Working Capital Loans – Cash Flow Business Financing Canada

Working Capital Loans in Canada provide cash flow business financing for Canadian business owners and their financial managers. When you achieve a cash flow loan of this type the overall financing rate tends to be very attractive.

Generally a working capital loan is a 3 to 5 year short term / intermediate term facility. Repayments are made monthly out of business cash flow, and typically the working capital loan is viewed as permanent business cash flow.

In many cases a working capital loan can have some collateral attached to it such as equipment or other business assets.

These type of facilities are made through 3 types of organizations-

Chartered banks
Independent Finance Companies
Government owned Crown Corporation

Achieving success in a working capital loan scenario will come with some conditions, as business owners will normally be required not to take out excessive funds from the business, and must be able to demonstrate that they have the cash flow in place to repay the loan. This is typically adjudicated via traditional cash flow analysis – the lender simply wants to see that you have current and projected funds flow to meet your repayment obligations.

As we stated, there is only a small handful of organizations that typically provide such business financing IN Canada. Canada’s chartered banks provide the lowest rates , while other firms and organizations have a higher cost of borrowing which is passed on to your firm as the borrow .

Working capital loans should be considered for a variety of reasons – some of these are – capital improvements, equipment purchases, and working capital to support cash flow and inventory.

It is important to ensure you are entering into a working capital loan arrangement for the right reasons – as working capital loans should not be confused with asset based lending on items such as receivables, inventory, equipment, real estate, etc .

Typically a working capital facility loan will require the guarantees of the owners of the firm. One of the smartest things you can do in positioning a facility such as this is to provide a crisp well thought out cash flow analysis – (an updated business plan wouldn’t hurt), to give the lender the comfort that you can make payments. In your document you should know that the lender will be looking at total debt to equity once the loan is in place, and also that you have cash flow coverage to repay.

In our experience with clients working capital requests tend to be in the 50k-250k range. Larger facilities than this become known as mezzanine debt, or subordinate debt – these are fancy terms for ‘unsecured cash flow loans ‘.

In summary, working capital loans are available in Canada from 3 different types of entities. It is important to position your request properly, and carefull attention to the metrics that the lender will be looking at will pay off for your firm. Speak to a trusted, credible advisor in business financing who will help you maximize the benefits of a true working capital loan facility.

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Stan Prokop is founder of 7 Park Avenue Financial - http://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 :

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

Equipment Financing – Expert Advice for Canadian Lease Financing

Canadian business owners who are armed with some basic equipment financing knowledge can significantly increases their chances of approval, and, equally as important, ensuring the Canadian lease financing they are looking for comes with rates, terms, and general structures that are commensurate with their overall credit quality and business financing needs .

A lease and equipment financing provider has some basic needs around your initial application for financing. Some of the key areas you should focus on are detailed below.

Leasing is available for firms with all durations of ‘time in business ‘. Although a start up firm can be financing via a lease financing solution your overall time in business can be a great factor to increase your chances of a proper approval. Equally important is the overall industry and business model you are in – as on occasion some industries are out of favor. In 2008-2009 the auto industry was clearly ‘out of favor ‘.

Lease financing is a segment of ‘asset based lending ‘- therefore the asset you are financing has a considerable role in determining your overall approval and pricing. Equipment that is financed generally tends to depreciate, so your lease firm will focus on the value of the equipment during the term of your lease. As an example a lessor could only reasonably expect to recover 5 or 10% of a computers value three years from now, simply because a computer and telecom equipment in general as asset classes depreciate quickly .

Equipment that is not purchase for bona fide vendors and manufacturers also on occasion can present financing challenges. Therefore if you have a choice work with repeatable dealers, wholesalers, manufacturers, etc.

Any lease firm will draw commercial credit reports on your firm and look for payment trends to suppliers – if personal guarantees are required on private small and medium sized firms quite often a net worth statement and credit bureau check will be asked form . Quite frankly these types of information and credit diligence are associated with any borrowing, whether that is a corporate credit card, a business loan application, etc. In reality lease firms in Canada probably provide the quickest overall approval times than any other type of business financing. Many lessors use automated credit scoring systems and smaller transactions fewer than 50k for example can actually be sometimes approved in a matter of minutes or hours.

Lease transactions in Canada can run into the many millions of dollars, lease financing is one of most vibrant financing initiatives in the country – so expect on larger deals that a higher level of due diligence will be performed on your firm for larger lease facilities .

Finally , leasing is all about ‘structure ‘ so you should feel free to be creative in your lease structure request in order to maximize the particular benefits of lease financing that you are trying to achieve – they might include lower rates re your credit quality, seasonal payments, flexible end to term options etc .

In summary, business owners should learn some key leasing basics around what is required to make a lease approval successful. Being armed in this manner will ensure a more prompt approval and the overall approval you are seeking re asset type, term of lease, and flexibility at end of term. That is sensible, proactive financing. Seek the advice of a trusted and credible lease financing advisor who can assist you in maximizing benefits!

