Avoid Costly Mistakes In Financing Working Capital – Finance Solutions For A Canadian Business Cash Flow Loan

Best Choices For Cash Flow Financing In Canada




Information on working capital financing solutions in Canada. Loan or Monetization business finance solutions that can work for you.







It's a mine field out there! And some of the decisions you make around financing working capital can be beneficial, or costly! depending on the business finance loan or arrangement you ultimately choose. And whats probably worse is making that type of decision without knowing all your options.

When we meet with clients we often find we are talking about all sorts of unique situations - perhaps the company has expanded too quickly. In some cases interest expenses on long term debts and leases and equipment loans are severely eating into profits. It's of course a vicious cycle and one difficult to get out of - with those liquidity challenges around financing working capital leading to some serious problems.

The signs are usually quite clear - in hindsight, not when you're in the thick of the weeds. We often think of how easy it sometimes probably is for folks to write those ‘business cases' in MBA classes about what went wrong and why. Probably would have been a bit more difficult for them if they were like you, in the thick of it.

So what are some of those danger signs in cash flow financing and business working capital loan scenarios? Those warning signs are often called ' overtrading ‘. Symptoms include very strong growth in sales, dwindling profits, lack of knowledge around short term and long term financing options, no cash flow budges, high leverage ( that’s too much debt by the way !) and slow moving or other inventory issues . Talk about a plethora of problems!


Working capital loans are in fact available in Canada. They are limited, but available. A pure working capital loan is most commonly a term loan, for cash, with fixed repayments and terms of typically three to five years. To get this loan you need to demonstrate historical and future cash flow. Many of the problems we pointed out above in overtrading don’t really often make your firm a candidate for this type of financing. Larger companies are in the same position - these loans are then called mezzanine loans or sub debt type financings. Bottom line, those same cash flow qualifications.

There are some methods of enhancing your working capital that many of the clients we talk to don’t think about. Simply negotiating better terms with favored suppliers is a good one. Also, earlier we spoke of Canadian business owners who knew they had a problem but weren’t aware of possible solutions.

One of those solutions is a working capital facility that monetizes your inventory and receivables. These facilities, a sub set of asset based lending are more expensive usually than bank financing but boy do they solve the problem. Other alternatives are bridge loans on existing equipment, aka the infamous ' sale lease back '.

Never also forget the fundamentals - i.e. a good cash flow plan, solid inventory management, etc.

We'll never know why but every business owner seems to think their situation is unique. Sometimes it is, but more often than not these are classic business finance challenges faced by all. Speak to a trusted, credible and experienced Canadian business financing advisor on the problem, and more importantly, the solutions!





Stan Prokop - founder of 7 Park Avenue Financial -


http://www.7parkavenuefinancial.com



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

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

Which Of The 3 Equipment Lease Rates Would You Choose ? Canadian Capital & Operating Lease Payments Explained!

Canadian Equipment Lease Rates – the truth!


Information on equipment lease rates in Canada . How are lease payments calculated on both capital and operating lease scenarios . Which type of transaction has the best payment structure for your firm?



OK. Quick test. Here we go. Let’s test your knowledge about equipment lease rates, payments... as they appear to be, and how those payments look in capital and operating leases in Canada.

Let’s assume you have a $ 150,000 transaction - you are looking for a 4 year lease term, and you are being offered three lease payment choices. Those choices are:

$3637.00
$3108.00
$3373.00


So, now the test. Are you ready. Which payment do you choose? The answer. All three transactions are essentially the same! Its just that the type of lease you choose and how Canadian equipment lease finance companies show you that payment is really where you can save, ( or by the way , lose) thousands of dollars . Let’s explain.



First of all, threes a huge difference in the types of leases being offered to Canadian business owners and financial managers in Canada. We're actually quite lucky because the U.S. leasing industry is populated by all sorts of leases, the names even make our eyes roll, and we think we're somewhat of an expert. They include Trac leases, synthetic lease, non leveraged lease, etc.

But, we're Canadians, eh?! So we keep it simple, and for the most part you only have to choose between two types of leases in Canada, capital and operating. Its the equipment lease finance industry in Canada that sometimes tries to make even these two scenarios complicated - its our job to keep clients decisions simple, and, oh yes, understandable !

