUTHOR :
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 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


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

On Top Of The Latest Trends In Canadian Growth Financing ? Working Capital & Purchase Order Finance Alternatives

No Jargon Get It Done Today Finance Solutions for Businesses in Canada


Information on growth financing alternatives in Canadian business . How working capital solutions such as purchase order finance can provide alternatives to business challenges .




Staying on top of any aspect of your business is important, and that includes ensuring you understand some of your alternatives when considering growth financing and working capital solutions. We're talking about everything from standard solutions such as working capital term loans all the way out to the end of the spectrum, the new kid on the block, purchase order financing.


When the SME sector (small and medium sized businesses in Canada) can't meet the requirements of a Canadian chartered banking solution then what are some of the alternatives. The last couple of years have been somewhat brutal on manufacturing companies, balance sheets have been hit and breakeven, let alone profits have been touch to achieve for many.

A total solution for many firms is to utilize a Canadian asset based lender to address numerous challenges at the same time. Let's examine a typical situation which many clients have found themselves in over the last couple years. They might have secured debt via a bank revolver or term loan, coupled with challenges around CRA arrears and accounts payable which have ballooned due to an overall working capital shortage.

In this type of case, as profiled above the growth financing comes from an all encompassing working capital facility to replace the banking solution, This type of financing margins receivables to 90%, provides a healthy margining of inventory previously not available ( anywhere from 30-70%). In more rare cases a straight cash flow loan might be added to the facility to further enhance the working capital

The bottom line is that the asset based growth financing solution solves a number of problems around collateral, size of the facility, and general health of your firm. Most importantly it addresses your company's ability to grow again and fund that growth at the same time. In effect we've achieved a hybrid type solution that many small and medium sized firms sorely require.

And what about that purchase order financing concept. Actually it’s not a concept; it’s a viable solution that gains more traction everyday. The P O finance solutions bridges the gap between fulfilling your contract or purchase orders from the time you receive them to your ability to get final payment from your end user customer. In some cases, but not all, purchase order financing involves a foreign supplier, either in the U.S., Europe or Asian. Your P O financier makes payment to your vendors, on your behalf, taking the products, inventory and receivables from that transaction as security. It is a more expensive form of financing but provides a valuable bridge to sales growth success.

So, is staying on top worth it? We think so, therefore you will want to ensure you have thoroughly investigated all solutions available for growth financing in Canada. Speak to a trusted, credible and experienced working capital financing advisor who can assist you in identifying solutions that make sense... for you!



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 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


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

5 Reasons Why Your Competitors Lease Equipment – Achieving Great Leasing Rates On A Commercial Equipt. Loan

A Canadian Equipment Financing Perspective


Information on why Canadian companies lease equipment and how the best leasing rates and terms and structures are achieved on a commercial equipment loan .






Recently we ' Canadianized' a U.S. update on what was termed the ' 10 Advantages of Leasing Equipment. The U.S. document also spoke of the top 5 reason why companies lease... We thought those were worthy of some comments also.

Canadian owners and financial managers who wish to lease equipment or obtain a commercial lease/loan for equipment are not only motivated by good leasing rates. Let’s examine some of those other motivators also.

Number 1 on the list was ' the bank won't help our firm’. That’s a common thread when we talk to clients looking to finance their assets. However, we must also point out that the Canadian chartered banks in very recent times have become very aggressive in lease financing of assets. Several banks have even purchased commercial lease companies and reframed them under the bank logo.

If your company can ' meet mustard' for the bank credit bar, which is typically quite high then you are in a position to get rates, terms and structures that clearly can't be beaten.

Another complication we have noted with bank leasing in Canada is that the preference is for them to only finance their own commercial borrowing customers under their lease programs. If they can’t do that there is usually a strong pitch made for moving all your credit facilities over to their bank. That of course may, or may not, make sense! It certainly complicates the process in our opinion. However, those bank leasing rates can be very appealing and are often significantly, and we really mean significantly under their competitors, the independent lease finance firms in Canada.

Reason # 2 for Canadian firms to choose Leasing .We guess you can call it our ' royalty' reason, because, so we've been told, cash is king ! So if you can obtain 90-100% financing of your asset, conserve credit lines, and finance numerous ancillary needs of the asset, i.e. maintenance, warranty, delivery, installation, etc then you are clearly way ahead of the game.

Reason # 3 - It's easy, it’s as plain and simple as that. The reality is that in 2011 the equipment lease is a highly competitive offering in Canada. Numerous firms that finance small, medium and large ticket transactions are very aggressive in marketing their financing services for a commercial loan / lease. The trick here we caution customers is not to reverse that ease of application by wasting time in talking to the wrong firm - someone who doesn’t match your firms credit quality or asset financing need .

Reason # 4- Want to be held captive? What do we mean by that? Simply that one of the category of lease offerings in Canada is held by captive finance companies and dealers who offer financing. They have one main motivation. Sell you their products! So their ability to finance those products for you becomes their motivator, with your firm being the winner, often getting great lease rates and terms by an incented manufacturer or dealer.

Reason # 5 - Hold on a minute, we have to talk to our accountant. By that we're simply saying there are number tax, deprecations and accounting implications and benefits around an equipment lease. This further solidifies the reason why many firm not only focus on leasing rates but other intangible benefits such as accounting, tax treatment, etc.

So, as always there’s a bottom line. Canadian firms who lease equipment have some great reasons to finance their asset needs in this manner. Speak to a trusted, credible an experienced Canadian business financing advisor to find out which of these reasons make the most sense to your firm.




