The Business Line Of Credit . Opening The Suggestion Box On Revolving Credit Needs And Choices In Canada

Do You Need Status Quo Or Status Grow When It Comes To
Business Credit Facilities?

OVERVIEW – Information on business line of credit access in Canada . A revolving credit line is critical to business survival and growth





The business line of credit . When it comes to revolving credit facilities in Canada is the ' status quo ' good enough? That status quo is of course your ' existing state of affairs ' and more often than not that ' same old' just isn’t good enough when you're growing or expanding your business.

So we've decided to open the SUGGESTION BOX

today and see what's happening in the world of corporate credit lines, including one solid alternative you might not be aware of. Let's dig in.

Top experts agree this type of borrowing; the ' revolving facility ' is both valuable and critical to your business.

It of course does make sense that our Canadian chartered banks is the one ' go to ' when it comes to business borrowing.

(SPOILER ALERT - ' What, there's another alternative?!) Bank credit is plentiful, flexible, and, top of mind for most business owners and financial managers, low cost! Commercial lending of course is big business when it comes to our Chartered banks.

So what factors determine your ability to get a business line of credit that works for your firm? There are a number, and some are more important than others. As simple as it sounds this includes clearly demonstrating you need one.

If you're in an all cash business with no receivables or inventory, which is the case for many retailers, your company is going to have a hard time demonstrating the need for revolving credit. That’s simply because this type of financing typically funds current assets such as receivables, which don't come into play in retail/cash.

The key to demonstrating your need for a corporate credit line is a cash flow forecast that shows proper assumptions in sales growth and build up in receivables and inventory. It's those assets that typically make up your borrowing base. By the way, we hate to be the bearer of bad news but it is exceedingly difficult to get such financing if you're a start up. Canadian banks are just not set up to take start up risk in corporate credit without strong collateral or equity involvement of the business owner/owners.

What are then some of those key characteristics in business credit? It should be little or no surprise that the banks focus hasn’t changed in a 100 years, and it’s the timeless adage of:

CHARACTER
CAPITAL
CAPACITY
COLLATERAL

Businesses with good commercial credit ratings, track records, and clean financials are always in a position to apply.

What about that alternative though that we mentioned to bank credit facilities. It’s called the ABL, the ' asset based loan / line of credit'. It's non bank in nature, more generous in borrowing power, easier to get 99% of the time and available in all sizes, typically from 250k to the many millions.

There is no doubt any growing company needs the cash or working capital supplied by a business line of credit. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your borrowing needs and alternatives that make sense.




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 :


7 Park Avenue Financial = Business Line Of Credit Expertise





Have A Question Or 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
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com























Stan Prokop

Tax Credit Financing In Canada .... Maximized

How To Not Wait A Long Time For Your SR&ED Or Film/TV/Animation Tax Credits . Finance Them!

OVERVIEW – Information on Tax credit Financing In Canada . Whether your tax credits are SR&ED , Film, Tv, or Animation they can be financed for valuable cash flow





Tax Credit Financing in Canada is a great alternative financing solution for Canadian firms who wish to maximize their Government tax credits. These tax credits typically arise out of the SR &ED (Scientific Research & Experimental Development) program, (commonly called SR ED) as well as various film tax credit programs that are Canadian based.

When you finance a tax credit such as SR ED you are in effect generating cash flow and working capital for your company and of course recovering monies that have already been spent! As most business owners pleasantly discover when they determine they are eligible for SR ED or film tax credits, these funds are non repayable, in effect they are grants .

The acronyms for these programs are SR & ED, FTC, (film tax credit) and OIDMTC.

Customers that we work with typically generate financings through us after they have filed their claims. With respect to the SR &ED financings these claims are filed at the same time you file your corporate tax returns. Typically we can generate and successfully complete these financings within 14 days, sometimes it takes longer due to the complexity of the claim and other financial issues your company might be facing. It is critical there are no CRA tax arrears; otherwise your claim will be offset against the arrears. In cases where the tax arrears exist, and are smaller than your claim, we can arrange to pay Ottawa and provide you with the full financing benefits of whets left in your claim.