Once you have a handle on the two types of leases, and some of the ' games ' albeit legitimate that lessor tend to play you should consider yourself fully armed with respect to getting leasing payment and equipment lease rates for those two basic scenarios ; capital, which is ' lease to own', and operating, which we call ' lease to use'!

When you enter into a capital lease you have made the decision to own an asset at the end of a typically longer lease term. In Canada that is anywhere from 2-7 years, although the most typical lease terms are three years and 5 years.

Operating leases on the other hand tend to be 2-3 year terms, and the reason why is that some of the technical and accounting calculations needed to make an equipment finance lease work from an operating perspective require the calculations to be on a shorter term. But that’s ok, because its assets in an operating lease that tend to be upgraded, returned, remarketed by you or the lessor, etc.

We encourage clients to think of their lease financing needs in terms of both financial reasons and operating policy reasons. All sorts of issues come to mind when you are leasing assets in Canada, not the least of which is getting approved! Other issues such as budgets, payment flexibility also come to mind.

Oh, and back to our opening question, which would you choose again. The first calculation is a standard lease with no obligation at the end of the 48mo term. The 2nd transaction is a slick trick, and actually useful financial strategy, which is providing you with a purchase option at end of term. You can pay or extend typically. And the final is an operating lease, same asset and term, but with a 15% residual investment by the lessor.

A bottom line? As always, speak to a trusted, credible and experienced Canadian business financing advisor who can help you wade thru the myriad of equipment lease rates and structure in a common sense manner that benefits your company.





Stan Prokop - founder of 7 Park Avenue Financial -


http://www.7parkavenuefinancial.com



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



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

Want Some Business Financing Privacy ? Canadian Confidential Receivables Financing Is An Alternative To Commercial Finance Factoring Funding

Grow Your Business and Cash Flow With This Unique Innovative cash flow solution !


Information on a Canadian business financing strategy known as confidential receivables financing and why this alternative to commercial finance factoring is a welcome surprise to businesses seeking growth funding.




We hear a lot these days about ' privacy’ and confidentiality in business these days. Well, here's a twist on that.

How would you like to be the firm that has a confidential receivables financing facility in place when all your competitors and other firms are using traditional commercial finance factoring funding for their cash flow/working capital? Sounds interesting, right?

The hard reality these days it that financing receivables has emerged as an ' in fashion' alternative to traditional financing that is often unavailable to thousands of medium and smaller businesses in Canada . (Oh and by the way, larger corporations use a subset of this financing also!)

We're often amazed at how long some firms continue to use commercial finance factoring. There are all sorts of reasons why. One not so obvious one is that Canadian banks will often calculate interest on your firm’s entire line of approved credit, even if you are only using part of it. Seem a bit unfair don’t you think? Receivables financing strategy is the ultimate in ' paying for what you only use '.

We admit that’s one smaller point in why factoring agreements are in place by thousands of firms in Canada. The reality is that the total flexibility of this business financing solution is in fact what most businesses are interested in .If we had to be pinned down and identify one main reason why firms factor receivables it might just well be that you credit facility grows as you sales grow . So, bottom line, no more annual reviews or bulge crises when things don’t work out on a temporary basis. It’s the end of ' fighting fires' in cash flow and working capital.

Financing receivables is a subset of asset based lending in Canada. Your firm sells its A/R either on a one time or ongoing basis. A hefty advance, usually 90% range, is made against that most valuable of current assets, your customer accounts. You have just generated instant cash flow. Once your client pays that ' holdback' of 10% or so is refunded, less financing costs, to you, the client.

Those financing costs in Canada average anywhere from 1-3% a month, and quite frankly that middle range, i.e. 2% is a typical fee for each invoice based on a standard industry credit term of 30 days. Factors that affect your rate are size of your portfolio, your general overall financial condition, and the quality and size of your A/R and client base.

So, that privacy issue. What's that all about ask clients. Well, our preference is for you to consider a confidential receivables financing alternative. Under this type of facility you bill and collect your own receivables, the bottom line your financing arrangements are known only to you and your receivable finance partner.

