Surviving A Working Capital Financing and Funding Challenge

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Tips on Cash flow Financing Solutions for 2018

Information on traditional and alternative working capital and financing funding solutions in Canadian business

Did we really even have to mention it, but a major CFO survey, just released, stated that ' Cash flow is Top Concern Priority .... ‘. When has working capital financing and working capital funding in general ever been more important.
Let's take a look at the Canadian situation and how you can solve some of those working capital challenges that were re iterated as concerns in the survey, which was done, by the way by TD. And by the way, putting ' surveys' aside, we'll offer some ' real world' solutions to some of the issues highlighted in the bank survey!

Intensity? The survey actually used that word when Canadian business owners and financial managers described their necessary day to day attention to working capital management. As a business owner you have to look at your overall structure and ensure you can manage cash flow on a day to day basis.

The survey intimated that although you could cut costs to manage and conserve cash flow most Canadian business owners don’t feel that’s the optimal strategy, only 7% actually.

Access to working capital financing and working capital funding
was a major concern by respondents. We are reminded of headlines that say things like ‘90% of all jobs aren’t advertised”. Well, do you know what, when we sit down with clients we strongly feel that they often don’t understand that 90%of financing options aren’t generally known to Canadian business. Did you know there are hundreds of non - bank finance entities, all very unique in nature, that finance receivables, inventory, purchase orders (yes, purchase orders! tax credits (you can finance a tax credit? - YES you can!).

The survey indicated that technology is by far the top area of planned capital investment, and you should be aware there are a number of solid capital and operating lease solutions that provide you with total flexibility in acquiring, and more importantly, using technology .

Alternately the Canadian lease financing industry is back on its feet and numerous solutions for equipment acquisition via leases, loans, bridge loans, etc are available.

Want those real world alternative financing solutions we talked about - consider non bank asset based lines of credit or receivables discounting. Your cash flow is at risk if you aren’t properly managing your A/R and financing it in a manner that suits your firm’s business model and cash conversion cycle.

You could of course stop your life and spend a lot of time investigating these solutions but we strong recommend to clients that they simply seek a trusted, credible, and experienced business financing advisor to sour the working capital financing and working capital funding they need for short term liquidity and long term survival .


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

Direct Line = 416 319 5769

Office = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com


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

' Canadian Business Financing With The Intelligent Use Of Experience '

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

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

Stan Prokop

Financing Tax Pigs ! ? Your SRED ( SR&ED Tax Credits ) Tax Credit Claims Are Still 100% Financeable!

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SR&ED Bridge Loans Still Make Sense And Here’s Why

Information on the financing of the sred tax credit in Canada. SR&ED claims for your tax credits are still 100% financeable – here is why and how!

Ouch! Make that a double ouch! Tax pigs? That was the assessment of one of Canada's leading economics and business professors when it came to Canadian firms who line up (we assume he meant at the trough?!?!) to get their fare share of what he called ' tax preferences' in Canada.



The thrust of the article, which appeared in one of the two leading business newspapers in Canada, was that Canada is losing billions, yes that’s billions with a capital B... to a long list of tax programs from which it derives little benefit.



Those programs include labour funds, the Atlantic tax credit , film tax credits, accelerated deprecation credits ( that’s a new one for us), flow through share credits, GST preferences, and finally SRED ( SR&ED ) tax credit claims .



We won't weigh in on the authors premise, which was pretty well to put these programs on the ' chopping block ‘in order to get government spending in line.



We thought that perhaps we should seek an honest politician for some clarity on the issue , but in the interest of time vis a vis the ' honest politician' oxymoron our point is simply that if certain government tax credit programs such as SRED and film exist , and you qualify and file for them .. Then you can finance them.



The financing of these credits brings valuable cash flow and working capital into the thousands of firms who do in fact qualify for the program.



Let's look at the SRED program. This is the Scientific Research and Experimental Development Tax Credit Program which is a federal incentive. It's administered by both CRA and your respective province and has encouraged over the years thousands of Canadian companies to work on r&d. Private , ie non public firms can earn approximately up to 35% on the first 3 Million they spend on projects that qualify, and 20% on amount in excess.



Canadian business currently uses this SRED credit for claims on wages, material, equipment, and certain overhead allocations.