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 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


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

Put An End To Business Funding Challenges - Why Accounts Receivable Financing Via A Confidential Invoice Finance Strategy Works

Don’t Let Your Business Experience Financing Downtime!


Information on accounts receivable financing in Canada . What is the best type of invoice finance strategy and how does this type of business financing work?




When Canadian business owners and financial mangers want to put an end to business financing challenges they are prepared to consider all alternatives. One of the most popular these days is accounts receivable financing via a confidential invoice finance facility. It only does one things for your company - it accelerates cash flow!

One of the other reasons that this type of financing gains in popularity every day is that allows you to increase your cash flow and working capital without having to consider additional equity arrangements into your company. Even more important is the fact that many business people miss the fact that an A/R finance strategy is not ' debt ' - you are simply monetizing your current assets, i.e. the accounts receivable, into immediate cash.

The concept is exceptionally simple, where it gets complicated we find is that clients don’t really understand some of the terminology, costs, and benefits of this type of financing. As we said, it couldn’t be simpler - you generate sales, and, via your receivables, sell those invoices, gaining immediate cash flow. Clients tell us it certainly is not unusual these days to have their A/R run anywhere from 30-90 days from a viewpoint of when they can expect payment from their customer.

So imagine how your firm would do if you have really unlimited capital based on the sales you generate. You're back to where you want to be, growing your company, not wondering how you will finance that growth!

Some of the day to day nuances of factoring need to be clarified to Canadian businesses who are considering invoice finance for the first time. One is the holdback. When you finance one or a number of invoices (and by the way, it’s your choice) you receive typically 80-90% of the invoice value the same day. The remaining balance is held as a holdback or reserve and remitted to you when your client pays.

If one issue typically concerns the Canadian business borrower who is considering and accounts receivable financing strategy it’s the cost of the financing. In Canada that cost, on an average, is typically in the 2% range. We hasten to add that sometimes it’s less, and sometimes it’s more. Factors that decide your final pricing are the general health of your business, the size of your monthly A/R, and the overall quality of the customer base.

Firms considering invoice finance are typically those that are growing too quickly and are unable to achieve traditional bank financing. Alternatively they may be working their way through some business challenges, such as an off year for financial results, etc,

One reason this method of business financing is growing so quickly in Canada is the fact that facilities can be set up very quickly, with less focus than the bank on issues such as rations, shareholder equity, personal guarantees, etc.

Is any one facility of this type better than the other? We sure think so, that’s why we constantly are recommending a confidential accounts receivable financing strategy.

This allows you to bill and collect your own receivables, finance which ones you want when you want, and has no involvement or notification to your clients. Unfortunately the majority of facilities offered in Canada don’t offer this type of financing
So consider speaking to a trusted, credible and experienced Canadian business financing advisor who can work with you to get you the optimal facility that works for you from a viewpoint of benefits and day to day ease of management.



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 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


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

Are You Eligible For The Canadian Government Small Business Loan?

Use Government SBL Loans For Asset Financing Needs


Information on the ‘SBL ‘ - commonly know as the government small business loan . This program offers some of the best rates, terms and structures for small business financing needs in Canada .



Many business owners in Canada in the SME sector aren’t fully aware that they are already qualified to take advantage of the SBL loan program in Canada. The Government Small Business Loan is an initiative of the federal government in Canada that helps thousands ( in fact over 7000+ in 2010 ) of Canadian businesses to securing business financing on terms that rival those of the big boys when it comes to attractive rates, and structures .

There are many misconceptions about the program and that is why we feel quite sure that you may already qualify and probably just didn’t know it! Let’s examine some of these very basic and reasonable qualifications of the program, and let’s help you maximize the benefits already utilized by thousands of firms just like yours.

'Government ' isn’t necessarily the most popular word at any time when it comes to your day to day business. However, that’s misconception number 1, simply that this loan program is in fact operated in the private sector, by Canadian banks, not the government directly. So where does the government come in then? , ask clients. Simply that they are in fact guaranteeing the majority of the loan. Actual funding is done through your bank.

The challenge we work through with on a daily basis is that not all banks or bank employees rather are always familiar with the details of the program. So many clients who are keenly interested in availing themselves of this financing in fact get mixed signals on how the program operates, its benefits, and mostly importantly, how to start the process and get approved quickly!

Let's cover off some of the basic facts. To be eligible for the program your Canadian business, either incorporated or a proprietorship, must have revenues not exceeding 5 Million dollars. Start ups are eligible for the program also.

Most Canadian business owners who start from scratch are keenly aware of the financial challenges that are faced when financing a start up, or a franchise. That’s really the spirit of the Canadian government small business loan program... it’s providing financing to businesses and business owners who otherwise might not be able to acquire the financing they need.

Owners of the business must have reasonable good credit... in terms of the credit bureau beacon score that all Canadians possess that score should be in the 650+ range. Contrary to the belief of some this is not financing for people with poor credit.

What does the SBL government small business loan finance? That’s another area of what seems constant confusion when we talk to clients. In fact the program only finances equipment and leaseholds. Software by the way is included in the equipment category. We meet many clients that are under a major misconception on SBL’s - namely that the financing is cash and working capital. It absolutely is not!

How can any business owner in Canada not want to take advantage of financing that can help build and grow their business? Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in being successful and unlocking the benefits of the government small business loan program. That’s SBL for short!








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 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :

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

What You Need To Know About Equipment Lease Rates and Interest Finance Charges In Canadian Lease Finance

Are You Getting The Best Lease Finance Rates ?