What an advantage! Simply because thousands of other firms, including your competitors who utilize commercial finance factoring have to go through a somewhat intrusive process of have traditional factor firms notify clients and are involved in collecting your accounts.

So, bottom line? If you don’t mind the whole world knowing about how you finance your firms business then consider a traditional commercial finance factoring strategy.

If on the alternative you want all the benefits, the same cost by the way, and want to run your own business from a cash flow and working capital standpoint... well, you know what to do! Speak to a trusted credible and experienced Canadian business financing advisor on how confidential financing of receivables can work for you!




Stan Prokop - founder of 7 Park Avenue Financial -


http://www.7parkavenuefinancial.com


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



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

Finance and Equipment Lease Options for Canadian IT And Medical Hardware And Software

Technology and IT Leasing Benefits for Companies and Institutions in Canada

Information on the growth and benefits of financing and equipment lease options for medical and IT ( information technology) hardware and software assets for corporations and other healthcare institutions.




Although the prospects for Canadian medical/healthcare and IT (Information technology) asset acquisition has never been stronger the hard reality is that the finance needs for these assets is even more pronounced. Simply speaking, companies and institutions want financing options for these assets.

It's all about affordable and managing budgets for many firms, including of course hospitals, clinics, etc. At the same time there is a need to look at both flexible financing, and solutions that lend themselves to upgrade and replacement. The bottom line? That’s where equipment lease financing comes in.

So what's driving all these asset acquisition and financing needs in healthcare and IT in Canada? It seems to be a function of both increased electronic medial records growth of course, as well as the simple fact that newer equipment technologies are emerging all the time.

Government grants and lease accounting incentives also spur the growth of finance for medical and it equipment lease options. And as many users are happy to hear, software, particularly application software, can be financed also.

It's all about being creative when it comes to financing tech assets, software, medical assets, etc, and that’s been a mainstay or key benefit of equipment lease finance in Canada.

Very simple things like interest rate subsidies by vendors, structured payments to reflect the reality of budgets, or seasonality in revenues and cash flow have been a fundamental part of lease financing in Canada for almost forever!

Many medical and equipment and software acquisition needs revolve around projects, aka project financing. So flexible vendor payment scenarios and the ability to match cash outflows with project timelines is critical. More often than not it’s a case of managing that up front cost when cash outflows versus benefits need to be tied together in a common sense manner.

Predictable cash flow and benefits is what Canadian equipment lease financing is all about .And a dose (pardon the pun!) of creativity in IT leasing and medical equipment financing sure helps!

Healthcare and IT budgets are huge in Canada and the lease finance options helps business owners, financial managers and public institutions to address those projects in a manner that makes sense. Its time for the folks that manage those budgets to ensure they have a strong level of awareness of the financing options and flexibility that comes around a solid it equipment lease for both hardware and software.

Saving working capital and allowing companies and other institutions to acquire assets they nee, as well as the upgrade flexibility inherent in asset financing is what it’s all about. Many companies in both the IT and Healthcare sector choose operating leases as a way to manager these acquisitions. The combination of flexibility at end of term, upgrade options, and the generally lower payments that come with a ' lease to use ' transaction are valuable.

Everyone benefits from a properly structured operating lease, as the aftermarket for medial and IT assets in Canada is huge. This aftermarket drives the creativity available in lease finance transactions. Residual values for IT and medical equipment are generally excellent, as are the aftermarket activity for purchase and re-financing of these assets.

Speak to an experienced, credible and trusted Canadian business financing advisor who can help you structure and obtain the best finance options available for medical, IT, and software assets.




ABOUT THE AUTHOR : STAN PROKOP

7 PARK AVENUE FINANCIAL

CANADIAN BUSINESS FINANCING!


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

Are You Eligible? Canadian Government Small Business Loan Qualifications – SBL Financing Is The Funding You’re Looking For !

Curious About SBL Government Financing Loans?



Information on the government small business loan ( SBL ) financing program in Canada . Start Up ? In Business ? Here’s how to qualify for this great funding program .



It's actually not that complicated. The Government Small business loan financing program makes funding for your new or established Canadian company accessible and on terms that even larger more established firms simply can’t often achieve.

