Business Financing Costs For Funding Solutions In Canada

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Looking for The Best Rates & Financing To Run and Grow Your Business ?

Business funding and the costs and ' rates ' around financing a company are always top of mind for business owners and their financial managers in Canada. It is safe to say that stability around financing options and solutions that are reliable play as much a key factor as the cost of that financing.

When it comes to financing a company it's a combination of current needs as well as the sometimes overlooked intermediate and long term needs of the firm. That becomes even more important if a firm has ambitious growth and expansion plans.

What Are The Finance Needs Of A Company ?

There are numerous ways to ensure your firm can access those shorter term needs to avoid the proverbial ' cash crunch '. And, as we noted cost always plays a key role.

Although it might not be immediately obvious to all business folks, suppliers are in fact a form of short term financing . There are benefits, risks, and costs associated with vendor/supplier finance.


Let's use the example of a supplier who offers your firm payment terms of 2/20 net 60. That of course means that you can pay them in 60 days, or takes a 2% discount if you pay in 20 days. If you use a sample $ 10,000.00 invoice the arithmetic around that transaction will tell you the opportunity cost of not taking that discount is almost 19%!

Opportunity cost is a solid way of looking at financing costs - It's very simply the cost associated with passing up an opportunity when making a financial decision.

The lowest costs of business financing in Canada is financing via our Canadian chartered banks . Interest rates for borrowers, consumers and businesses alike are the lowest they have every been . So what is the challenge ? Simply that bank facilities are often a challenge for a firm to get approved , so whether it's

Unsecured Cash flow loans


Business credit lines


Installment loans


Term loans

our Canadian banks offer up a plethora of financing options! For those companies that can't access some or all of the bank credit they need it is critical owners / financial mgr's understand that numerous alternative business finance solutions are available . Even firms that have had their loans called are eligible for alternative finance solutions that can save their business and put it back on the right financial footing. Special loan designation is not fun !

As stated a number of non bank commercial finance firms provide business funding solutions, albeit at a higher rate than the banks. With this group of lenders more emphasis is placed on business assets and sales versus the bank requirements of profits, clean balance sheets, and personal guarantees and outside collateral.
Alternative finance companies simply have a different way of looking at business credit, and of course they are not funded with customer deposits, as are our banks.


Receivable financing in Canada is more common place everyday. Many misconceptions exist around financing costs associated with ' factoring ‘. It's also important to remember that A/R finance allows you avoid long term debt and giving up equity - those are important considerations. If you understand the miscellaneous charges, the advance rate, and the discount rate on Receivable Finance in Canada you may well embrace the benefits, which are:


Immediate cash flow

Bulge financing

Growth potential

Strengthened balance sheet

Our recommended form of receivable financing for clients of 7 Park Avenue Financial is Confidential Receivable Financing, allowing firms to bill and collect their own receivables as well as achieving all the benefits of non bank a/r finance. This solution is also commonly bundled into a non bank business line of credit which combines the borrowing power of your a/r, inventory, and even equipment you own.

Short term working capital loans are also very popular in recent years - Typical terms are 1-2 years maximum, and many firms can qualify for a loan amount based on 10-20 per cent of your annual sales .


Leasing/equipment financing in Canada offers competitive rates for all asset classes commensurate with your asset class and overall credit quality. The industry has a solution for every asset, and rates from 4-24% cover the spectrum of asset financing in Canada. While you will probably pay more for leasing than a bank term loan the appeal is staggered cash outlays, obsolescence protection and fewer financial covenants /restrictions.


So our bottom line today? Simply that each category of financing required comes with a different measure of cost, risk, liquidity and in many cases, restrictions. Speak to a trusted, credible and experienced Canadian business financing advisor who has a track record of business finance success , who can assist you with the cost of finance for your business.


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

Solving The Debate About The Business Line Of Credit In Canada : Rates And Other Issues And Alternatives

Stranded In A Business Line Of Credit Wasteland?

OVERVIEW – Information on business line of credit alternatives in Canada. Rates and other factors to consider when working capital and cash flow financing are critical to survival and growth






The business line of credit in Canada is used to finance the growth and operations of your business when that can not be done by owner capital and self financing sufficiency. But many owners/financial managers find themselves in positions where they don’t fully understand the 2 types of business credit facilities, what they cost, and how they work. Let's dig in.

So what are those two alternatives ? Naturally answer # 1 from clients we meet and talk to is of course the Canadian chartered bank credit facility . The other, less common, but more popular everyday is the non bank business line of credit. This facility (not always, but more often than not) cost more, but offers more liquidity, is easier to obtain, and grows with the size of your business assets.