Canadian business owners and financial managers typically use these funds for short term working capital purposes.

In some instances, particularly in the film tax credit financing area your project can receive funds under the film tax credit financing prior to filing the final claim, provided your project can confirm eligibility. In these instances it is recommended that you can successfully prove you have filed and been approved successfully in previous years.

In cases where your corporate SR & ED claim is a first time claim there is a bit more due diligence put into the quality of the claim and your overall financial position, but categorically these claims can be filed and financing originated on a first time claim. Most companies use the services of well known SR &ED preparers, which accentuate the positive nature of your claim.

With respect to SR &ED claims that are financed, typical financing is generated at 70% loan to value. That of course simply means that you receive, on financing approval, approximately 70% of the total provincial and federal claim as working capital. These funds are repaid in entirety when you claim is adjudicated, approval, and funded by the government, so you are not paying ‘ monthly payments ‘ – you simply receive the working capital injection which is offset on final approval .

Canadian companies who are interested in tax credit financing and film credit financing should speak to an experienced advisor in this area who can assist them in the financing of the claim. It’s a great Canadian alternative financing strategy!




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 :


7 Park Avenue Financial = Canadian SR&ED And Film Tax Credit Finance Expertise





Have A Question Or 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
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

Business Acquisition Financing Shouldn't Be Harrowing. When Buyout Finance Works Properly

Here’s Your Storyboard For Buying A Business

OVERVIEW – Information on business acquisition financing in Canada . What info and analysis makes a good buyout finance strategy successful






Business acquisition financing in Canada needs a better storyboard. Buyout finance opportunities exist all the time in the Canadian business landscape .Certainly buying a business and either growing it or turning it around is an exhilarating experience. What works and what doesnt for the would be buyer/owner? Let's dig in.

Proper acquisition finance should be done strategically - making sure the right tools and agendas are in place to make the new business work.

If you're either an entrepreneur looking to buy a business or a current business owner looking for diversification and non organic growth that typically is driven by sales and profit motives. When you enhance the value of another business both revenues and profits will grow if managed properly.

Numerous clients come to us with what they feel are ' undervalued' situations. Some of those can become overvalued if not dissected properly. Most businesses in the SME sector in Canada tend to be purchased or bought in a somewhat ' friendly ' negotiation. SME is rarely the hostile takeover environment.

A lot of the focus on your initial pricing and value of the business you are looking at will always come back to cash flow. That cash flow is going to come out of how you will mange the business relative to current assets (inventory and A/R) as well as the financing you need for current and future investment.

How then does the purchaser/buyer create that ' storyboard' we've been talking about? It's done by taking a close look at finance operations - that includes gross margins on sales, expenses, and the turnover of assets.

Business purchasers often go wrong when they don’t spend enough time on the required investment in new asset needed. That could be technology, plant equipment, vehicles, etc. All of those will require financing, which can typically be properly funded via equipment finance. The cash flow required to make those payments must be taken into account in your cash flow analysis of the acquisition.

Sales in most companies always comes back to a working capital requirement. This is the balance that comes from managing your payables and vendors as well as collecting receivables and purchasing inventory / goods.

Here's a quick way to look at that. Let’s say a company has 100,000 dollars in current assets and 80,000 dollars in current liabilities. That business has a working capital position of 20,000 dollars. Bottom line? For every dollar of sales your business needs 20 cents of working capital. You need to project that out into your future sales growth. Keep your ' capital turnover cycle' top of mind.

What are those key storyboard questions you should be asking yourself? They include:

What debt levels are in place or needed?

What amount of owner equity needs to be in the business at the time of purchase?

Are short term solvency issues a critical item? What type of financing can be put in place to solve those?


They might include:

RECEIVABLE FINANCING
INVENTORY FINANCE
BANK OR NON BAN LINES OF COMMERCIAL CREDIT

Remember the maxim ' Growth penalizes Cash ' when you're planning an acquisition for growth. That punishment can be brutal.

