Banks, and Me ...

Canadian banks got zapped in a Financial Post article on April 14 called ’ SMALL FIRMS SCORE BANKS POORLY : STUDY ’ .

While CIBC and RBC got a solid scathing quite frankly every Canadian chartered bank got its share of criticism with respect to their commitment to small business .

This article could not be any closer to what this BLOG and my business ( www.7parkavenuefinanical.com ) is all about . We originate business financing for Canadian corporations of all size, from start ups to major corporations .

My own thoughts on this are very clearly - its the banker, not the bank. Doesn’t anyone get this ? We work with some great people at all these banks , in fact a large part of my own time is spent searching these people out and cultivating business relationships with them . In any large organization you have under’performers and over performers . We have contacts at these institutions who wake up every day and look for small businesses to finance . Many of their peers , in my opinion, dont do that .

When Canadian business owners and financial managers are looking for business financing do you think they go to the balance sheet and financial statement of the banks and determine which bank might have the most capital, cash on hand, etc . That doesn’t happen .

What they should do is try and find a banker who is sympathetic to their needs and who will outline financing options, and then champion that customers cause within their own organization based on their job parameters and the particular offerings of the bank .

It’s the banker , not the bank - can I be anymore clear?!

Stan

Sr&Ed Financing – Cash and Working Capital Now for your claim!

SR&ED financing (also known as SR ED / SRED Financing) is a very positive working capital strategy to monetize now your SR&ED tax credit filing.

Canadian business owners who have filed SR&ED claims in the past are already aware of the great aspects of this program, under which the Canadian federal and provincial governments provide a non repayable grant to your privately owned Canadian company for your expenditures relating to improved products and processes. The fact that you can recover a very significant portion of your salaries, materials, equipment and portions of overhead is in our opinion the best program in Canada as it relates to government actually really helping Canadian business.

Many clients approach us and ask about ‘government grants and loans ‘. While there are of course many such programs out there the SR&ED program is real money under a much defined process. And it is non repayable – that’s a good thing.

Let’s assume you are aware of the program, have filed claims, or are filing your first claim. The claim is of course filed at the same time you are filing you year end tax return. The claim can be prepared by yourself, but in our experience 99% of claims are best prepared by specialized consultants of your accountant.

So you have prepared a claim and you have filed it. Of course you can wait for your government refund cheque, but that process involves of course also going through the review of your claim by Canada Revenue and in some cases having a technical audit of your claim. The government website indicates that depending on when you are filing, whether it is a first time claim, and if you are filing for multiple years that you can wait anywhere from 4 – 12 months based on some of the above noted factors. CRA in Canada has a specialized team that works in this area and clients tell us that the overall review of your claim is a fairly standardized process – naturally the overall quality and back up your provide to your claim helps finalize proper adjudication and approval .

Can you get cash and working capital now for your claim? Yes you can. Simply work with a trusted, credible and experienced business advisor in this area and immediate financing can be provided for your claim.

Clients ask what the basic process is over view to get your filed claim financed. It is a very basic process not unlike any standard business financing application. The basic steps are as follows “

-Complete an application – i.e. business details, your current company financials etc
-Provide details of your SR&ED claim

A term sheet can be provided in a matter of days, and claims are financed at generally 70% of the total value of what you have filed, i.e. the combo of the federal and provincial portions. Financing can take place, in our experience in a matter of 2- 4 weeks. You can of course use your SR&ED loan funds for any general corporate purpose, and no payments are made during the loan period. The loan period ends when you claim is processed by Ottawa and you of course receive the other 30% of the claim at that time, less any financing fees.

Consider maximizing the Canadian SR&ED claim by turning your filing into immediate cash flow. That is a solid working capital strategy that assists your firm in growth and competitiveness.
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Stan Prokop is founder of 7 Park Avenue Financial - www.7parkavenuefinancial.com
Originating financing for Canadian companies, specializing in working capital, cash flow, and asset based financing , the 6 year old firm has completed in excess of 45 Million $ of financing for companies of all size . For info and free consultation on Canadian business financing and contact details see:
http://www.7parkavenuefinancial.com/Sr_Ed_Financing_Cash_and_Working_Capital_Now.htm

Film Tax Credit Financing – Canadian Expertise and Cash Flow Solutions

Film tax credit financing in Canada is enjoying a mini boom and resurgence due to a number of positive factors. The economy is strengthening and government and industry bodies are both recognizing and capitalizing on the overall benefits to the film, television and animations sectors, which are the prime movers in the industry.(Music and book publishing traditionally rank behind these sectors.