The question has therefore become, is all this SR&ED tax credit work legitimate, as almost 4 Billion per annum is spent annually in non refundable tax credits for Canadian firms. Over 24,000 firms have applied annually for the credits.



Upcoming federal budgets will soon tell the tale of where SRED is going in Canada.



The bottom line is that if you have a SRED (SR&ED) tax credit there is financing available on the credit. Your credit is monetized either at time of filing, or in some cases in an accrual financing plan as you spend. Claims typically are financed at 70% of SRED value, the other 30% is in essence a buffer.



TAX Credit financing can typically be completed in 14-21 days, with the essential collateral behind the financing of course being the SRED itself



Canadian firms who use the program can claim up tot the last two years of R&D, and the claims are typically prepared by professionals simply known as ' SRED CONSULTANTS.



So, is your firm a tax pig? Seems a bit harsh, and we're still looking for that honest politician find out where SRED tax credit is going in Canada. In the meantime, if you have a claim, and want to monetize it consider talking to a trusted, credible and experienced Canadian business financing advisor for funding your claim.

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

Direct Line = 416 319 5769

Office = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com


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



' Canadian Business Financing With The Intelligent Use Of Experience '

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

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

Stan Prokop

A Practical Cash Flow Loan ? What Type Of Working Capital Company Can Help Your Canadian Business

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Working Capital and Cash Flow Solutions In Canada

Information  on why a different type of cash flow loan might be the solution to your cash flow needs. What type of working capital company offers this type of facility to Canadian business?

Practical - it refers to good judgment in action. That type of common sense definition is what Canadian business owners and financial managers seek everyday when they are faced with locating a cash flow loan or facility.

And it becomes a bit more complicated when they don’t necessarily know what type of working capital company is the optimal solution for their business needs .Lets shed some light on that subject with real world experience backing it up.

Naturally just the creation of additional sales revenue creates profit for your firm, but it’s clear to every business owner that is simply not enough, given the investment you then have made in current asset accounts such as receivables and inventory.

One Canadian solution available is the conversion of short term debt into long term debt via a working capital term loan. This creates a long term working capital component to your financial structure. Small and medium sizes firms can source this type of solution via a government related bank - larger firms can utilize mezzanine or subordinated debt type financing to accomplish the same goal... only from a larger perspective.

Not often thought of as a cash flow loan, but in reality it is the creation of a sale leaseback for assets your already own. You in effect sell the assets to a lessor or working capital company and create a similar cash flow loan along the lines of the term loan we had reference above. All these solutions achieve the same goal.

Probably the most popular method today of generating cash flow is the sale of receivables via a factoring or securitization type facility. The good news for Canadian business is that this type of financing is available for a 10k solution as well as a 10 Million dollar solution.

We seem to be continually explaining this type of solution to clients, and it’s frankly quite simple to understand. It’s your selling of your receivables as you generate them for cash flow... today. What makes it complicated, and we're not to proud of it we can assure you, is how the working capital company sometimes complicates things around how this whole process works, what it costs, and how it affects your company on a day to day basis.


When you exactly face the decision to go out and look for more working capital. Really it fundamentally comes down to three areas, starting a business, growing your business rapidly, and then simply financing those day to day activities because for some reason cash flow is failing you.

You have clear options in the Canadian business financing environment .Its a questions of knowing those alternatives and determining what is achievable based on your unique needs. Very typical fundamentals you should have under your belt are up to date financials, a strong sense of your cash flow needs (via a cash flow budget) and some ' education' on what facilities are available for a firm of your size and credit quality.

The premier working capital and cash flow loan solutions in Canada are as follows - receivable financing, a working capital facility that combines A/R and inventory, or a true asset based lending arrangement which replaces a bank facility but gives you higher borrowing margins. We of course also touched on the cash flow term loan earlier.

Three more esoteric ( but totally viable ) financing solutions for your business are purchase order financing, inventory loans, and financing your tax credits if you have access to them.

Complicated? It doesn’t have to be. Seek a trusted, credible an experienced Canadian business financing advisor who can assist in clarifying individual solutions to your practical business financing needs.