Methods of acquiring a business in Canada through finance include_

GOVERNMENT SBL LOANS
BRIDGE LOANS
ASSET BASED LINES OF CREDIT
BANK TERM LOANS

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your buyout finance needs.



Stan Prokop - founder of 7 Park Avenue Financial

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 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 :



7 Park Avenue Financial = Acquisition And Buyout Financing Expertise





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

Business Financing In Canada. Are You Addressing Banking And Credit Needs Incorrectly?

Business Finance Alternatives – Use As Directed


OVERVIEW – Information on business financing . How does management choose the right credit and banking alternatives that are available




Business financing choices in Canada. To many business owners and financial managers it must seem like they spend a tremendous... aka ' too much' time searching for the credit and banking alternatives they need to run and grow business.

What then are some of those decision points when your business is looking for capital of any type? Let's dig in.

Easy to say, but fundamentally it's all about finding the right financing in the amount that you need that carries an acceptable level of risk and cost. As we said, easier talked about than done.

More often than not it's about taking on the wrong kind, or too much debt and therefore risking business failure.

There are a number of ways in which business finances itself. They include:

Vendor / Supplier credit

Lease Finance

Bank Financing

Asset monetization

New equity

Many business owners often underestimate the power of supplier finance. The terms and credit needs you're able to negotiate contribute greatly to business cash flow. Supplier credit stems the outflows of cash. The bad news here is that everybody's in the same boat at the end of the day, as everyone, including your clients attempt to stretch payment terms.

Instead of paying with cash for equipment and technology assets business can choose to lease those assets on a lease or rental basis. Terms of anywhere from 2-7 years, sometimes longer, are available to leases assets such as rolling stock, computers, heavy equipment, production machinery, etc. Bottom line... any asset can be financed.

Canadian commercial banks offer significant financing choices when your firm seeks business credit. The most desirable bank facility is typically the ' revolver' allowing you to draw daily against the cash you need up to a set limit. The danger of breaking a bank arrangement often leads many businesses into a death spiral.

While in many cases it's desirable to get new equity into your company the challenge here is that it dilutes ownership at the expense of current owners.

Many owners and finance managers who focus on getting new equity don't fully realize that numerous ASSET MONETIZATION strategies exist as an alternative to equity in many cases.

They include-

Receivable financing
Inventory Financing
Tax Credit Financing
Royalty financing
SR&ED Tax credit monetization
Non bank asset based lines of credit
Sale leaseback
Bridge loans

4 or 5 key issues typically should come up in your overall financing decision. They include:

Flexibility of the financial offering
Risk
Cash flow and profit concerns
Control exerted by the lender based on the finance offer
Timing

At certain times in any company’s history it can't always get the financing it needs. Issues such as your overall leverage and your capital structure need to be addressed carefully. Growth, while always desired by almost all firms requires proper assessment of your financing needs.


Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with business credit and banking decisions that make sense today and tomorrow.



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 :


7 Park Avenue Financial = Canadian Business Financing And Credit Banking Expertise


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

Business Software Leasing . Here’s The Rules Around Technology Financing Options. Now You Know

Know What You’re Doing When It Comes To Financing Computers , Software And Other Technology?

OVERVIEW – Information on technology financing in Canada . Business software leasing is a viable way of acquiring your tech needs in a way that matches benefits to cash outflows





Business software leasing and technology financing in general often seem like ' uncharted territory' when it comes to Canadian business financing. The truth is there are some striking differences in tech finance, and, as our lawyer would say ' on the other hand'

there are quite a number of similarities. Let's dig in.











Don't think that because software is an ' intangible asset ' that it can't be financed. One study by top experts revealed that over 1/3 of business owners have never considered this method of financing technology. The reality is that Canadian business owners, from small business to our largest corporations have been financing software and tech assets for 20-30 years. While the lease and financing documents are essentially the same it's important to understand certain elements that are specifically related to the tech world.

Part of the confusion around software financing revolves around the simple fact that you're licensing, or using software, your firm doesnt own it per se. Given that most computer hardware is really a commodity these days the actual value of application software is much more significant.

From the lessors point of view they disclaim the warranty in the software and hardware they finance, that’s between you and your vendor.