Funding under the SBL program obviously has a long term gain for Canada as the 7000+ firms that use the program every year create jobs, pay taxes, etc.

Clients sitting down with us only want to know one thing. Are they eligible?! Eligibility for small business loan financing therefore allows them to reap the financial benefits of the program.

So, eligibility. Its a simple case of knowing how the loan guaranty program works , what options are available from a structure viewpoint, and what exactly does the program finance ?

Great questions. Let’s get some answers going! The government small business loan financing option was developed for businesses just like yours. You can either be a start up, or an established firm already in business, with the one caveat being that your revenues must be under 5 Million dollars annually.

Because you may not be eligible for financing at a Canadian chartered bank doesn’t mean you aren’t qualified to receive the SBL loan. That’s because the government guarantee on the loan, by its nature, allows the bank to now provide you with the financing you need for your business.

So when actually are you eligible ?The answer is ' all the time' as the program has been in place for years and allows you to obtain financing for real estate, equipment and capital assets, including software, and even leasehold improvements to your business facility . Many restaurants and franchises use the program for the initial funding of their transaction.

So whets with the guarantee? As we referenced it’s the federal government that guarantees the funding to your chartered bank or other financial institution that participates in the program. That’s one of the big misconceptions, because the same bank that couldn’t provide you with ' traditional' financing because you were a start up, didn’t have enough collateral, etc is the entity that both provides and administers the loan. Talk about irony.

Restrictions on the use of loan proceeds is actually one of the continually misunderstood aspects of the government small business loan. You cannot use the loan for working capital or things such as inventory ; it must be used for our three aforementioned categories - real estate, assets, including software, and leaseholds.

The general terms of the program are as follows, a very limited personal guarantee, 5-7 year term amortizations, and rates at approximately 3% over the Canadian prime rate of interest. By the way that’s a fabulous rate for a start up, wouldn’t you agree, if in fact you are utilizing the program for a new business? It’s also important that the owners of the business have a decent personal credit history, as validated by their personal credit score at the credit bureau.


How can you quickly determine your eligibility without wasting time, monies and resources? Its simple, speak to a trusted, credible and experienced Canadian business financing advisor who can quickly steer you through eligibility and yes, approval!


Stan Prokop - founder of 7 Park Avenue Financial -


http://www.7parkavenuefinancial.com



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



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

Cold Hard Facts On Franchise Financing Funding In Canada – Information On The Franchising Loan You Need

Straight Talk On How To Finance Your Franchise Purchase In Canada


Information on franchise financing in Canada . How does the funding and approval of a franchise loan work and what are the benefits and disadvantages of certain finance strategies when purchasing a franchise.


We've observed over the years that business owners and entrepreneurs never mind getting the ' cold hard facts’ in business, as long as they are in fact getting ' the facts'! So let’s share some franchise financing information on how the funding of a franchise loan really works in Canada.

Purchasing a franchise in the Canadian marketplace can revolve around three different scenarios: a total new turnkey start, purchasing a business from an existing franchisee, or perhaps even adding another location or unit to the franchise you already own.

It may be a surprise to many people, but in Canada it’s actually quite difficult for existing franchisees to achieve financing for additional units. Conservative lending policies that focus on the debt you take on will often limit your ability to expand your multi unit dream.

When clients talk to us about the franchise financing information they need to complete loan funding we point out that a very aggressive strategy for achieving a high chance of franchise loan approval is in fact the government SBL program. While we believe it certainly was never intended to focus strictly on franchises, (and it doesn’t) it has become the perfect vehicle to successfully complete a loan funding in the Canadian franchise finance arena.

The challenge though then simply becomes understanding what you need to do to successfully complete the loan process. And doing it right can make this program the ' one stop ' solution for final franchising approval.

While be believe many clients, and perhaps rightfully so believe the Canadian chartered banks will not support them on their franchise finance attempts the reality is that bank can become your best ally when it partners under the federal BIL/CSBF program .

If you were to finance a franchise under standard business financing arrangements, outside of the program, how could this in effect be accomplished? First of all, you probably would need a very hefty down payment, otherwise known as your equity injection. Payments would be higher if you were unable to obtain the right loan term (amortization), and, suffice to say, it certainly might take quite awhile to get your transaction approved.