The major qualifier for bank credit lines is pretty simple - good financial statements. Those statements must of course reflect good equity, profits, and reasonable debt load.

If those qualifiers can't be met in their entirety the ' ABL ' asset backed credit line is a very solid option. Common structures for the facility are similar to bank lines - the margining of receivables and inventory. The difference is that you have a much higher ' borrowing base ' around those two assets based on their ongoing values.

Receivables are typically financed at 90% of their value, and inventory, depending on its nature is financed anywhere from 25-75% of its value.

For both types of credit lines the owner/manager can assume that financing charges are only being applied on what is outstanding and utilized by your firm. While bank facilities have fixed approved limits, asset backed credit lines have limits but are easily adjustable if your firm is growing sales and current assets. Note that one other interesting aspect exists with the alternative ' ABL' facility. That aspect includes the financing of your equipment and fixed assets, which are, in effect, bundled into the total credit line.

The business owner/manager can therefore quickly see that the ability to borrow much more on inventory and A/R, as well as using fixed assets for additional borrowing quickly translates into a lot more working capital and cash flow for your business, when you need it.

When your firm utilizes a bank line of credit it's of course all done through one operating account that the bank monitors. In the case of asset based credit facilities various methods can be used to facilitate the actual management of the account. That needs to be addressed because the ABL firm is usually not a bank but a private commercial finance company.

If you feel you're stranded in a ' wasteland ' of lack of credit and working capital alternatives seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can ensure your firm has the ability to access rates , structures and the amount of working capital you require to fund and grow your business.


Stan Prokop - 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 90 Million $ of financing for Canadian corporations . Info /Contact :

7 Park Avenue Financial = Canadian Business Line Of Credit Expertise




Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

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


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

Confused About Financing Costs And Rates ? Here’s The ‘ Skinny’ On Business Loans And The Real Cost Of Finance

Canadian Business Financing - Rates, Costs and Implications


OVERVIEW – Information on the cost of finance in Canada . Financing costs, either rates or implications of business loans and asset monetization play a critical role in the business decision




Financing costs and ' rates’ re: business loans are top of mind for Canadian business owners and managers searching for some sense of stability and reliability in running their business as bench marked against the cost of finance. Let's share some ' skinny '

around these issues.

A good place to start is to give some solid thought around whether your financing will cover off the current need, and take you into the intermediate and long term when it comes to growing or expanding your business.

There are about 6 ways to ensure your business has the short term financing you need. Let's look at some of them... with a focus on ... COST!
The average business owner can be forgiven for not viewing their supplier as a form of financing, along with considering the benefits and costs around this continual relationship.

Let's use the example of a supplier who offers your firm payment terms of 2/20 net 60. That of course means that you can pay them in 60 days, or takes a 2% discount if you pay in 20 days. If you use a sample $ 10,000.00 invoice the arithmetic around that transaction will tell you the opportunity cost of not taking that discount is almost 19%!

By the way... Opportunity cost? It's the cost of passing up the next best choice when making a decision.

In Canada bank loans offer the lowest cost of finance when it comes to business borrowing. In the current low rate environment of 2012/2013 typical borrowing rates are in the 4-5% range. The challenge in Chartered bank facilities is getting approved, as well as ensuring you have the right facility in place. Those include: unsecured cash flow loans, business credit lines, installment loans and term loans for the purpose of asset purchases.

Probably the best advice we can give clients in reference to bank loans and their costs is to simply understand the alternatives, especially if you either don't qualify or are in the position of having your loan called. I.E. The Special Loan scenario!

A lot of the financing that banks provide in Canada can also be achieved via commercial finance firms. While rates might be higher and more emphasis is placed on collateral you can often achieve all the financing your firm needs. By the way, why are rates higher from commercial finance firms? Probably because they get their funds from the bank!

Receivable financing in Canada is more common place everyday. Many misconceptions exist around financing costs associated with ' factoring ‘. It's also important to remember that A/R finance allows you avoid long term debt and giving up equity - those are important considerations. If you understand the miscellaneous charges, the advance rate, and the discount rate on Receivable Finance in Canada you may well embrace the benefits, which are:

Immediate cash flow
Bulge financing
Growth potential
Strengthened balance sheet


Two other subsets of short term financing in Canada are Inventory finance and Leasing. Inventory finance is generally done within the context of an asset based credit line, which comes at higher than bank rates.