And the bare facts are simply that as long as you are making payments under your lease you have the right to use the software in a nonexclusive manner. Most software lease financing in Canada is done under a capital, or ' lease to own' document.

We can get really technical and also offer up the fact that when you are financing / leasing software you don't own the IP (Intellectual property) around the software in question - you can use it, but you can't resell it! Today Canadian lessors also register their interest in the same manner that they register any lease document.

We've already said that a strong case can be made for software being more valuable than hardware, as it most cases its running your business and providing you with a competitive edge. These days it runs a company financials, manages customers, controls inventories, etc. That's why it makes sense to consider leasing/financing this valuable asset to your business.

For credit worthy companies all software can be financed, so that is all the way from MS Word to aircraft scheduling systems. It's a fundamental concept of lease financing that you should match the cash outflow of a purchase with the benefits. Since the useful life of the software will often be several years it makes sense to consider a 2-5 year lease term for tech financing scenarios.

Custom software in general cannot be leased or financed, except when there is investment grade credit quality backing up the transaction. But in Canada the lease finance industry has embraced software financing , so whether your finance need is 5k or 5 Million $ consider such a strategy. And if by chance you're a software company you should definitely consider offering customized financing to your client base.

It's no secret that more and more everyday we're living in a knowledge economy, so don’t forget the financing opportunities your firm has in financing hardware, software and other services to achieve your competitive position in your industry.

Seek out and speak to a trusted, credible and experienced Canadian business financing with a track record of success in tech financing. The bottom line, these days its' mission critical’!



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 :

7 Park Avenue Financial = Candian Business Software Financing and Technology Finance Expertise





Have A Question Or 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
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com























Stan Prokop

Business Finance Options Harder To Find Than Atlantis? Alternative Financing Solutions Are The Answer

Solving The Fundamental Problem Of Business Financing Options . Hint .. It’s Alternative Finance Solutions


OVERVIEW – Information on business finance options in Canada. How alternative financing solutions via asset monetization and debt allow the business owner to avoid equity dilution




Business finance options seem harder to find these days than the lost continent of Atlantis.

So when clients say that traditional solutions are no long working or accessible by them our answer is simple - consider alternative financing scenarios. Let's dig in.

Part of the problem faced by many business owners is simply time... they know they need new or better... or even ' some' business financing... they just don't know where to look for it .

In a lot of cases the entrepreneur spends a lot of time searching for equity capital and are disheartened to find out that they were so not ready for that option. By the way, equity capital dilutes ownership of course, so giving away a large piece of the pie early in your business success reduces the chances of long term return on your investment.

Many top experts feel that the equity route though is in fact better than debt or asset monetization. We respectfully disagree, as no matter how costly these solutions are... properly structured they can still allow you to achieve sales growth and profits without giving up ownership. That's our story and we're sticking to it!

No discussion on Canadian business financing can take place without talking about ' WHEN THE BANK SAYS NO ‘. We don’t think it's that complex really.

As one expert puts it the business owner or financial manager fails to understand that the bank has a deal with its depositors... the money is safe and unavailable to risk start ups, early stage companies, or firms experiencing financial difficulties .

We're the first to point out that if your firm has profits, cash flow, and collateral, clean financials, etc you're 100% eligible for bank term loans and commercial revolving credit facilities.

So what are some of those alternative financing solutions that can still generate capital and cash flow for your business? They include:

SR&ED TAX CREDIT FINANCING - This financing funds your research and development
GOVERNMENT SBL LOANS
ASSET BASED NON BANK LINES OF CREDIT - (They finance inventory, receivables and equipt all in one borrowing facility
CONFIDENTIAL RECEIVABLE FINANCING
SALE LEASE BACK

What then is required to access these alternative financing solutions? In almost all cases just you’re current financials and a sales or cash flow forecast is a great start. You will not, we repeat NOT be successful if you, or your advisor can't articulate sales growth, receivable collections, gross margins, etc. That's just common sense by the way.

Asset monetization strategies will focus on your balance sheet. Hard assets can be refinanced through bridge loans or sale leaseback strategies.

