Business Financing: Maximizing Cash Flow Via Alternative Loans & Tax Credits

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Business Financing: Maximizing Cash Flow Via Alternative Loans & Tax Credits

The Hidden Gems Of Canadian Business Financing

Business Financing Loans And Financing Tax Credits For Cash Flow

Business financing success in Canada might well come from finding some of what we call the ' hidden gems ' of loans and other financing options. Even the govt via tax credits under the SR&ED program or gov't guaranteed loans might well become your best friend when it comes to business finance success. Let's dig in.

 

TWO GOVERNMENT SPONSORED BUSINESS FINANCE PROGRAMS YOU NEED TO KNOW ABOUT

Two of Canada’s government-sponsored business finance assistance programs are the farthest thing from handouts you can imagine. Canada's SR ED Tax Credit program for R&D is a solid tool for recovering your R&D capital via refundable tax credit financing.In many cases anywhere from 30-40% of your entire research budget can be recaptured via a refundable tax credit for a loan amount your require.

CAN THE REFUNDABLE SR ED TAX CREDIT CLAIM BE FINANCED?

 Even better news is that this tax credit can be financed via a bridge loan while you wait for your refund to be approved and arrive. It’s no secret that many of the thousands of firms who received billions in refunds every year take advantage of SR&ED loan financing.

THE ' SBL ' GOVERNMENT LOAN PROGRAM

 One other ' hidden gem ' for start-up and early growth companies requiring SME COMMERCIAL FINANCE solutions is the govt sponsored Guaranteed Small Business Loan. It's very accessible and is geared toward financing 3 asset categories - equipment, leasehold improvements, and finally real estate. While not often used to finance real estate thousands of firms do in fact finance their fixed asset and leasehold needs via this program. One of the main ' users' of the program is entrepreneurs wishing to start or purchase a franchise business.

The Govt small business loan is NOT a handout. It's not a grant. But what it is provides a flexible term loan with great interest rates and flexible terms and amortizations. It even can be repaid without penalty - which even other traditional financing methods don’t allow.

What are the approval criteria for SR&ED loans and the Government SBL loan that we've described? In the case of the SR ED tax  program, you simply need to file your claim with your yearend financials. Claims are typically 'written up ' via SRED consultants who specialize in maximizing your claim under the program. Naturally, your R&D capital investment spend under the program must be well documented when it comes to actual expenditures and monies paid/spent.

As far as the Govt SBL loan is concerned very typical lending criteria apply. Business owners must have reasonable personal credit and be able to provide a business plan and cash flow that assumes some realistic repayment of your loan. Invoices or quotes from suppliers on leaseholds and equipment you intend to finance also helps. The interest rate on the program is very attractive and competitive and comparable to main street financing rates given the nature of the program.

ARE THERE OTHER SOURCES OF ALTERNATIVE FINANCING FOR CANADIAN BUSINESS?

Our two ' hidden gems’ , the SR&ED program and Canada Govt Guaranteed business loans can be complemented with numerous other finance solutions. Those include financing under:

ALTERNATIVE FINANCING SOLUTIONS

A/R financing
Inventory Loans
Equipment Leasing
Non bank asset based credit lines
P O financing
etc.!

Business Financing  Loans Cash Flow Tax Credits: If you're focused on understanding all the finance solutions and business credit available to your company seek out and speak to a trusted, credible and experienced Canadian business financing advisor.


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


Stan Prokop 7 Park Avenue Financial/Copyright/2020

business financing cash flow loans

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SME Finance, (that’s ' small to medium enterprise ‘), aka ' small business finance ' , in Canada no doubt requires a fix (or fixes?) of some sort. Getting a tailor-made business financing solution for the loans and cash flow solutions you need is not easy, but where there's a will there's a way. Let's dig in.

Alternative financing solutions for small business lending are a new and appealing part of the Canadian business landscape.