Although the film and entertainment business in general might seem so much more esoteric than, for example, Canada’s manufacturing industry, it should not seem surprising that the business faces the same challenges as any other Canadian firm – namely financing via cash flow and working capital and fundamental product success.

What Canadian participants in the industry need to know is that your ability to finance projects viatax credit financing , accrual financing, and other financing strategies can significantly enhances your chances of overall financing success.As most industry participants know you don’t necessarily have to have a production hit to ensure you can still capitalize on financing and recovery of costs.(Having the market accepts your movie, show, or product is still very nice though!)

There are a number of late breaking industry changes in the market place that are extremely attractive and are therefore able to assist you in the financing of your projects. As we have noted, it certainly has help when federal and provincial governments have stepped up to the bar and committed millions of dollars of tax credit ability.

Your ability to capitalize on the financing of those credits could be a major factor in the successful completion of your projects.To re- enforce our point on government commitment the there is even intellectual property financing assistance in screen based industries.

The core of successful financing is knowing what is available and then implementing and utilizing innovative strategies around financing.

In any business you have a choice of working with experts, or trying to get financing things done on your own. By utilizing the services of a credible, experience financing advisor in this area you have the ability to broaden your financing possibilities.

When clients as us for tax credit financing assistance they are pleasantly please to hear that that they have the ability to monetize their tax credits into immediate cash flow and working capital. As a producer or other principal you simply might not be aware of the myriad of financing options available, even if it’s just the availability of various tax credits.

Many industry players might think their productions go to some sort of tribunal or jury for adjudication – in fact that is not the case. Your main focus in film and related tax credit financing should be as follows:

-Determining which credits you should use Vis Vis cash flow maximization – as an example for certain of the refund credits you have to choose between one and the other

-Getting certification in place

-Financing your certificates( Innumerous instances accrual financing is possible ; so cash flow is then almost instantaneous provided you meet basic criteria

Surrounding yourself with a credible team always helps in any industry.Knowledge of Small nuances in the programs can actually save, and get you thousands of dollars – a good example is the OFTTC credit and your willingness to shoot a production outside the GTA – In effect you are in a position to recover 45% of your funds at that time, with just that one issue being considered and implemented.

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Stan Prokop is founder of 7 Park Avenue Financial - www.7parkavenuefinancial.com
Originating financing for Canadian companies, specializing in working capital, cash flow, and asset based financing , the 6 year old firm has completed in excess of 45 Million $ of financing for companies of all size . For info and free consultation on Canadian business financing and contact details see: http://www.7parkavenuefinancial.com/Film_Tax_Credit_Financing_Canadian_Expertise.html

Franchise Finance Canada – Financing your Canadian Business Purchase

Franchise Finance in Canada calls for both you as the owner, as well a lender, to, on a combined basis, complete the financing you need for a franchise acquisition. In Canada you could of course be acquiring a new turn key franchise from a U.S. or Canadian franchisor, or in many cases also considering the purchase of an existing franchise.
Several key questions are always table by our clients – inevitably they are:

-How much do I have to put into the business as my own investment?
-Where do the other funds come from?
And, oh yes, how long does the process take!

We always encourage clients to start thinking of financing very early in the process. A great place to start is often, guess who? Your franchisor! That is simply because if they have a multi unit system already in place they usually have a strong indication of how these franchises were financed. Information you obtain from the franchisor or other existing franchisees is invaluable , as the franchise financing journey is a puzzle to many .We also are quick to add that you should never expect financing assistance from a franchisor in the form of loans, etc – The franchisor grows their business from selling you franchises, not loaning you money .
In the U.S. the majority of franchises are financed via the SBA, which stands for Small Business Administration . This is a government sponsored / funded loan, and Canada has a similar program that is commonly known by several different names – they are SBL, CSBFL, and BIL. All of these are acronyms for the same program.

You should most certainly incorporate your business to both gain access to business credit as well as limit personal liability. Personal liability under the Canadian version of the program is limited to only 25% - that’s a great deal for the business owner, as it of course limits your risk.
Most franchises in Canada are financed via this program. Sounds good so far right. We simply point out to clients that achieving success in this financing program is simply a case of:

- ensuring you understand the basics of the program – i.e. what it does not do
- complying with the information required by the program

When planning your franchise financing focus on what amount you can contribute personally to the business, and also understanding the components of financing you need. What are those components? They are:
- Soft costs ( example – franchisee fees, pre paid rent, etc )
- Equipment
- Leaseholds ( if required )
- Working capital

We can’t over emphasize the need to work with an experienced and credible business financing advisor who preferably has a track record of franchise financing success. A thorough business plan, the right advice, and understanding you’re financing needs – all are critical elements to franchise financing success!