Leasing/equipment financing in Canada offers competitive rates for all asset classes commensurate with your asset class and overall credit quality. The industry has a solution for every asset, and rates from 4-24% cover the spectrum of asset financing in Canada. While you will probably pay more for leasing than a bank term loan the appeal is staggered cash outlays, obsolescence protection and fewer financial covenants /restrictions.

So our bottom line today? Simply that each category of financing required comes with a different measure of cost, risk, liquidity and in many cases, restrictions. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with the cost of finance for your business.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS FINANCING EXPERTISE

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 10 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-costs-cost-of-finance-rates-business.html






7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

















Stan Prokop

Is There A Perfect Debt Financing ? Achieving Business Loans And Rates And Structures That Make Sense For Your Company

Looking For An Answer To The Right Business Loan Question?

OVERVIEW – Information on debt financing and business loans in Canada . What rates and structures work best for your firm ?




Not getting debt financing right in Canadian business finance can destroy a lot of prospects your company might have - we suppose it could also destroy your firm... period! So the right amount of debt, and business loans and rates your firm can manage is critical to long term success.

When credit is of course available it’s both easy and tempting to take on more debt. In fact if you have done that in 2008 right around the time the global economy imploded we are pretty sure there was some sledding at that time.

Of course it’s all about having the right objective in mind when your firm contemplates more capital. In some cases thought its not necessarily additional debt on the balance sheet that is going to get you more cash flow - you might also find that simply monetizing assets without taking on debt gets to the goal line just as fast... and in better shape!

Part of the temptation of debt is that your firm will miss opportunities along the way if you don't ' bulk up ' on capital. So that’s when some pretty basic questions come into play. They are as follows -

What in fact is the right amount of debt for your company to take on and manage?

Do you need to totally change your outlook on your capital structure - i.e. the right amount of debt and equity?

Can your projected cash flows sustain debt?


It is safe to say that if your firm has a lower debt level then you're probably more comfortable in managing through challenges. The more sophisticated finance folks tell us that the amount of carefully managed debt simply increases your overall returns - that’s a good thing. But when your debt levels are too high via business loans and rates that severely affect your cash flow the perception can easily arise, from customers and suppliers, that you are... well ' in trouble '.
It also is safe to say with the wrong amount of debt your firm is more prone not to be able to make new investments in capital, research, and marketing. Once suppliers start cutting you off that forces you to react with a new behavior to inventories you are carrying, thereby affecting sales and revenues. The finance books tell us tor most firms that a 2:1 ratio, o relationship of debt to equity is the right mix. That varies of course between different industry segments.
A good way of looking at new business loans, rates, and other debt alternatives is for the Canadian business owner and financial manager to simply as ' what could go wrong '?

Many clients are pleasantly surprised to hear they can monetize assets to increase cash flow and business opportunities. This can be done by:

Receivable financing
Asset based credit lines
Sale leasebacks
Financing Tax Credits
Supply chain / PO Finance


So... a bottom line? Simply that debt financing comes with risks and rewards, a classic case of Caveat Emptor. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in maximizing the right debt finance and asset monetization strategies

7 PARK AVENUE FINANCIAL
CANADIAN DEBT FINANCING AND ASSET MONETIZATION EXPERTISE




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/debt-financing-business-loans-rates.html


7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

Get The Lowest & Best Accounts Receivable Financing Loan Rates In Canada – Factoring Demystified!

We wish. If only pricing and ' rates ' around accounts receivable financing loan rates were more easy to understand, and not so confusingly (is that a word?) presented to clients look for a/r financing, commonly know as factoring. We're quite sure that thousands more Canadian business owners and financial managers would look at this unique for of business financing quite differently.

So if it’s not for the industry itself to explain how things work... you guessed it, it’s up to us!

You're looking at accounts receivable financing because of the value you perceive in both growing, and yes surviving from an operational and growth perspective. Using growth as an example the financial reality is that as your firm does grow you require a greater investment in inventory and accounts receivable.

That investment hampers cash flow and working capital, unless you have discovered a way to get your clients to pay your firm before you have to pay your suppliers and employees. Most of our clients haven’t yet found that magic formula, so factoring has become one of several solutions.

In the majority of cases A/R finance is going to be more expensive than traditional financing you could obtain through a Canadian chartered bank. But no matter what pricing you achieve in Canadian A/R finance you can still offset this cost via supplier discounts you can now take, as well as the reality that you can now compete on equal footing with all your competitors. Bottom l line, you're financed to grow!