 These solutions are of course available to any firm, both public and private, but we're quite sure the majority of firms that use these solutions are privately held.

At a certain point in time, business owners come to that turning point where equity no longer works and debt or cash flow solution decisions around a company loan must be made. Now ' leverage ' seems to make a lot more sense than equity dilution.

Monetizing assets for cash flow, as well as securing working capital allows your firm to consider growth projects to enhance both sales and profits. In some cases you might be making investments in new marketing strategies, in other cases your company might be investing in research and development.  ( Don't forget to check out the Canadian Governments SR&ED Program - and by the way, you can finance those SRED Tax credit refunds !)


Many businesses find themselves in unexpected situations where they have maxed out on the liquidity available to them from current lending sources. That is the time to consider either cash flow or asset monetization solution. Cash flow solutions are best suited to firms that are unable to offer up additional collateral to lenders. They also place much less emphasis on the proverbial ' personal guarantee ' required by almost all lenders when it comes to borrowing in Canada. 


Working capital loans come in two flavours - short term loans that typically are repaid in one year, and of course longer-term loans that typically have a maturity of  3-5 years, and sometimes longer. These short term loans have become very popular with thousands of firms, and are a spin-off of the ' merchant advance ' industry which flowered in the United States and then moved into the Canadian domain.


Whether its a short term loan or one that matures several years out a good lender will work with you to tailor repayments based on your current cash flow inflows.
The danger in working capital type loans comes from how these funds are deployed - typically shorter-term loans should be used to augment your day to day working capital, and they should not be invested in asset procurement/capital asset purchases.


Working capital loans make sense if you have good sales; many firms use this financing simply because they are growing too fast and traditional chartered bank financing is not available. In certain cases, companies may wish to capitalize on short term opportunities that have arisen around inventory volume discounts, or large orders received from new or existing clients.


All businesses that sell on credit carry receivables, and there is a cost to that, as the buildup of both a/r as well as inventory places pressure on the investments you carry in receivables and inventory as sales grow. That's why it is important to focus management on good inventory turnover as well as the prompt collection of receivables, leading to a better ' days sales outstanding - DSO '.

Alternative finance for a small business capital loan and asset monetization from financial institutions is almost always more expensive than bank debt. But from the owner/entrepreneurs point of view working capital and cash flow cost far outweigh equity /ownership dilution - especially for growing firms with promise.

Let us not forget also that even established firms with relatively good financials often can't ' tap ' the financing they need. And going the VC/Private Equity route makes sense only for the smallest % of Canadian business

WHAT COUNTS AS COLLATERAL FOR A BUSINESS LOAN?

Typical collateral for a business loan in Canada revolves around accounts receivable, inventory, and fixed assets. When dealing with a senior lender for business capital they will typically collateralize these assets for securing the loan/financing.

So what are in fact some of those ' tailor-made' solutions that might be highly applicable to your business finance needs when it comes to small business loans  and business lending Canada

 

What types of business cash flow loans can a business use to finance their business?

Factoring

Confidential Receivable Financing

Inventory loans

Bridge loans

ABL loans (non-bank asset-based business lines of credit)

Equipment leases/sale-leasebacks

Unsecured cash flow loans - cash flow based lending

Govt Guaranteed Small Business Loans -  Business loan new business

Sales Royalty Finance

SR&ED Tax credit financing

WHAT IS CASH FLOW FINANCING

Important Point: Owners/ financial managers should understand the following about loans for small business

1. In some cases, these alternative finance solutions can be combined or added on to one another - example: term loan and cash flow facilities

2. In some cases it's possible to have traditional bank financing in place as well as an alternative financing vehicle backstopping your bank facility

3. While the majority of these solutions are almost always used to finance operations and growth it's important to note that they can also be used to acquire a company or to finance management or leveraged buyout

If you're looking for the right ' fix' or a ' tailor-made' solution for your business financing needs in Canada seek out and speak to a trusted, credible and experienced Canadian business financing expert to fully understand the requirements and benefits.