Information on equipment lease rates and finance interest charges in Canadian leasing and financing . Factors and issues to consider for a transaction that makes sense for your business .



Although the Canadian equipment finance industry is very competitive many Canadian business owners and financial mangers don’t fully understand how equipment lease rates and interest finance charges are calculated... how they can be managed, and what issues affect your ultimate monthly pricing. Let's examine some ' need to know ‘points that will allow you to fully maximize the benefits of lease financing assets in Canada.

We don't blame clients for always wanting ' the best deal ‘... the ' lowest rate '... the ' smallest monthly payment ‘. Some of the variables that go into those issues are controlled by the lessor; some can easily be managed by you.

Asset quality is often a factor in Canadian lease finance. The ability of either yourself of the lessor to understand the ongoing value and the final residual value of the asset you are financing plays a key role in equipment finance pricing in the Canadian marketplace. A win win situation exists of course when both you and the lessor have a transaction that meets both of your needs.

Lessors refer to their profit on a transaction as their ' yield '. Many lease finance firms strive to earn a certain constant yield on their lease transaction they finance for Canadian business. It’s simply their ultimate profit for putting funds out on your transaction.

Canadian business mangers choose from only two basic lease types when acquiring and asset via a lease finance strategy. Its as simple as that, you are either selecting a capital lease, which is a ' lease to own ' strategy, or alternatively you are choosing and operating lease .The operating lease is a transaction wherein you have a stated intention to return or upgrade the asset during or at the end of the lease term . The true beauty of the operating lease is that it also gives you still the right to purchase the asset, even though that might not have been your original intention.

Put yourself in the eyes of the lease company, and let’s use a simple example of a 1000.00 transaction. If the final residua value of the asset at the end of the term of the operating lease is 100.00 and the lease firm estimated this as , lets say 50.00 then they have just realized a further 50.00 profit on the asset .

So who is the best to understand the actual true value of the lease at the end of the term? Quite frankly, sometimes its you, who understand your business only too well. Alternatively many lease equipment finance firms have significant expertise also. It depends,

The type of lease company you choose to work with also has a significant effect on your interest finance charges. Bottom line, your lease firms borrow funds also. In Canada that’s typically done through insurance companies and banks. So a general rule of thumb is that if your lease finance firm is larger, well funded, and well managed... the bottom line is that your chances of more aggressive lease rates increases.


We hate calling them ' games ' but the industry uses many nuances in pricing and structure and terms that significantly affect your overall finance charges . What are some of these?

A good example is advance payments you are asked to make, or security deposits. If you are asked me make a significant security deposit ensure interest accrues to your security deposit, at a rate commensurate with the size of the deposit.

Many assets are acquired on an interim rent basis... that has the lessor outlaying cash before you actually sign off on the final acceptance of the asset. It could be a complicated computer project that is being funded, or perhaps a production asset that is being assembled by your vendor in stages.

We've highlighted just a few of the basic issues that should come into consideration by your firm when you are concerned about getting those ' best ' equpment lease rates' in the Canadian marketplace . There are others.

If there is a bottom line here it simply that it’s worth it to take some time and understand how some up front knowledge and consideration at the start of your lease finance process can positively impact interest finance charges in your favor as the lessee. Speak to a trusted, credible and experienced Canadian business financing advisor who can guide you to the appropriate lease finance pricing for your ongoing equipment needs.


Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


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

Not Your Imagination ! It’s Possible To Finance A Franchise In Canada – A Franchising Loan ‘ How To’ !

Canadian franchise Financing Decisions You Need To Make


Information on how a franchising loan works in Canada. What are Options for business entrepreneurs who wish to purchase and finance a franchise?





One of the main reasons clients tell us that they wish to purchase a franchise is their belief that this type of business opportunity in essence gives them a head start in owning and successfully running a business... and we couldn’t agree more. But that life decision, and a big one at that, comes with the challenge of how to pay for, or finance a franchise. A franchising loan properly structured can make or break your business opportunity.

There really are 4 key categories or areas that you should focus on in both selecting and financing your franchise. They are the actual type of business you wish to be associated with... ie big, small, service based, asset based, hospitality based, etc. After that comes the all important analysis part of your decision. what we could call ' running the numbers.

Those numbers must then be translated into an effective financing plan to finance a franchise. i.e. getting a franchising loan that makes sense from a viewpoint of debt load, your own equity, and the right rates, term and structure that make business and financial sense, without putting you at risk.

Finally the 4th major consideration topic is simply ensuring you have weighed the pros and cons of owning an independent business under the franchise mode. The reality is though that you are in good company, as thousands have gone before you successfully, and a huge part of the Canadian economy (you’d be surprised how much) relies on the franchising industry for its products and services. And God knows the economy needs all the help it can get these days.

We tell clients that when they look to purchase a franchise they need to do a total... lets call it ' sanity check' on the numbers. Key questions need to be answered, including whether the investment will provide you with the proper return on your own investment. That’s an important concept when you think of it, and easily overlooked by franchisees that don’t have a strong financial background.

In essence you are simply asking yourself if the amount of money that you have to put into the business personally is going to be rewarded over time with a return. That makes total sense, don’t you think? In today’s Canadian franchising environment business owners can be expected to put anywhere from 10- 50% into their business. That amount varies with the size and type of franchise that you purchase.

In assessing your financial needs you need to take into account funds you need to open and purchase the business, as well as what type of working capital you need to maintain and grow the business - quite frankly that’s the same challenge that any business purchaser faces, whether or not its a franchise .