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

Direct Line = 416 319 5769

Office = 905 829 2653

Email = sprokop@7parkavenuefinancial.com


Click here for 7 PARK AVENUE FINANCIAL
http://www.7parkavenuefinancial.com


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

' Canadian Business Financing With The Intelligent Use Of Experience '

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

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

Stan Prokop

Business Credit Alternative : Solid Info On Canadian Accounts Receivable Loans & Financing

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Why You Should Consider A/R Financing in Canada

Information on accounts receivable loans to increase working capital financing via a business credit alternative strategy that maximizes cash flow and creates growth financing

Nothing is more important to a Canadian business owner or financial manager than being well informed - in business living in the past generally leads to failure in today’s competitive environment

So when it comes to business financing and credit knowing the advantages and costs of accounts receivables loans becomes valuable.

Many Canadian businesses still feel they are somewhat of a captive prisoner in the difficult business credit environment. While interests are low in Canada and the stock markets seem to be doing fairly ok its clear that access to business credit and financing is still very difficult.

It’s kind of like a slow thawing out, with the freezer of course being Canadian chartered banks. Many surveys suggest that a good percentage of Canadian business that applies for working capital and cash flow facilities do not get all of the financing they need, if in fact they are approved at all.

This forces you, the business owner or manager, to take a second look at what is available out there to keep your operating capital adequate. We're definitely not putting blame on the banks (we love Canadian banks) but could there be a better way for small and medium sized businesses to access credit...well we think so .

Isn’t the saying that ' necessity is the mother of invention '? In our case independent finance firms, both U.S. owned and Canadian have stepped up to the bar, providing accounts receivable loans for your financing needs. We hasten to point out that the word ' loan ' is a misnomer here... our clients use the term also but we caution them that the good news is that these facilities arent loans, they are just the moneitzation of your largest current asset - your a/r.

Accounts receivables loans in Canada go by many different terms, some you have heard of, some you may not have. They include invoice discounting, factoring, receivable financing, and our favorite, confidential invoice discounting or factoring. In effect you are maximizing your cash flow from operations by monetizing your assets, i.e. the receivables.

Accounts receivable loans are your answer to being stuck in the middle - at one end of the spectrum is your investment in accounts receivables and providing terms to your own clients, while at the other end it’s a questions of not being able to access traditional business credit to finance that same investment.

So, do you know a good solution when you see one? Receivable financing would appear to be that solution. Turning your company into a cash flow machine via receivable finance is a solid strategy being adopted by thousands of Canadian firms.

The process is simple, as you generate sales invoices are immediately sold, i.e. converted into cash, at a discount. In Canada the rates of business factoring range widely - anywhere from 9% per annum to 1-3% per month.

Business owners accept this pricing when they realize they have decent gross margins to absorb this cost, while at the same time using the new found cash to take discounts with suppliers and sell more and generate more profits. In some cases 50-100%of the financing cost can be offset in the manner in which you use your new found cash flow.

Canadian business owners would prefer that their clients and suppliers didn’t know they were financing their A/R via accounts receivable loans. That’s whey they investigate C I D, confidential invoice discounting, allowing them to bill and collect their own receivables as they wish. (Traditional factoring via the U.S. and U.K. model requires your clients be notified.

In summary, thousands of firms in Canada are moving to this type of financing. Speak to a trusted, credible and experienced Canadian business financing advisor who can review costs, procedures and benefits, allowing you to win the cash flow and working capital battle!

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

Direct Line = 416 319 5769

Office = 905 829 2653

Email = sprokop@7parkavenuefinancial.com



Click here for 7 PARK AVENUE FINANCIAL http://www.7parkavenuefinancial.com


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

' Canadian Business Financing With The Intelligent Use Of Experience '

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

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

Stan Prokop

Confused About Canadian Working Capital Finance ? Cash Flow Financing Techniques That Work !

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Financing Of Working Capital – Here’s How !

Information on Canadian working capital finance . What are solid real world solutions to financing and cash flow challenges that businesses face every day

Clear answers... no, even better, clear real world solutions. That’s what Canadian business is looking for in working capital finance . And that type of financing and cash flow solutions has been tough to come by over the last several years.

Let’s examine why your understanding of working capital and your ability to measure the need and the solution is as critical as ever in the competitive environment you fight every day.

Let's focus on some of the hard facts first. If you don’t have working capital key issues such as payrolls, loan and lease payments, inventory purchases, etc can become big issues pretty quickly!