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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



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



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

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR

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

business financing consultant

.

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


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


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







Stan Prokop
7 Park Avenue Financial/Copyright/2020

SME Finance Loans Cash Flow Business Financing Solutions

Can Asset Based Lending Help Your Company? The ABL Solution Works - Here's How!

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Asset-Based Revolving Lines of Credit and Term Loans

Is asset based lending the right financing for your business? That's a question that comes up all the time with our clients, and they want solutions now, not down the road! One ' size fits all' solution is, asset based lending. These 'ABL' techniques and solutions could provide all the financing your firm needs in today's competitive environment. Asset based lending industry statistics show explosive growth over the last decade .

What is Asset Based Lending, also known as ' ABL '?

Simply speaking it's a lending facility with the collateral being specific company assets. Utilizing the ABL formula allows your company fo fund A/R, Inventories, unencumbered equipment, and real estate is that latter asset is a part of your asset mix. The combination of those assets will significantly improve overall business liquidity/working capital.

One way to view this newer method of financing is to look at it as a ' blending ' of your company assets. This lending formula, therefore, delivers on access to more capital than any one financing. There are numerous, let us call them ' subsets ' of asset finance -

A/R Financing
Inventory loans
Purchase Order Financing
Sale Leasebacks

All of these deliver solid financing when your business needs it. But combined into an Asset Based Borrowing solution your firm maximizes total working capital needs. View it as an option to run your business on a daily basis, or in the terms of considering a management buyout or acquisition. It's working capital when you need it most.




Companies that are constantly growing and in need of additional operating capital are the best candidates for the cash flow generating power of asset based lenders. Many of the best candidates for this business finance solution are financially leveraged and are not best suited for traditional Canadian bank financing .



Business owners and financial mgr's are looking for finance that grows with their business. As it became difficult to get all the financing they needed after 2008's recession many business owners investigated the ABL loan solution.

Typically, ( but not always ) asset based finance is non-bank in nature - it's offered by specialized commercial finance companies . It helps businesses access more working capital and cash flow - typically "Job 1 " for any business.

If your company has long term debt, and is looking to avoid taking on more debt, payables are rising, and you're waiting longer to collect receivables asset finance is a very logical solution. Ironically many business owners and financial managers in some cases haven't heard of this type of financing.

In the ' old days ' ( we remember them well ) abl was often touted as a financing of last resort. No longer!! Using it can grow your business, expand into new markets, buy a competitor, and oh yes, just survive day to day!

Summary Of The Benefits Of ABL

New clients at 7 Park Avenue Financial always ask us to clarify the benefits of the asset based lending solution.

A combination of business assets delivers a higher level of liquidity than any one type of finance

The ability to unlock assets traditionally not margined by Canadian banks as part of a working capital revolver

The ability to restore your firm to a level of financial stability - we meet with a lot of management who by necessity are always spending mangement time on cash flow needs

Every industry requires different levels of expertise and funding - ABL suits a wide variety of industries

ABL is a legitimate ' catch-all ' for expansion, restructuring or refinancing ( Yes you can finance the purchase of an existing business )

Asset finance solutions are low cost when compared to equity financing

Traditional Canadain bank requirements around covenants, ratios, etc make ABL more accessible and it's ability to ' co-exist ' with other types of debt is viewed as a key positive for firms that have different levels of senior and junior debt.It is a funding structure that works! That what we at 7 Park Avenue Financial call ' covenant light '!




In it's purest sense asset based lending is often just a revolving line of credit that allows you to borrow against all, repeat ' all ' of your assets. Those typical asset categories include receivables, inventory and fixed assets.. even real estate if your company occupies and owns its own premises. Therefore the prime security of the loan is a focus on the overall value of your asset base, with less, or no reliance on external collateral, the focus on personal guarantees, etc.