And that's if, and its a BIG if, you get a bank or financial institution onside given the pool of prospective lenders in Canada is actually limited to only 1 or 2 commercial finance firms . Suffice to say also that you'll probably be spending a lot of time educating a lender about what you need and what you are trying to achieve.

So is there a better way? We categorically think there is! As we said, the BIL program in Canada perfectly suits a franchise financing requirement.

Why? Simply for the following reasons. First of all your total permanent equity injection is only 10%, allowing you quite a bit of room for working capital needs as you start your business . Terms under the program are typically 5-7 years. That means a typical 350k loan will cost you around 6700$ a month which is of course incorporated into your cash flows and income projections.

No outside collateral is required, which certainly isn’t the case in many other forms of business financing, and even your personal guarantee is very limited. Talk about a double whammy of goodness!

So ' how long would this all take ‘is a typical question clients have. If you utilize the expertise and resources of someone such a trusted, experienced and credible Canadian business financing advisor the whole process can in fact be completed in a matter of days - if you are prepared!

So, that’s the cold hard truth on some franchise financing information in Canada. Can you handle the truth?! We're quite sure you can, because it’s all you wanted in the first place!







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/franchise_financing_information_funding_loan.html

Restart Canadian Business Finance Success With An Asset Based Line OF Credit ! Turbo charge cash flow Via ABL Revolving Lines

Don’t Take Chances By Not Investigating ABL Credit Lines




Information on the Canadian asset based line of credit and the ABL revolving finance facility .How these business lines leverage your working capital and cash flow to the maximum




The ‘times they are a changing; Bob Dylan we're thinking probably wasn’t considering an asset based line of credit finance solution when he wrote his famous song .

Somehow though those words signify a ' restart ' and that’s what Canadian business owners get when they consider asset based finance via revolving credit facilities as a solution for cash flow and working capital needs .

So how does something that seemingly seems the same actually benefit your company so significantly? It's partly related to the external environment out there: traditional forms of business financing in Canada are challenging to say the least, venture capital seems somewhat non existent, and private equity deals take forever to complete if you can find a suitable partner.

Enter the asset based line of credit finance solution! ABL is the acronym for this these revolving lines of credit. They are multi tasking to say the least. Hers some of the things that ABL lines can do : pay out secured existing creditors who have term loans or business lines of credit in place with your firm, eliminate CRA arrears, ( if any ) on the initial advance, and , quite importantly, help you get caught up with valued supplier and vendor related payables.

Oh, and by the way, if you had limited or perhaps no inventory financing in place before as a part of your business line of credit... well, you do now!

The Canadian asset based line of credit marketplace is significantly different from that of the U.S. First of all, we're a smaller country business wise, no surprise there. So there are fewer true ABL type lenders to meet your overall needs. We also logically think that the limited number of players in this market might be one of the reasons you simply have never heard of this solution?!

We keep talking about differences when we compare the asset based loan facility to traditional commercial banking facilities available from our chartered banking system here in Canada. Those differences are quite frankly what make these revolving lines of credit so great.

First of all there is a lot of emphasis on collateral and assets, and less or extremely limited emphasis on outside collateral, personal guarantees, and ratios and covenants.

Additionally, it’s apparently not a perfect world out there, and your firm may be experiencing fluctuations in sales, profits, and balance sheet strength. The reality is that ABL finance is still the solution for your firm if you are in any of the above scenarios.

ABL finance is specialized lending. Firms that offer this service tend to be seasoned companies with significant experience in loaning against your assets. That’s of course not to say the banks are not, but it’s a case of almost micro managing your assets with you, which gives you more borrowing power. These capabilities translate into more working capital and cash flow for your firm, as you benefit from higher advance rates on receivables, inventory margining that actually finally makes sense, and access to unlimited business credit as long as your business is growing .

Investigate ABL. Speak to a trusted, credible and experienced Canadian business financing advisor who can help you determine whether your firm is due for a ' restart ' in Canadian business financing.





Stan Prokop - founder of 7 Park Avenue Financial -



http://www.7parkavenuefinancial.com



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




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