That ' pros and cons' analysis we spoke of is also critical at this point in your decision - you need to evaluate the cost of buying and financing a franchise against using that capital or debt to start a business . However, the concept of proven business models and branding is key, so that makes the assistance you get when you want to finance a franchise easier.

In Canada franchises are financed via one or two specialty finance firms, which tend to focus on the major players and names in the industry. Thousands of others are financed under the auspices of the government BIL /CSBF program. The attractiveness here relates to great terms, rates, structures, low personal guarantees, and flexible repayments.

Want help on making one of the most important financial decisions in your business life? Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in making the right decision and facilitating a franchising loan that works... for you !


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 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


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

If Things Are So Bad Why Is a Canadian ABL Facility Business Line Of Credit So Good ? How Asset based Lenders Work

The Worse Your Financing Challenges The More An Asset Based Line Of Credit Should Appeal To Your Company

Information on why and ABL facility from Canadian asset based lenders and why this type of business line of credit is extraordinary in terms of delivering more financing to Canadian business .



Does it every get easy? It's probably just us but doesn’t it seem like there’s never a time when there isn’t some major economic turmoil these days that simply add to the constant challenge of being able to be successful in business financing for your firm.

That’s why an ABL facility... a business line of credit from asset based lenders is very much a total breath of fresh air. With the Canadian economy see sawing back and forth between good news and bad news the likelihood of your company getting the business credit it needs is never 100%.So is there a way to improve those odds? We think there is, and it’s an asset based line of credit, the technical term being ABL.

It is somewhat ironic that the asset based lender actually tends to do better in more difficult times - that’s easy to understand because the unique facility it offers has a much higher chance of approval for firms such as yours. And, as always, it’s about the assets, not the ratios. Coupled with the fact that the industry in Canada, relatively speaking is still quite new and somewhat fragmented , well , bottom line, its just seems to get more traction everyday.

Stats in other countries , and we think they are reflective of Canada also , show that 80-90 % of the firms that utilize asset based lending for their business line of credit are in fact small to medium sized corporations . It is sometimes overlooked that some of the biggest corporations in Canada also use this type of financing, abandoning the traditional Canadian chartered bank line of credit.


When we meet with clients to discuss their needs for an ABL facility it's often necessary to spend a bit of time explaining some of the mis information that exists with this type of facility. That is partly because this type of lending has some subsets, they include receivable financing, and in some cases purchase order financing.

The key benefit of an ABL business line of credit always comes back to one word - ' margining '. Typically this type of revolving facility margins 90% of receivables and anywhere from 30-75% of inventory, depending on the type of inventory your firm carries/requires.

Additionally, the key difference in the facility is the fact that your business access to working capital and cash flow grows with your needs, pretty well automatically! Now that’s the type of borrowing facility that every business owner dreams about!

So, when the bank is not the solution, (those hoops keep getting more difficult to jump all the time!) and your company is either reluctant or unable to raise additional equity speak to a trusted, credible and experienced Canadian business financing advisor on the benefits and requirements for an ABL business line of credit.






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 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


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

Starved For Cash ? Dying For Business Loan Debt Financing Or Working Capital Solutions ?

Is Your Business Growing – Need Funding ? What’s The Best Solution


Information on working capital and debt financing for Canadian business owners . What type of business loan or asset monetization makes sense for your firm, and why.





At one point or another all business owners and financials managers find they have to focus on either working capital or debt financing business loan type solutions for the growth or perhaps even the survival of their firm.

The ' go to ' solution seems intuitively always to consider additional debt for the company - part of the reason is that the leverage that business loans via debt provide and pay off in higher returns on equity . Larger firms consider this as a potential means to obtain a higher valuation.

But is debt always the way to go ... not necessarily as there can be some troubling side effects for the starving patient! Working capital and debt financing are of course, when considered as a whole, the alternative to raising additional equity, bringing in a partner, having to consider the sale of your firm, etc.

So is there ways to consider ' sensible' business financing that actually make sense to the business owner of financial managers of a firm? We think there are.

Certainly there is nothing wrong with debt per se... It’s just that we hope in business that its ' good debt '. Business people recognize that as debt grows on your balance sheet (and assuming you can make the payments) your return on equity increases considerably. That’s a good thing! Higher sales will increase profits under that strategy. But again, at the end of the day it’s all about not pushing your firm to the brink with that increased debt.

The challenge also is that when firms use debt in an aggressive fashion they often have challenges in raising funding quickly, at rates that make sense and they are deserving of. At the extreme end of the curve debt will of course force a company to miss out on lost opportunities, competitors also seem to have a keen knack of sensing your weaknesses!... and in general day to day operating is often affected by the focus on debt repayments .

So are there some key management points and techniques to asses whether you should be taking on more debt. Here are some issues to consider.

Look at your financing needs from a longer term perspective; that’s often difficult to do and disregarded by many. Look at it from the viewpoint of can you defer financing additional debt without missing out on opportunities for growth.

At the same time, are you aware of the types of debt financing that might work for your firm. In Canada that consists of term loans, asset financing, cash flow loans, and other subordinated debt scenarios. Ensure you are comfortable with the rates and structures of each type of financing - more importantly from a time wasting point of view ensure you are aware of the requirements that each type of lender has for all those different debt scenarios.

This is of course the time to do some keen financial planning around your ability to meet any debt payments - and it’s a good time to consider worst case scenarios of not being able to make payments.

When debt financing isn’t the answer a working capital solution often can work. That could involve monetization of current assets via an asset based line of credit, receivable financing, securitization, or financing of tax credits or an asset sale leaseback for working capital purposes.