LEVERAGING BUSINESS ASSETS TO ACCESS WORKING CAPITAL

The entire subject of leverage and margining your assets in ABL is critical to understand for the business owner and financial manager . ABL funded revolving credit facilities are based on a formula based on the liquidation value of your current and fixed assets. Naturally, a/r and inventory rank very high in liquidation value and will provide the maximum borrowing power . Typical advances on receivables are 90%, and percentages will vary based upon the many types of inventory specific to any one industry in Canada.

How Is The Exact Value Of ABL Secured Loans In Canada Calculated?

The asset based lender will focus on your firm's balance sheet with a view towards ensuring a detailed analysis of your overall potential liquidity. Factors that come into play include specific industry issues as well as current economic conditions, pandemics included!

As an example, the ageing for a/r and inventory will determine eligible amounts of borrowing under the facility, i.e. all receivables under 90 days is usually a typical measure of borrowing power. There might be a ' dilution' part to the formula - that might be an allowance for bad debts/uncollectible accounts.

The final borrowing base certificate will demonstrate maximum borrowing power for your firm.It should go without saying your firm should have a good reporting and accounting systems capabilities .



Canadian asset based finance candidates can appreciate that numerous fluctuations in their business sometimes deliver a challenge to those borrowing base calculations. Retails or distributors might require excess borrowing capacity at certain times of the year so seasonality must be factored into any common sense formula.

The best way to address that is to ensure your lender has visibility to historical documents around cash on hand, current asset levels, accounts payable, etc. Heres where overall averages can really help the final formula. Yes, assumptions must be made but those cushions will be an excellent ' shock absorber' in available borrowing.



Traditional bank financing often revolves around strict reporting periods on financial statements, and aged reports on receivables and inventories and often comes with a term loan structure. If your firm requires what the pro's call ' bulge financing ' traditional bank type facilities cannot necessarily solve the cash flow crunch. The more liquid your receivables and inventories are re turnover will mean a higher loan to value in drawing down on your facility.

THE ABL DIFFERENCE?  Simple - You can borrow significantly, on an ongoing basis, against those assets. Smaller ABL facilities tend to be in the 250k range, but they can easily run into the millions. Many large corporations use ABL also by the way!

By now you may have picked up on the fact that as your business grows you can borrow more on an ongoing basis, as your assets have grown also - with virtually no upper limit.

While Canadian chartered banks focus on ratios, covenants, personal guarantees and high net worth the asset finance solution focus.. you guessed it.. mostly on your business assets.

ABL comes in different flavours and can be specifically based or full service against all assets. That allows you to not postpone business success! Can you afford not to access this solution?

So what can ABL do for your company - if you're growing let asset based financing finance that growth? Growth financing is a challenge for every business .If you are considering funding an acquisition ABL can play a part in that financing. Many entrepreneurs don't realize the critical part asset finance can play in acquisition financing. It is often the cheapest, quickest, and most efficient way to fund acquisitions versus going the equity financing route. An asset based lending mortgage can also be part of any new facility.

If your requirement is a turnaround or recapitalization this method of business finance is well suited to your needs and can be delivered in a timely manner when timing counts! Working with an experienced advisor with a track record of financing success will also allow you to address any cross border financing that might be required.


The seasonality of any industry can greatly impact cash flow - let this form of financing help you with the cash flow strain. And should your company require the ' turnaround' asset finance is a proven method of restructuring your firm.



Speak to a trusted, credible, and experienced Canadian business financing advisor with a track record of success on achieving benefits of ABL finance. Let our team tailor a specialty facility tied to your business within its industry. We will demonstrate how to unlock working capital to meet all your cash flow needs with the right total financing option. Next step? Growth/success!






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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



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



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

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR

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

business financing consultant

.

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


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









Stan Prokop
7 Park Avenue Financial/Copyright/2020

Can Asset Based Lending Help Your Company? The ABL Solution Works - Here's How!