So how can you change assets and sales into the financing of cash flow? It's a one word answer - monetization! You need to use a razor sharp focus on monetizing (i.e. changing!) receivables, inventory, and sales into working capital to address those key issues we just mentioned above.

The better you do this you will find the better the patients health will be and that patient is of course your company.
Canadian business owners and financial managers know that their balance sheet and income statement are related. Today we're focusing mostly on the balance sheet - The amount and relationships between those current assets such as A/R, inventory, and payables can let you zero in real quickly on what some of the problems might be. (We won't forget telling you about those solutions also!).

Yes, you do need positive working capital to ' stay healthy ' from a working capital and cash flow perspective. And talk about a balance act, if you are growing too quickly your investment in A/R and inventory hinders cash flow, and if sales are shrinking then your receivables shrinks also.

So, we've done the usual pretty good job (we think) of telling you what your problems are. But that’s not why you came here, right? Let’s address solutions.

Are there in fact real solutions that allow you to fix today’s financing of cash flow challenges, and at the same time address these issues in a long term manner . Here's the good news. There are.

We tend to review 6 major methods of addressing your working capital challenges.

They are :

Asset Based Lending Facilities

Working Capital Lines

A/R Finance

Inventory & Purchase Finance

Cash Flow Term Loans

Merchant Advance Loans ( Retailers )

And, guess what? Almost all of these solutions are non bank independent finance company solutions! We bet you did not know that?

All of these solutions have different levels of criteria for approval and success. Some are size based, and some are viewed as alternative, but boy do they work! Pricing is a factor also, and each of those solutions brings a different level of financing cost to the table.

If you want to investigate any of our 6 proposed solutions to both immediately and from a long term perspective fix your financing and cash flow issues seek a trusted, credible and experienced business financing advisor. Those solutions are just around the corner.


Click here for 7 PARK AVENUE FINANCIAL
7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com


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

' Canadian Business Financing With The Intelligent Use Of Experience '

How To Leverage SRED (SR&ED) Tax Credit Financing And Factoring for Cash Flow

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Cash flow your SR&ED claim today !

Information on Sr&ed tax credit financing. Factoring / cash flowing your Sred claim via a Sr&ed loan immediately leverages your firms cash flow investment in your r&d capital investments

Leveraging your SRED (SR&ED) Tax credit via the financing and factoring of your claim is a responsible way to maximize cash flow and working capital. It’s all about timing, and if your firm requires additional working capital financing the ability to cash flow or discount your claim for working capital today is a clear and viable option.

Canadian business owners that partake of the program in Canada clearly have recognized the benefits of research and furthering their competitive position in product and services. Although tens of thousands of firm take advantage of the program we are always amazed at the number of our clients that either have not heard of the program, much less take advantage of it.

Let’s do a short primer on the program, and more importantly, the financing aspects of your claim. And trust us, we are not talking about going to your chartered bank for that financing, as this type of financing is somewhat boutique and niche requires specialized financing and financing assistance.

The federal SRED program is s of course for private companies that qualify for a non repayable tax credit, in effect a grant from the government for a large percentage of their R&D spending. Your ability to recover that cash flow is of course a very positive aspect, but, the ability to finance your claim as soon as it is filed, ( in some cases before ) simply is one more alternative in today’s challenging cash flow environment to monetize a short term asset and turn it into cash flow .

So how does Sred (Sr&Ed) tax credit financing and factoring work? We use the term factoring because its becoming more broadly understood and accepted in Canada - so what we are simply saying is that your sred (sr&Ed) claim is in effect a receivable, and in the same manner that you would consider financing a receivable is really the same logic and methodology around a sred financing.

Is it difficult to finance a Sr&Ed? We keep that explanation to our clients very simple. If you have a sred that has been prepared by a qualified consultant or accountant and your company has viability then your claim is financeable. Is that complex, we don’t think so.

Have you ever applied for any type of business financing before? What was involved? - Typically it was filling out an application, providing back up documentation, and clarifying, if required to a business lender, any information that required explanation. Guess what, that’s the SRED process also.