The best time to address finance needs is often when things are going well for your firm; consider speaking to a trusted credible and experienced Canadian business financing advisor who can assist you in business loan or working capital finance.



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 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


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

How to Successfully Avoid 6 Risks in Business Equipment Leasing in Canada – Make Lease Financing Work!

Managing Risk in Equipment Financing For Canadian Business Owners and Managers


Information on how to successfully work through and manage 6 potentially overlooked risks in business equipment leasing and lease financing in Canada .




It's not always just about the benefits of adopting a business strategy such as business equipment leasing and lease financing... sometimes it is about ensuring no undue risks are also taken.

So let’s examine 6 risks that Canadian business owners and financial managers can manage if properly understood at the outset of any lease transaction.

First of all it’s always great to understand that leasing equpment is all about two things, your rights and your obligations. Your ability to assess those at the start of your transaction is critical.

Our first risk management issue is the concept of addressing the end value of your asset at the end of the term. While most business equipment leasing in Canada is done on 3 -5 years terms shorter terms are possible (generally 2 years is the shortest) and assets that have long economic lives are often lease for in excess of the 5 year norm. If you are entering into an operating lease you must clearly understand that you have the obligation to return, buy, or re - lease the asset at the end of term.

That’s when knowing the potential value of the asset is important. If in fact you feel it has value why pass that value on to your finance partner without some sort of participation or negotiated benefit to your firm. In fact many leasing companies make a tremendous amount of profit by placing bets on the value to you, of the asset, at the end of the lease term. So make sure it’s an equal fight, so to speak. Discuss things such as early buyout or fixing a price at the end of the lease term that is mutually acceptable to both parties.

Our second issue on risk avoidance is the concept of maintaining your asset. While some assets, perhaps such as computers for example require little maintenance many other assets (think plant machinery or rolling stock) require some level of care. Lessors recognize this and often, if not always, write this into the lease. So understand your maintenance obligations.

It’s a ' taxing ' matter. Taxes! That’s our third risk element. Ensure that you and your management or financial team understands all the correct depreciation and tax issues surrounding your lease transaction. This is clearly a time, especially on larger transactions to invest a bit of time in speaking to your accountant or tax expert .The many benefits of equipment financing can sometimes be swept away by your inability to properly address tax, deprecation, how you account for the lease, etc.

Our fourth issue is the concept of upgrading during or at the end of term. Understand here that lessors are incented to keep leasing you assets in Canadian lease financing. Understand your upgrade options at the start of your transaction, and ensure they are properly document in your lease, whether it’s a capital or an operating lease transaction.

Our 5th risk avoidance tip is to properly reflect on indemnification. If any sort of indemnification is required in your lease ensure it is within reasonable risk and control. Issues such as title, transfer, operation of the asset should all be properly documented to your satisfaction

Our final item is in fact the insurance issues revolving around your lease. Ensure you insure am I guessing what we are trying to say, allowing for your insurance firm to cover the risk of any loss, damage or theft to your assets. In fact most lessors, who are in effect purchasing the asset for you and ‘renting’ it back to you, actually require you to provide a certificate of insurance on your transaction.

So, is there a bottom line? As always there is in business, and in this case it’s simply to view each business equipment leasing and lease financing transaction you undertake not only from a benefits point of view but from a risk avoidance perspective. Speak to a trusted, credible and experienced Canadian business financing advisor for additional assistance.



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 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :

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

# 2 And Trying Harder ! Why Canadian Business Accounts Receivable Financing Is Your Cash Flow Solution

Why Canada’s 2nd Alternative To Cash Flow Financing Just Got Better

Information on Canadian business accounts receivable financing . Why a confidential A/R finance strategy is a solution to cash flow and growth challenges .




We probably all remember the car rental company commercial... they were ‘ # 2 and trying harder ' ... that certainly could describe business accounts receivable financing in Canada - your company's 2nd alternative to cash flow financing after the bank.

So why is # 2 and trying harder gaining so much momentum from Canadian business owners and financial managers? Its pretty simple, it becomes the de facto alternative for businesses that can't achieve the financing they need from what the industry terms ' traditional sources '.

So let’s examine some key basics around how the financing works, and also let’s differentiate it from bank working capital financing... the proverbial business line of credit.

What drives an approval and the ongoing operation of a bank line of credit that is collateralized by your receivables? Of course it’s the size of your A/R base, but at the same time other key factors must come into play. The onus is on your firm to show profitability, debt and equity ratios that work for the bank, as well as more often than not emphasis on personal guarantees and even outside collateral.

However, business accounts receivable financing (aka ' invoice discounting ' ' factoring’) focuses solely on one thing - your receivables. The size of your A/R as well as its general quality essentially determines the size of your new accounts receivable financing facility.

The second key difference in comparing the two is that the bank in effect collateralizes your receivables by registering a security agreement against them. They are in effect ' assigned ' to the bank in the event of a default by your firm.

Business receivable financing however works differently, and that’s quite often mis understood by many Canadian business owners and financial mangers. Under this process you derive cash flow, on a daily basis if you choose, by selling your receivables to the finance firm, in whole, or in part, on an ongoing basis.

That A/R is sold at a discounted price, which in effect becomes your financing fee. (Many customers view this as the interest rate - the industry views it as a discounted purchase from you at a pre determine rate, usually 2-3% per month. So we can also make the statement that the a/r financing process, non bank in nature is a three way agreement, its between yourself, your customer, and your a/r finance partner firm .