How To Access Business Factoring For Cash Flow Success Via Receivable Financing

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Receivable financing solutions in Canada, often called  ' business factoring ',  offer a true ' second chance ' when it comes to the business owner/financial mgr’s ability to turn adversity into opportunity. This business finance solution goes by a few names: invoice factoring, invoice discounting, receivable factoring, etc.  There are different forms of factoring, so we forgive new clients at 7 Park Avenue Financial for sometimes getting overwhelmed with the terms!


The ability of your company to turn cash flow for business challenges into a major win in working capital and cash flow might just come from one of Canada's newer forms of business financing, called ' business factoring '. Spoiler alert -  Accounts Receivable factoring it's not that new!

Getting the order, and then getting paid. The old  ' cliché' of  ' the order is not complete until it's paid for '... as trite as that sounds, seems to hold true even today, especially for new, small and medium size firms.

Many clients we meet with are in the enviable position of getting larger orders and contracts than they might have imagined based on their innovative products and services. But with that success, as we noted, comes the challenges of cash flow financing.

During the past few years with all the economic turmoil it seems Canadian business financing options seem either limited or have disappeared - that's certainly how many clients feel. The impact of accounts receivable growth is a huge challenge, not to mention inventory and Purchase Order / Contract funding needs.

 Many companies find that traditional bank financing is restrictive to a point that Canadian banks can't meet their business credit needs. The concept of ' seeling a/r ' to a third party and generating immediate cash as you grow sales has become popular with thousands of companies in Canada.   This differs from assigning accounts receivable to a bank.

Note that almost all of the commercial factoring in Canada is done by non bank commercial lenders. Canadian banks will often refer customers seeing a/r financing to a specialty lender or an experienced advisor familiar with factoring.

Advantages of Factoring Vs. Other Types Of Financing 

There are of course some significant differences between a/r finance and the concept of a ' commercial loan '.  Primary is the fact that this type of business credit is not a ' loan' per se - your company does not take on debt on your balance sheet.  The amount of factoring financing is simply directly related to the amount of your A/R. Canadian borrowers will be happy to know that there is virtually no upper limit to the amount of factoring finance if your firm is growing and has good receivables, domestically or internationally. 

Borrowers know only too well that bank financing is tied to credit limits, annual reviews, and a variety of covenants, personal guarantee focus, and the potential requirement of outside collateral. Many Canadian firms feel the pressure to increase outside equity, and a good receivable financing facility will allow you to potentially avoid that need.

What Type Of Company Utilizes  Accounts Receivable Financing?

Almost every industry in Canada uses Factor financing.  Industries in the oil and gas sector, staff placement, manufacturing, distribution, wholesaling, trucking, technology and business services all are major clients of the receivable financing industry.

Although some businesses that are financially challenged in some manner, the proverbial ' bad credit ' industry statistics show that the factoring industry is experienced strong growth and popularity.


Business cash flow, a la ' cash is king ' has never been more relevant for the economy. Receivable financing allows firms to not be victimized by clients pay 30, 60 or dare we say it 90 days beyond stated payment terms. It's the SME sector that feels that pain the most, as larger corporations have access to more liquidity.

Business factoring can be called a subset of asset based financing - the monetizing of assets without taking on commercial business loans and term debt. The speed at which factoring facilities can be arranged is also an appeal to Canadian business owners and their financial managers. The concept of no installment payments has broad appeal to factoring clients.

Key Points in Determining the Financing Value Of Your Accounts Receivable 

Numerous factors are taken into account when commercial lenders are setting up your accounts receivable financing facility. It's all about the true value and quality of your a/r. When it comes to your accounts receivable ageing it's no secret newer invoices have greater value - numerous industry statistics validate that point.  Who your client is also is important. An extreme example has been given that a receivable owing to your firm from Google has more value than one owing from a local DVD rental store!

As a commercial borrower in a factoring facility the more info you have on your a/r base will result in a more cost effective facility.