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Stan Prokop is founder of 7 Park Avenue Financial - www.7parkavenuefinancial.com
Originating financing for Canadian companies, specializing in working capital, cash flow, and asset based financing , the 6 year old firm has completed in excess of 45 Million $ of financing for companies of all size . For info and free consultation on Canadian business financing and contact details see:
http://www.7parkavenuefinancial.com/franchise_financing_canada_business_purchase.html

Asset Based Lines of Credit – Canadian Financing Solutions

Asset based lines of credit are an alternative to Canadian chartered bank financing in Canada. It is certainly well documented that Canadian business, small, medium, and even large has experienced general credit tightening by our chartered banks here in Canada. Business owners and financial managers are forced to consider alternative financing solutions which are certainly not numerous in natures here in Canada.

Asset based lines of credit are absolutely one solution to the financing you might be searching for. Surprisingly many of our clients have not even heard of this type of financing, much less understand it.

Many customers are actually forced to consider an asset based lending solution because of the concern of owners, lenders, and suppliers that their business does not have the ability to finance the firm properly. When suppliers and other lenders act aggressively on the belief that your firm can’t meet its obligations problems ensue!

One key point we continually make with clients, and we would recommend this to everyone is that you should be aware of your financing alternative before you are forced to be aware of them. Simply speaking, it behooves you to learn about asset based lines of credit. Although the ‘ABL ‘ ( short form ) financing facility has been around for years some people still associate it with distressed lending – it is not just that . It also is not borrowing or taking on additional debt, which is certainly a relief to owners.

So what is it then? It is just the financing of all your current (and sometimes fixed) assets as total collateral for borrowing. In fairness most of that financing is done on receivables and inventory

Because you are in effect borrowing more than you ever could have in a traditional financing arrangement there is some additional reporting requirements when you borrow under an asset based line of credit. But frankly when we talk to customers they indicate this additional reporting often helps them to understand their business better.

It is interesting to note that many firms utilize this type of financing for a long period, and view it as an excellent source of financing, while some business owners and financial mangers view it as a bridge to solve temporary working capital and financial statement challenges. Generally firms considering asset based lines of credit cant meet some of the ratios required for traditional banking and debt service, yet at the same time they have new contracts, need new assets, or more headcount , etc – with asset based financing being a solid solution to provide this additional capital .

In summary, asset based lines of credit are a business financing option. They are utilized in Canada by hundreds, even thousands of medium sized and larger firms. They are a form of non traditional lending that in reality is become mainstream. Asset based lines of credit provide the maximum working capital against your operating assets such as receivables, inventory and equipment...

Speak to a business financing advisor who has credibility, experience in this aspect of Canadian business financing. You can then determine that if it’s the right solution for your Canadian business.

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Stan Prokop is founder of 7 Park Avenue Financial - www.7parkavenuefinancial.com
Originating financing for Canadian companies, specializing in working capital, cash flow, and asset based financing , the 6 year old firm has completed in excess of 45 Million $ of financing for companies of all size . For info and free consultation on Canadian business financing and contact details see:
http://www.7parkavenuefinancial.com/asset_based_lines_of_credit_canadian_financing.html

Equipment Financing Specialist – Canadian Leasing Solutions

Equipment Financing in Canada is a specialized type of financing. Lease financing on its own goes back hundreds of years and is a widely accepted financing tool.Major companies in Canada utilize lease financing, why shouldn’t your firm.

Lease financing covers all sorts of equipment – that includes production equipment, transportation equipment, machine tools, computers, etc. In general most Canadian banks do not offer lease financing, although two of the Chartered banks have dedicated lease operations but require a very high quality credit quality.

You should consider leasing because it’s a simple to arrange financing agreement between yourself, your vender of the equipment, and the lessor. Leasing should not be considered complicated, however Canadian leasing practices and the parties that participate are much different than in the U.S. . . . It benefits Canadian business owners and financial managers to ensure they understand why leasing is so popular.