Because Canadian banks are highly regulated and generally risk averse they cannot provide the amount of financing that thousands of small to medium sized firms need for working capital. But since the business A/R financing firm is focusing solely on the assets, i.e. your A/R, they can generally advance up to 90% of all your A/R at any given time. So, bottom line, your company doesn’t have to have the capital structure that is required for traditional Canadian chartered bank financing.

In many cases clients are please to hear that their inventory can also be combined into a one stop revolving credit facility by your non bank partner firm. This provides a revolving line of credit with much more liquidity than your firm may have experienced in the past - bottom line - more access to cash flow and day to day working capital for operations and growth.

Clients are generally mystified by the number of firms out there that offer this financing, what they charge, how they work on a daily basis, etc. We recommend they consider a confidential invoice financing facility, one that allows them to bill and collect their own receivables without any third party knowledge, including your customers! Speak to a trusted, credible and experienced Canadian business financing advisor on how business A/R financing can enhance your company’s cash flow today.





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 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


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

The Ten Advantages Of Using Canadian Business Equipment Leasing Companies For Commercial Asset Financing

What Are The Key Benefits Of Lease Financing & Funding For Canadian Business ?


Information on Canadian business equipment leasing companies and the advantages and benefits of commercial equipment funding and financing strategies.



One of favorite U.S. Business equipment leasing publications recently published a ' TOP TEN ‘advantages of leasing finance. But hey, isn’t this Canada? So we thought we'd address those top ten advantages in terms of the Canadian perspective of commercial leasing companies that provide Canadian owners and business financial managers with hundreds of millions of dollars in asset finance.

So let’s try and ' Canadianize ' those advantages in terms of business leasing in Canada. Here we go.

#1 - Cash - You'd prefer to keep it, but unfortunately you need to spend in on new or upgraded assets to your business. And that includes everything from plant assets to new computing power. Utilizing lease financing lowers your cash outflow and often lowers the requirement that other lenders such a as a bank might demand for you with respect to additional equity in the transaction.

# 2- Cash flow management - Many Canadian business owners and managers don’t often realize the flexibility they have in structuring a transaction with respect to the tax aspects of the lease, as well as your ability to structure seasonal, quarterly, or some other form of payment structure that makes sense for... you guessed it, your firm.

# 3 Your ability to decrease financing costs with commercial equipment leasing allows you to utilize those savings for other things - a good example is your potential new found ability to take discounts on vendor payments to your valued suppliers . Using cash to take 2%10 type discounts could save you thousands of dollars every year, depending on the size of course of your company .

4. Our U.S. example that we are referring to listed ‘bank hassles’ as another great reason to consider lease asset financing. We're certainly not sure that going to a Canadian bank is really a ' hassle ' but we are the first to admit that many of our clients can meet stricter bank credit covenants and criteria - As a result Canadian business owners and their financial managers find that there are hundreds of aggressive lease finance firms who actively solicit their asset financing business - And that’s a good thing!

#5 - Leasing productive assets improves productivity and can assist in lowering general overhead costs. Although technology investments in plant, rolling stock, software (yes, software can be fully financed!) and computing can be huge competitive drivers in your business.

# 6 - Leasing epitomizes your ability to upgrade and be flexible and acquiring assets. Using such strategies as an operating lease allows you the benefit to return, upgrade, and purchase or extend key assets in your business.

#7 - Debt may be expensive, but anyone will tell you equity is even more expensive. Leasing assets can often help you avoid equity dilution in considerations such as bring in other ownership capital or partners in the business?

#8 We’ve observed that many small and medium sized businesses finance their businesses in part by business credit cards and small lines of credit. Utilizing asset lease finance allows you to keep those arrangements intact and current.

#9 There are a number of significant depreciation and tax benefits that Canadian accounting allows when you consider business equipment leasing companies for your commercial asset needs.

# 10 - It works - most of our clients have determined that their bank won’t lease the assets they need to run and grow their business. It’s easier to apply for and in many cases vendors and distributors offer preferred financing for customer choosing to utilize commercial lease strategies.

So there you have it, our Canadian TOP TEN ADVANTAGES of equipment leasing in Canada, with due respect to our U.S. counterparts. Want to maximize on any or all of these advantages? Speak to a trusted, credible an experienced Canadian business financing advisor who can help you with commercial lease financing.



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

The New Shape of Business Financing and Commercial Lending Options in Canada

A Mini White Paper On Canadian Business Financing

Information on the state of Canadian Business Financing and commercial lending . Who is offering and competing with who and what types of options are available to Canadian companies seeking asset and working capital financing .




Turmoil in economic times presents all sorts of challenges for Canadian business owners and financial managers. As challenging as business financing has become so called ' tougher times' a new breed of financing services and players in Canadian business financing offer new and different types of financing for business needs.

Most people would agree that the Canadian chartered banks had what we could call the protective turf in Canadian business financing for many decades. Our observation? Boy has that changed, and new dynamic and innovative offerings are available for every type of business, from start up to large corporation.

A good way to thing of business financing in Canada is simply by thinking of the offering as either from a regulated player, or a non regulated player. Banks are a good example of regulated players, while firms such as equipment finance companies or asset based lenders tend to be unregulated.

Types of financing that might have been unimaginable in older times are now viewed as new and extraordinary relative to business financing needs.

Many larger industrial corporations - i.e. G.E, G.M., etc. have in fact become major players in Global and certainly Canadian financing. Commercial lending and financing is no longer of course just offered by Canadian chartered banks. In Canada it is some major insurance companies and pension funds that are the ones funding the Canadian equipment financing industry.