What Do Factoring Companies In Canada Require To Set Up Your Invoice Purchasing Facility     

As a general rule borrowers will be pleased to know that the entire application process in setting up your facility is very simple and straight forward. Key information required includes :

1.     Standard credit application 
2.     Agings for a/r and a/p
3.     Confirmation of legal company name - ie articles of incorporation
4.     Sample invoice 

New clients of 7 Park Avenue Financial always want to understand how the advances and cost work when it comes to receivable funding. As a general rule your sales invoices are funding at 90% of their face value.  Your firm receives the balance of the invoice, ie the remaining 10%, less financing costs when your client pays the invoice. Invoice purchasing is now completed!

It should be noted that there is no requirement to finance all your a/r base, although many of our clients choose that route, allowing the facility to mirror a true bank line of credit.

So we have waxed eloquent on the problem- That's easy. You'd prefer a solution though!   Receivable financing, also known as factoring addresses the issues of your customers paying you in 30.60, or dare we say it, 90 days. You can carry those receivables and continue to make a high investment in current assets, or you can turn your sales into immediate cash.

Let's cover off some other basics around how this innovative method of business financing works.  When you sold the product or service you hopefully had enough gross margins in your cost of sales to make the sale profitable. If you are able to sustain another 1- 2% of gross margin erosion you can use receivable financing to turn sales into same day cash, which is what this financing is about. That is known as the factoring discount, which is a cost, and not an interest rate as some people believe.

So how does this all work? We're glad you asked! Let's reveal and recap in a manner that's understandable.  Your purchase orders or contracts must be ' clean ' from a viewpoint of being able to demonstrate you can recognize revenue on your shipment.  We should interject at this point that the banks will finance your receivables also, but that comes with much stricter criteria and limits on the amount you can finance.

That is why factoring has risen in popularity, it provides unlimited... yes... unlimited same day cash flow for your sales. Your challenge is to work with a trusted, experienced and credible business financing advisor who can steer you to the right partner with the type of facility that works for you.


Although traditional factoring along the lines of the U.S. model requires your customer to be notified we are in fact a fan of the type of facility that allows you to bill and collect your own receivables, for all the obvious reasons.  At 7 Park Avenue Financial we've called that Confidential Receivable Financing.

It's important for clients to understand at its most basic how factoring works. You are advanced, on the same day as you invoice approx 90% of funds for your invoice. The remaining 10% is a holdback which creates a reserve and also covers the financing charges. When your customer pays you or the factor you receive the remaining 10% of your invoice amount, less the financing charge.

In Canada the cost of factoring from accounts receivable factors ranges from 1-2% a month.  The cost of factoring revolves around some key points. They include:

Industry specific issues relating to your company  - some industries are occasionally ' out of favour"

Size of your Receivable base - a very general rule is that many facilities start in the 250k range, there is no upper limit, but any size of facility small or large can ultimately be financed with the expertise of a business financing consultant 

General level of creditworthiness of your client base as it relates to any major concentrations or invoice size, geographical location, etc

DSO! Business people need to be familiar with the concept of DSO -  ' days sales outstanding ' It is a key measure of any successful company. The largest and most successful corporations in the world have this a key measure of financial and profit performance. DSO is measured in days, lower is better and the turnover of your a/r can dramatically affect the cost of factoring.



Note that it is also possible to transfer all of the risk of bad debt to your funder, which is known as non-recourse factoring - these facilities naturally cost a bit more and are sometimes abetted by credit insurance. Factoring companies in Canada and advisors can provide your firm with more info on this additional investment in credit risk.



It turns adversity into opportunity because you grow sales with larger gross and net margins, and if you utilize the financing properly you are actually in a position to reduce much, in some cases all of your financing costs by taking discounts with your own suppliers or buying smarter and in larger quantities. Reversing the cash flow for a business problem - That’s a win win in the language of business.