A claim can be financed in a matter of weeks, which we think is a very typical time for any type of business financing these days. After a basic business application and review of your sred a term sheet is issued. Typically the main collateral for the financing is of course the sred claim itself. In Canada its typical to receive about 70% LTV for your claim, meaning that if you calim is 300k you would receive immediate financing for 70% of that amount .Whats the monthly payment clients ask?


Here's the good news, there is none. You put that cash flow to work and when your claim is finalized, adjudicated and paid by Ottawa then you receive the other 30% of your claim , minus of course the financing costs, which typically are in the 1.5 -2% range per month .

Speak to a trusted, credible, and experienced Canadian business financing advisor on how SRED (SR&ED tax credit financing and factoring works. Cash flow today from a government non repayable grant - How could you not consider that option!



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

Direct Line = 416 319 5769

Office = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

Click here for 7 PARK AVENUE FINANCIAL

http://www.7parkavenuefinancial.com


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

' Canadian Business Financing With The Intelligent Use Of Experience '

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

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

Stan Prokop

Canadian Business Capital – Bank Business Lines of Credit & Alternatives

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Canadian Business Financing - Tried & Tested Real World Alternatives

Information on acquiring bank business lines of credit in Canada. How are these facilities secured, how do they work, and are their alternatives to business capital requirements other than the bank?

Business Capital. Easier said than done, right? Let's examine how  bank and other secured lenders offer business lines of credit - More importantly, we're going to bet a dollar ( we're conservative by nature!) that you might not be aware of some other options and alternatives for business line of credit financing !

Business operating lines are used to finance your investments. Your investments in   receivables, inventory, and other current asset accounts of course.  Canadian banks willingly offer these credit facilities (no seriously, they do) but the quality of the collateral they take is critical to that offering!

So how do the Canadian banks structure that facility in order to be made whole and feel comfortable in providing you with that business line of credit that is so badly needed for working capital and cash flow financing.  For a starter, they take a first charge on the actual assets that are used to margin the facility - those current assets are  accounts receivable, inventory (  raw materials, work in process and finished goods ) , all secured via a common security agreement which is typically referred to as a GSA ( General Security Agreement )  . You'll of course be surprised at how un - general and very specific this agreement is!

So once you have a bank operating line of credit how long does it last for. In our experience these facilities are renewed on an annual basis - with the two criteria for renewal being your business financials of course, as well as how the account has operated over the past year.

How are limits established for bank business lines of credit in Canada? Typical ' ratios '' or ' margining ' as we have called it are 75% of accounts receivable under 90 days, and some per cent age of inventory. It's only our opinion, but Canadian chartered banks really struggle with the inventory component of your business lines of credit - most typically because they can’t be expected to have experience on the value and disposal of all types of inventory.  So typically you are very luck if you can get anywhere from 10-50% inventory financing on the value of your inventory.

Do your customers ever find out about how you are arranging business capital? Not really, the security is registered at a central registry, but clients and suppliers are never notified unless, of course, your loan is called.

Naturally many firms do  also require long term financing commitments for  business capital assets - i.e. those ' fixed assets' on our balance sheet . Typical bank term loans in Canada range from 3-5 years, sometimes longer, and have strict repayment and cash flow coverage requirements

As many Canadian business owners know, often personal assets are also charged as extra collateral for business lines of credit in Canada.  These include cash savings, home equity, cash surrender value of life insurance policies, etc.

So why do the majority of Canadian business owners and financial managers always try to get bank financing in place. In might just be force of habit, but we think two other factors play a role. They are the cost of bank financing in Canada (its low!) and, as importantly, their lack of knowledge of other financial options.

There are other financial options for business capital in Canada other than the banks? Yes, there are! Prudent owners and managers should investigate ever growing alternatives including asset based lending, confidential invoice financing, tax credit financing, and purchase order financing, and unsecured cash flow loans. How's that for alternatives!

To more closely explore traditional or alternative options in business capital in Canada consider talking to a trusted, credible and experienced Canadian business financing advisor, who can put you on the path of business lines of credit that make sense.

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

Direct Line = 416 319 5769

Office = 905 829 2653

Email = sprokop@7parkavenuefinancial.com


Click here for 7 PARK AVENUE FINANCIAL
http://www.7parkavenuefinancial.com


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

' Canadian Business Financing With The Intelligent Use Of Experience '

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

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

Stan Prokop