Different financing firms have different niches, but in many cases competition has become fierce and it’s quite often a challenge for the companies seeking Canadian business financing to differentiate from who is offering what.

When we think of the financing needs of larger companies in Canada we can be forgiven for thinking that this is the real bread and butter of bank commercial lending in Canada.

Captive finance companies also provide a significant amount of financing in Canada. They play a significant role in many transactions that otherwise might not be able to meet more stringent bank criteria. The good news is that many captive finance firms have branched out in Canada to offer inventory financing, purchase order financing, asset based lending, and equipment finance - not just for their parent companies, but for a large measure of Canadian business. And that’s a good thing!

When Canadian business has a strong knowledge of both the finance offering and the competition for that offering that leads to better rates, terms and structures for your firm, the borrower.

Canadian banks , viewed as the strongest and best run in pretty well the whole world haven’t necessarily stood around watching their business financing and commercial lending decline . They have expanded into the U.S., purchased independent commercial lease financing and auto financing firms, and rebranded these firms into their own offering.

Many smaller companies in Canada, those ranging under 5 Million dollars in revenue utilize independent commercial receivable financing firms, known as ' factors' to finance their working capital needs. The need for this and other types of creative financing is huge because of the general strict credit criteria of the Canadian chartered banking system.

Other non bank financing services in Canada generate premium pricing for the companies offering these services. We think they do this by paying more attention to the real needs of Canadian firms seeking commercial lending. When asset based lenders or receivable and P.O. factoring firms have the right discipline they have proved themselves to be very successful and strong competitors of the Canadian banks.

Canadian non bank finance firms have a number of nonproprietary finance offerings that allow premium pricing, and servicing the SME (small to medium enterprise) sector provides strong growth opportunities.

So how does the ever changing Canadian business financing landscape affect you, the potential borrower? The bottom line is that a variety of finance offerings allow you to maintain an open door to get the maximum amount of financing your firm needs. Smaller firms have the ability to use lease asset financing, receivable financing, tax credit financing, purchase order financing from a variety of competitors.

Take hands on approach to your finance needs by speaking to a trusted, credible and experienced Canadian business financing advisor who can help you manage the relationships you need to have in place to access business financing options that make sense for your firm.



ABOUT THE AUTHOR -

Stan Prokop
7 Park Avenue Financial
www.7parkavenuefinancial.com

What Every Entrepreneur Should Know About How To Finance A Franchise In Canada – Financing Your Investment

Canadian Franchising Finance Explained

Information on how to finance a franchise in Canada . Best methods for financing your entrepreneurial decision in this business investment.



It tends to start with the franchisee fee itself, but there are a number of other financing challenges that come into play when the Canadian entrepreneur is faced with the basic question - ' hot to finance a franchise ' in the Canadian marketplace. Financing one of the most important business investments you'll make can be a challenge - so let’s identify some key issues, tips, and strategies on being successful in this challenge.

A solid way to look at finance success in your franchising ' adventure' is to break down your estimated costs into several key areas. Most potential franchisees don’t realize that each key aspect of your franchise purchase is financed in a different manner.

Lets breakdown the key elements of a franchise investment. They include the franchise fee itself, which we have already referred to. Other components usually equipment you may need, leasehold improvements to any new facility, potentially real estate , as well as the often forgotten but as important on going working capital .

Our experience is that the franchisee typically in Canada has to cover the franchisee fee him or her self. That then leaves our other components to address. So is financing a franchise in Canada a challenge ?In some respects it has the same challenges as if you were opening any new business from scratch - however, the good news is that the financing industry as a whole tends to view franchises positively because franchisors, when successful, have proven brands, track records, etc .. in general they are considered, we think, a lower risk that many other ' start ups'

We sometimes forget to mention to clients the possibility that they may be in fact purchasing an existing unit from the franchisor - that typically involves buying a company or corporate location that the franchisor wants to sell, or, in some cases purchasing a franchise from an existing franchisee who is motivated to sell for whatever reason. Bottom line, both new and existing franchises and be financed.

We are quite sure that when most franchisees consider how to finance a franchise investment they think that financing might in fact come from a Canadian chartered bank. Well, here’s the facts on that one... it does... and it doesnt. While it is somewhat rare that your bank would directly finance 100% of you franchisee needs under a normal term loan scenario the banks do play a key role in franchising in Canada.

How? They do it under the auspices of the Canadian BIL/CSBF program which offers a competitive term loan for Canadian franchisees under the umbrella of this program. The benefits of that program are significant - they include financing up to $, 350,000.00 as well as a low personal guarantee. Rates are excellent, and terms are flexible. Criteria for the program essentially are a decent personal credit history of the prospective franchisee, as well as a respectable owner investment into the business.

Whats respectable?! We knew that question was coming next. Typically to be successfully anywhere from 10-40% investment is required by you as the franchisee. While one commercial finance firm in Canada dominates franchise financing individual franchisees can compliment financing needs with equpment financing, business lines of credit , business credit cards, and the increasingly popular merchant advance loans for retail oriented businesses.


Both having a finance plan and knowing how to execute on your plan are what will make you successful when you are faced with today’s questions ' how to finance a franchise ' ... Speak to a trusted , credible and experienced Canadian business financing advisor for help and tips you need to be successful as a franchisee entrepreneur in Canada .



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 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


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

ABL Financing & Lending Is The New Version Of An Old Product – Asset Based Lenders Are The New Teachers Pet Of Business Finance In Canada

Why Asset Based Lines of Credit Are Starting To Dominate The Canadian Financing Landscape


Information on ABL financing in Canada . Why Asset Based Lenders offer business lending and loan facilities that makes sense in 2011.