In summary, it is important to realize how factoring works and why it can be valuable to your business, in good times and in less than good times! Your firm accelerates cash flow and literally unties the capital you have invested in sales to clients.


If you are looking to factor receivables seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your business factoring and A/R 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

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



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



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

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR

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

business financing consultant

.

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


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









Stan Prokop
7 Park Avenue Financial/Copyright/2020



















 

Business Capital Solutions In Canada : Accessing Proper Cash Flow & Commercial Financing

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Cash Flow Solutions - What Are The Types Of Capital For Your Business

Business capital requirements in Canada often boil down to some fundamental truths the business owner/financial mgr/entrepreneur needs to address when it comes to financing for businesses.

One of those truths? Knowing the true state of their financial condition and what financing they do and don't qualify for when it comes to meeting commercial lending requirements in Canadian business.

Business Loans In Canada

Whether you are smaller or start-up firm looking for information on how to get a business loan or a larger established firm looking for growth financing or acquisition opportunities we're highlighting 3 mistakes that commercial loan seekers like your company need to avoid making when addressing, sourcing and negotiating your cash flow / working capital and commercial financing needs.



1. Understand the true condition of your company finances - These are almost always successful addressed when you spend time on your financials and understand how your financial statements reflect your access to commercial loans & business credit in general



2. Ensure you have a plan in place for sales growth and financial needs as it relates to commercial financing



3. Understand that actual hard facts about cash flow which is, of course, the lifeblood of your company



Can you honestly answer or feel optimistic about all those 3 points. If so, pass Go and collect $ 100.00!



An excellent way to address your company's finance plans is to ensure you understand growth finance solutions, as well as how to manage in a downturn - i.e. not growing, losing money, etc ; It's never fun to fund yourself in an economic or industry downturn such as the COVID pandemic of 2020!



When we talk to clients of new or established businesses it seems they are almost always talking about sales, so the ability to understand and focus on the differences in their profits and cash fluctuations is critical.



How do cash flow and sales plans and projections affect the type of financing you require? For one thing sales growth usually starts out by consuming your cash, not generating it. A poor finance plan will drag your business down, and addressing financing simply gets tougher and tougher.



Three basics always emerge when it comes to your search for the right business capital and financing.



1. The amount of financing you need



2. The type of financing (debt/cash flow/asset monetization) The business loan interest rate will be dramatically affected by whether you choose traditional or alternative financing solutions. Private business loans in Canada come from non regulated commercial finance companies most often known as ' alternative lenders '. These lenders are typically highly specialized in one ' niche ' of business financing and may be Canadian firms or branches of U.S. banks and non-bank lenders



3. How the financing is structured to be manageable with your day to day operations

What Finance Company In Canada Can Meet Your Borrowing Needs & Why Is Capital Important In Business 

Let's identify and break down key financings your firm should know about and understand if they are applicable and achievable to your business. They include:



A/R Financing / Factoring / Confidential Receivable Finance



Inventory finance / floor planning / retail inventory



Working Capital term loans



Unsecured cash flow loans



Merchant working capital loans/advances - these loans are geared toward short term cash needs and are typically one year in duration. Loan amounts are typically 15-20% of your annual sales revenues.



Royalty finance



Asset based non bank business lines of credit



Tax credit financing (SR&ED bridge loans)



Equipment Leasing / Sale leasebacks - Equipment financing in Canada is used by almost 80% of all companies looking to acquire new, and used assets.



Govt Guaranteed Small Business Loan program - Government Loans in Canada are sometimes referred to as ' SBL', aka Note: BDC Finance solutions are available from this Canadian non-bricks and morter crown corporation. A small business loan via the government-guaranteed loan program comes with true flexibility around term loan duration, market rates, no pre payment penalties, and of course the low personal guarantee that is required by borrowers. These two ' government ' loan solutions are often perfect for financing a new business.