Two basic types of leases are available for the Canadian business owner – they are capital and operating leases.Operating leases are often promoted by manufacturers or vendors and they often include maintenance and insurance.You should consult with an Equipment financing specialist to ensure an operating lease is right for your firm.The essence of an operating lease is that your intent is to use the equipment, but not to own it. When you enter into an operating lease ensure that you have no intention of owning the equipment at the end of term. In this case your payments will be much lower than if your intention is ownership, and you will have the benefit of some balance sheet improvement, as this lease is not shown as debt on your balance sheet. The alternative lease is a capital, or financial lease, which denotes ownership.

We can’t over emphasize the need to work with a trusted, experienced and credible advisor in this specialized area of financing in Canada. Seek out a professional that will assist you in acquiring the equipment you need and answer any questions you have about the proper rate, term and structure that your firm deserves based on overall credit and asset quality. Equipment can be new or used, and a good lease financing specialize will be pleased to assist you in maximizing the benefits of lease financing, which include:

-Better use of working capital

-Often cheaper than a term loan

-Wont restrict your current banking arrangements

-Payment flexibility

-Fixed rate financing in today’s low interest rate environment.

Specialists in any industry are a benefit. Consult a lease financing specialist for your asset acquisition needs.

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Stan Prokop is founder of 7 Park Avenue Financial - www.7parkavenuefinancial.com
Originating financing for Canadian companies, specializing in working capital, cash flow, and asset based financing , the 6 year old firm has completed in excess of 45 Million $ of financing for companies of all size . For info and free consultation on Canadian business financing and contact details see:

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

Lease Equipment Financing – Canadian Solutions

Canadian Lease Financing Solutions are available for Canadian business owners who are acquiring assets and business equipment.

When a Canadian business owner or financial manager considers a financing transaction he or she wants to understand the advantages and disadvantages of such a financing. When we meet with clients we clearly explain that no one financing solution is a perfect solution when evaluated against other alternatives.That certainly applies to leasing.

Are there actually disadvantages to a lease financing strategy? Here are a couple of things for you to consider. Naturally a lease is a fixed payment arrangement, so you do have a constant obligation to meet the agreed upon payments over the term of the lease. If you have chose a ‘ lease to own strategy then clearly you own the equipment at the end of the lease – in some cases certain equipment holds value and actually appreciates, but 99% of business assets, other than real estate, decline in value . Also, your accountant may tell you that some of the tax advantages of a lease are less attractive. A lease versus buy strategy may point out that it is actually financially advantageous to purchase or take out a loan.

Well there, we have given you four or 5 reasons why Leasing ‘might ‘not be the best financing strategy. Now though, let’s talk about ten or more reasons why Canadian lease equipment financing solutions in fact might be very attractive and appealing to your asset acquisitions!

The most obvious benefit of leasing as perceived by Canadian business owners continues to be that it allows your firm to conserve working capital. We talked bout how a lease versus by analysis by your accountant or financial team might show that leasing is not the best acquisition strategy – however in many cases, depending on criteria assumptions, it in fact may well prove to be a more profitable financing and cash flow strategy.

If your firm has bank loan or arrangements with any other lenders you are often, if not always subject to other covenants and restrictions they have imposed re collateral, personal guarantees, and ratio covenants. In a lease financing strategy the collateral is generally just the equipment, it’s a very stand along type of financing!And naturally those bank lines and arrangements that we just spoke of are not disturbed; you can still use them for day to day working capital and cash flow.

When clients ask how long it takes to get an approval and financing completed we generally indicate that can be done in a week or so with their full co operation. Generally that type of time line cannot be met with other types of financing. And payments and cash flows can always be structured to meet your financing needs. In effect you have arranged an alternate source of financing for your firm, and all financial gurus will advise you to ensure you have multiple, not just one, source of business financing.

In May cases you are acquiring business equipment and assets because of budget issues and leasing certainly helps to eliminate what our firm calls the ‘obstacle to innovation. Certain assets your lease will ensure you have in effect created a hedge against obsolescence.

Well, in summary, we have given you four or five reasons not to choose equipment financing in Canada as a financing strategy – hopefully you will weigh those against the ten or so great reasons to financing via leasing. Speak to a trusted credible an experienced advisor in this area if you wish more information.

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Stan Prokop is founder of 7 Park Avenue Financial - www.7parkavenuefinancial.com
Originating financing for Canadian companies, specializing in working capital, cash flow, and asset based financing , the 6 year old firm has completed in excess of 45 Million $ of financing for companies of all size . For info and free consultation on Canadian business financing and contact details see: http://www.7parkavenuefinancial.com/Equipment_financing_specialists_canada.html