Receivables of any type can easily be financed in Canada. This even includes contract monetization scenarios. And by the way, service companies can easily cash flow their A/R... your firm doesn't necessarily have to sell a hard asset product.

Yes, its true that we’ve spend hundreds of years searching for the continent of ATLANTIS. Our point - Alternative financing solutions can be found today, they are here, or just around the corner via the assistance of a trusted, credible and experienced Canadian business financing advisor.



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 :

7 Park Avenue Financial – Business Finance Options Expertise

Stan Prokop

Benefits Of A Sale Leaseback Strategy In Canada. How A Bridge Loan Or Asset Finance Lease Back Works

Deconstructing The Sale Leaseback Solution In Canada


OVERVIEW – Information on the sale leaseback strategy . How does an asset lease back work and why does this type of lease or bridge loan benefit the business owner




A Sale leaseback strategy, if executed properly, is a classic refinancing scenario. How does the lease back work, and whether it’s a bridge loan or finance lease what are the key benefits and mechanics of this financing solution. Let's dig in.

Sale leasebacks are typically utilized when a firm such as yours is looking to generate cash flow and working capital from unencumbered assets. These assets on the balance sheet can be almost any type of tangible asset - that might include trucks / vehicles, real estate, technology, shop floor equipment etc. They still have operating value to the firm.

The legalities of the transaction are simply. As the owner of the asset your firm simply sells it back to a leasing company. That creates a lease financing (or in some cases a bridge loan) which not makes your company the lessee or borrower in the transaction.

Naturally the key benefit of the deal is your ability to generate cash from the deal, while at the same time using the asset to hopefully generate profits and operational efficiencies within your firm.

A key factor in the whole transaction is of course the value of the asset. As we've experienced over the year’s business owners tend to place a higher value on the asset or assets in question as opposed to the lender! So how then is this problem or challenge addressed?

Typically the answer is a third party appraisal. It's very rare that larger sale leasebacks are consummated without and appraisal. In years gone by lenders were skeptical of this method of refinancing simply because they viewed it as a ' cash grab ' by the customer. These days, when properly structured and valued it’s a solid mechanism of refinancing that more often than not makes a lot of sense.

A common mistake many business owners and financial managers make is to solicit an appraisal on their own. That problem complicates two main things -

Lenders like their own appraisers, not yours!

Dollars can be spent on the wrong type of appraisal (there are three types)

Obviously the best solution is when you and your lessor or lender agrees on who will be performing the appraisal, and what type is mandated. The three types of appraisals include

FAIR MARKET VALUE
ORDERLY LIQUIDIATION
FORCED VALUE LIQUIDATION

Lenders and lessors will more often than not ' go conservative ' on the asset and focus on the dollar value of the orderly and FLV asset liquidation prices. Because most (not all) lessors and lenders don't have significant asset expertise in diverse industries they want to know they can disposed of an asset quickly in a worst case scenario. That worst case is of course a business failure.

It's important to note that a lease back or bridge loan has some tax and accounting implications, so they should be reviewed with your accountant. In some cases book values of assets will come into accounting play.

There are two types of leases in Canada - capital and operating. Operating leases are less in vogue these days due to international accounting standards being re written .So most often the sale leaseback / bridge loan is constructed as a full payout capital lease with fixed interest rates and monthly payments . The bottom line is still the same - new cash on your balance sheet.

In a small number of cases equipment already under lease can be refinanced also, although this is not really a classic leaseback... it’s just a refinancing of an unencumbered asset. In some cases an alternative to the lease back is to simply pledge the asset or asset in question under another type of financing arrangement.

Our bottom line? Let this method of refinancing existing assets make sense for your firm when the planets align relative to asset value, cash needs, and accounting sense. Seek out and speak to a trusted credible and experienced Canadian business financing advisor who can assist you with your refinancing needs.







Stan Prokop - founder of 7 Park Avenue Financial
http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 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 :


7 Park Avenue Financial = Sale Leaseback And Bridge Loan Financing Expertise



Have A Question Or 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
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com






























Stan Prokop