If you're focused on not making mistakes in your business finance needs and want to capitalize on the solutions your competitors are probably already using seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your cash flow and commercial 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

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



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



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

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
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 Financing Companies For Lines Of Credit & Loans

Business Financing Loan Programs That Make Sense

Business financing choices for medium-sized companies and small business credit term loans or a line of credit often seem like huge hurdles when it comes to funding accessibility for owners/financial more. It's all about ' working capital when it comes to funding, and business owners will often lament the lack of choices in funding and capital solutions. Our thoughts? In fact, you probably have more choices today than you ever did for your cash needs! Let's dig in.


Is there ever a time when a company doesn’t need funds. Whether it's acquiring new assets, considering expansion into new markets or products, or simply paying daily operating expenses there’s always a need for financing solutions.


There is always a business loan requirement! At 7 Park Avenue Financial we will often recommend and prepare a business plan for our clients as a key part of any financing strategy.

Your timeframe of reference is critical to assessing and acquiring your financing solutions. Typical timeframes are of course ' short term' for daily needs such as a line of credit, or ' long term ' as it relates to capital assets or investments in R&D. In the long term, you might be considering simply refinancing your current business is funded - that perpetual mix of owner equity and debt - and the right combination of those two.



In the middle, there are often' bridge loan' needs for a variety of circumstances. These solutions can fill the gap that comes from the dynamic changes in your business.



From a small business perspective, many firms are in start-up or early stages, The Govt of Canada has one of the best programs that thousands of firms utilize every year. This loan is now up to $1,000,000.00 in loan cap, provides a govt guarantee to your bank for 90% of your loan, and comes with great rates and flexibility that even some more traditional forms of financing can't deliver on, i.e. any penalty pre-payment, longer terms, etc.



As we've stated, there is a ' new normal ' in Canadian business financing. That new normal includes the rise of numerous alternative finance solutions. Those combined with traditional bank financing offer a large slate of funding solutions.

So How Do Business Loans Work In Canada?

Looking for a simple list of business financing solutions available to your firm? Here they are! The Canadian ' SME ' sector has access to traditional and alternative finance solutions for small business financing as well as larger firms.

What are the best financing options for a business?

A/R Financing/ Invoice Factoring/ Confidential Receivable Financing



Inventory Loans



Bank credit lines



Nonbank asset-based revolving credit lines



Govt Guaranteed Business Loans - This is The Small Business Administration Program Of Canada ( This Program Is excellent for start up funding for small business ) This program is the best example of ' government financing ' and is used by thousands of companies every year. The program is also excellent whereas grants for small businesses may be cumbersome and difficult to obtain from a timing perspective.



Tax Credit Financing (SR&ED / FILM)



P O / Contract Financing



Equipment Financing



Unsecured cash flow loans/ Mezzanine financing



Franchise Loans



Sale Leasebacks



Royalty Financing



Working Capital Loan / Merchant Cash Advance - These viable short term loans arose out of the use of credit cards by business owners.



Many financing solutions identified here can also be combined with ' BDC Funding '. All of our referenced business finance sources are not ' equity financing ' and don't dilute owner equity. The road to venture capital and private equity financing is a long and arduous one and most companies are not ready for that journey.

Whatever financing program or strategy you employ interest rates will vary depending on whether your loan or asset monetization will cost will vary.

Documentation and your firm's ability to provide the basics such as financial statements, owner background, etc. are keys to a good financing package. Let's not forget a realistic cash flow budget also.

This broad range of financing solutions allows your firm to grow, hire people, and become key players in their industry. Looking at a number of solutions will allow you to identify business loan requirements and which finance solutions might work together.

To implement any financial solution you need to understand where your ' financing gap' is and which solutions will work when it comes to either taking on debt or simply monetizing your assets to the maximum, while still employing prudent leverage.

Are you aware of all your financing choices? If not seek out and speak to a trusted, credible, and experienced Canadian business financing advisor who can assist you with your loan and line of credit needs.




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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com


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