The proverbial ' teachers pet ' - aka the new favorite. That's a pretty good term for abl financing, which is pretty well the newest form of business line of credit financing in Canada in many years. Let’s take a look at why asset based lenders and their lending facility, the asset based loan are starting to dominate the Canadian business landscape.

ABL financing has been around for awhile, in the past it was considered a very ' alternative' method of financing business lines of credit in Canada. It, as well as its subset, ' receivables financing facilities ‘ have not become a very popular choice for Canadian firms who cant qualify for traditional financing .

An additional comment we might make is that many clients we talk to do in fact qualify for some form of traditional financing, i.e. the Canadian chartered banks, but they typically can’t get all the financing they need. That goes for everything to start up to Major Corporation, as more and more large corporations are also gravitating to this type of financing.

Part of the misconception around an ABL financing loan is that this lending means different things to different people. In our context today we're talking about the monetization, for maximum leverage, of receivables, inventory and in certain cases equipment and real estate, which can neatly be packaged into a revolving business credit facility.

Another old saying we like is the 'mother in law pitch’. Whats that? It’s your ability to explain in a sentence or two, to your mother in law, why asset based lending is radically different from Canadian chartered bank facilities. Hers our version of the mother in law pitch in that regard - ‘Asset based lending relies almost solely on the amount and quality of your collateral, not your overall financial statements and general financial health ‘.

It’s as simple as that! Banks are required, by their charter and nature to focus on overall credit quality when granting business line of credit facilities. Therefore the main discussion point very quickly becomes debt to equity ratios, cash flow covenants and coverage, external collateral, personal guarantee emphasis, etc. That is somewhat thrown out the door in an abl financing and lending environment. Therefore it is very common, we repeat, very common for a Canadian firm to receive financial leverage on 90% of receivables, 50-75% of inventory, as well as appraised values of equipment and real estate, all into one convenient business line of credit.

Clients are great at coming up with simple questions. Hers a typical one - if this is a non bank facility how does my day to day banking work. Great question. The answer is that asset
based lenders use a dual account or lock box type system - your funds, as you need them, go into a regular business operating account.

Funds you collect on a daily basis from receivable and customer deposits go into another blocked account, at the same time reducing the amount you own on your business line of credit .Naturally this balance fluctuates everyday based on your firms business cycle, and the good news, similar to a bank facility, is that you are only paying for what you are borrowing.

So , in summary, while human nature often has us somewhat ' jealous' of the ' teachers pet ' the reality is that Canadian business owners and financial managers owe it to themselves to check out this dynamic form of business financing , under which almost all companies qualify . Speak to a trusted, credible and experienced Canadian business financing advisor for more information on the benefits of this type of lending.




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 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


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

Is Your Company In A Constant Whirligig On Business Cash Flow & Working Capital Funding Challenges ?

Canadian Cash Flow and Working Capital Solutions


Information on business cash flow and funding working capital in Canada. Measuring the problem and address it via real world solutions .



Boy do we love a good term when we see one. Whirligig. It’s the definition for a ‘ whirling or circling course of events ‘. Don’t business owners often feel they are in a constant whirligig of business cash flow challenges – always looking for funding for working capital as their business grows? They certainly are always telling us that.

Let’s examine some ways to both measure and address working capital and cash flow shortages. Our primary focus is on the SME (small to medium enterprise) sector of business in Canada. We should note that larger corporations have access to more sophisticated working capital solutions that include unsecured cash flow loans and mezzanine debt provide by Chartered banks, private equity firms, and specialized commercial financing companies in Canada .There are even some hedge funds in Canada offering this type of working capital solution.

The cash flow lending offered by these firms to larger companies is based on multiples of cash flow and profits, not utilizing the actual assets of the firm as first position secured collateral. Suffice to say that interest rates on these types of loans are very attractive but at the same time come with rigorous credit and size criteria that of course SME sector firms simply can’t meet.

SME firms are focused on more mundane issues, reducing their payables, purchasing more inventories, and meeting employee obligations. When actual working capital runs low of course our whirligig kicks in! It’s the constant battle to replenish working capital.

Working capital for your business consists of your cash on hand, your borrowing ability, and of course receivables and inventory.

The rudimentary way that those textbook guys and accountants calculate working capital is to divide current assets by current liabilities on your balance sheet .We’ve never really like this calculation because it doesn’t truly reflect the flow of funds in an out of your business . (A calculation called the operating cash flow calc does this much better). For instance if your sales are flat or slowing down and your receivables and inventory are building up your working capital current ratio calc is higher, but the reality is that your real cash flow is getting worse . And that’s a problem.

Working capital solutions in Canada are available but they are somewhat more limited in nature than many Canadian business owners and financial managers think. Business lines of credit to cover business cash flow for start ups or small businesses rely heavily on the business owners personal assets. Canada’s crown bank corporation offers working capital term loans, but significant emphasis is placed on owner equity and cash flow ratios.

The real world solutions available in Canada in 2011 for funding business cash flow are as follows; sale leaseback of some of your assets, Chartered bank lines of credit, accounts receivable financing facilities, non bank asset based lending facilities (they combine your A/R and inventory and equipment into one business line of credit). Many Canadian firms utilize various tax credits which can also be monetized into cash flow and working capital liquidity.

Speak to a trusted, experienced, and credible Canadian business financing advisor on how you can avoid the whirligig of Canadian business cash flow. In today’s competitive environment you ability to survive is based strongly on ensuring your working capital life blood is healthy.



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 7 years – has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


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