But let’s get back to pricing and rates, which is why you came today! In order to be able to afford and use effectively accounts receivable financing factoring you must be in a postion to have solid, at a minimum reasonable gross margins. This can be achieved financially of course via pricing well to your clients, and having respectable overheads.

So what are the key factors that you need to wrestle down when trying understanding factoring pricing?

First of all you need to understand the advance rate. That’s the amount of funds you receive on your invoice that's able to be provided to you immediately after you generate a sale. Typically you want to enjoy the maximum advance rate, which is 90% more often than not. Advances rates less than that are not advisable in our opining, and affect your overall pricing in a negative manner. So don’t ask the question ' whats my rate?’ make that instead whats my advance rate?

In accounts receivable loan financing its all about the discount fee. To most clients that that’s what they think the ' interest rate ' is on the deal. The reality , and this is difficult to understand , is that in factoring financing there is not interest rate, because the transaction is a ' sale ' of your a/r between you and your finance partner . Your receivables are ' bought ' at a discount that discount effectively being your carrying cost on the transaction.

We talked about the advance rate on your financing being an optimal 90%. But what about that 10% holdback? Ensure you get that holdback back when your client pays, immediately. That’s the facility you want to strive for, as the reserve plus the advance rate can significantly impact your overall financing cost in A/R finance.

We're the first to agree with clients that factoring pricing can be complex. One of the reasons is quite simple; the firms that offer it to you make it complex. If you take the time to understand how this financing works, and is priced we're quite certain the benefits will appeal much more clearly to your firm .

Want clarity and simplicity on your accounts receivable financing loan rates. Speak to an expert... seek a trusted credible and experienced Canadian business financing advisor who can assist you in making the right decision s in A/R 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 .Info re: Canadian business financing & contact details :
http://www.7
parkavenuefinancial.com/accounts_receivable_financing_loan_rates_factoring.html

Pick The Best Canadian Receivables Factoring and Financing ! Cost and Rates Of Invoice Finance

We encountered a great term the other day when it comes to business financing - the term was ' expansionary finance ‘. Is it just us or does this term seem to perfectly cover off factoring and receivables financing.

Often though three key issues come up when Canadian business owners and financial managers consider this type of financing. What are those 3 issues ?They are the total cost of this type of financing, the rates associated with this facility, and probably most importantly what type of firm offers the best facility to match your company's own specific needs .

Let's learn and cover off those issues, which will allow you to get more comfortable we think with this type of Canadian business financing.

So, why should you even be considering receivables factoring? Simply because it has become a common way for Canadian business to cash flow their accounts receivable and generate working capital based on your own policy of extending credit terms to your customers.

And, as most business owners know, sales does not equal cash flow and when business financing of your A/R is not available from your bank a logical place to turn to is to an independent finance firm that offers invoice financing.

But, what does this type of financing cost, and who offers it, and an even better question... ‘How do you pick the best factoring partner?

In Canada the financing and factoring of A/R varies widely. As a general rule we can say the cost is between 1-3% per month based on the size of the facility, your overall financial condition, and most importantly, whether you have sought out and picked the finance firm that best suits your needs.

Let’s clarify our comment on your overall financial condition. Receivable financing places much less emphasis on your firms overall financial health - in fact a huge amount of Canadian firms that utilize this type of financing are in stages of turn around, high growth, experiencing temporary financial losses, etc . So don’t despair that your firm isn’t eligible. But, as we said, your client base, the size of your A/R portfolio on a monthly basis and some other factors will dictate your overall pricing.

Frankly the best costs in factoring finance in Canada start to be achieved when your monthly financing capability for A/R is greater than 250k. Is there a ceiling on the amount of facility? Absolutely not, and facilities that go into the several millions of dollars on a monthly basis happen everyday in Canada.

Clients often ask our favorite most recommended type of facility. That’s a simple one - its called C I D - which stands for confidential invoice discounting, allowing you to be in total control of billing and collecting your own a/r without any notification to clients that comes with the U.S. and U.K.versions of a/r finance .

Remember also that when you are addressing the always top of the list issue with firms such as yourself, ' Cost ' that you need to factor in things you might never have thought about. They include your ability to grow your business and generate more profits simply because you now have the capital to do so, albeit at a higher cost. And couldn’t you offset some of the cost of factoring by taking discounts with your own suppliers (and improving relations with them along the way!), as well as purchasing more effectively with your new found working capital?


So , in summary , if you need a financing partner when you are considering a receivable management and financing solution seek out and speak to a trusted, credible and experienced Canadian business financing advisor who will ensure your cost and partnership with your factoring firm is focused on a mutually beneficial relationship for 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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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