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Stan Prokop is founder of 7 Park Avenue Financial - http://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 :
http://www.7parkavenuefinancial.com/equipment_financing_expert_advice_canadian_leasing.html

Equipment Leasing – Canadian Financing Solutions

Equipment leasing in Canada is based on the premise that your business requires financing to acquire new assets to stay competitive and profitable. Business owners and financial managers in Canada who understand that the majority of assets they purchase depreciate in value understand why lease financing works.

Lease financing in Canada involves the acquisition on your behalf, by the lessor, of equipment you wish to use in your business. Almost any type of asset, tangible, and sometimes intangible (i.e. software -) can be leased.

How does lease financing work? It’s quite simple. The lease firm purchases and owns the equipment and ‘rents ‘it back to your firm over a specified period of time. Typical lease terms in Canada are more often than not 5-7 years.

There are a variety of key benefits associated with lease financing – one of them is simply ease of acquisition. For transaction under $ 50,000.00 most lease financing is adjudicated and approved on an application only basis – i.e. no disclosure of financial statement required. Generally leases for more than this amount requires a more thorough application, often including your financial year end statements and perhaps an interim statement update also. In lease financing its all about cash flow, so your firm should be able to demonstrate a proper mix of historical, present, and future ability to make the monthly payment.

So yes, lease acquisition financing is a very simple process. We advise clients that wish to lease that the true challenge in lease financing in Canada is actually structuring your lease properly with respect to the type of lease you choose.

At the end of lease you wish to fully understand what your rights are wit respect to purchasing the equipment, purchasing it for a ‘ fair market value ‘, or in many cases, extending the lease because the asset still has value to your firm with respect to its ability to generate profit for your firm .

The other good news re lease financing in Canada is simply that it’s available for businesses that are in every stage of growth, from start up to major established corporations. Quite frankly, as is the case in a lot of banking scenarios transactions for smaller or start up firms are based significantly on the credit history and business experience of the owners, so Canadian business owners should be prepared to demonstrate the proper credit history and business acumen.

There is no limit to the amount of financing that is available in Canada for lease financing. During the economic crunch of 2008 and 2009 many lease firms actually got assistance from the government to keep the wheels of lease financing moving. Markets have stabilized and funding is generally as abundant as it ever was for the right types of assets and credit quality.

In summary Lease financing is very simply and has clear benefits. As we noted the challenge is in getting approval for the right transaction in terms of credit approval, rate, and overall lease structure. Speak to a credible, trusted, and experienced advisor in this area to ensure you are making the best use of this valuable Canadian financing strategy.

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Stan Prokop is founder of 7 Park Avenue Financial - http://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 :
http://www.7parkavenuefinancial.com/Equipment_Leasing_Canadian_Financing_Solutions.html

Invoice To Cash – Factoring for Canadian business

Converting an invoice to cash is a top priority for Canadian business owners and financials managers. Factoring continues to slowly increase it’s presence in the Canadian market place, and some of the largest corporations in Canada actually successfully use this type of financing strategy. However for the purposes of our information shared here we will focus on the whats, whys and how to be of factoring for small and medium sized companies in Canada.

Once a business owner both understand and starts to ‘ buy into ‘ this type of financing the only challenge at that point is ensuring that they enter into the right type of facility .

The Canadian factoring market is significantly different from the U.S. and European markets where factoring originated. It is therefore important for Canadian business owner who consider this type of receivable financing to know their options and to have a solid sense of how the financing works.

Canadian factoring companies fill the gap when a firm cannot obtain satisfactory receivable financing from their Canadian chartered bank. Many clients tell us they do have some for of bank financing in place, but it essentially does not meet their needs re growth and facility size. In many cases clients have had a challenging 2008-2009 and have no financing facilities in place whatsoever. Then there are of course starting up firms who virtually have no ability to qualify for standard Canadian operating facilities that are enjoyed by more larger and established firms.

Factoring works for your firm when you have decent receivables but there are issues on your balance sheet and income statement that prohibit you from obtaining the amount of financing you need on an ongoing basis . This working challenge is further exacerbated when you have large new contracts or volatile growth spurts based on the uniqueness of your industry.

There are two types of factoring in Canada, ‘notification factoring ‘, and non- notification factoring. Both work well if you understand how they are structured and priced, however we favor non notification factoring in our recommendations since we feel it more closely suites the Canadian way of doing business.

In notification type factoring the process is very simple and mechanical:

- Your firm invoices your customer
- You generate an invoice
- You receive a large, almost same day cash advance against that invoice (typically 90%)
- Your factor firm verifies the invoice with the customer prior to disbursing funds
- The factor firm more often than not collects the invoice, an remits to your firm the remaining balance due yourself, less their financing fee

Non notification factoring is dramatically different - with that type of facility more due diligence is spent on your firm and its way of doing business, invoicing, creating proper financial records, etc. Your company bills and collects all its invoices, and you receive funds immediately after you ship and provide proof of delivery.

Factoring pricing in Canada has dramatic price swings. Factoring rates range from 9% per annum to 2-3% per month. Factors that determine your price are the over all facility size, your usage of the facility, the overall quality of your customer based, and ,unbeknownst to your firm, how the factor firm itself is funded, usually either privately or institutionally .

In summary factoring works in Canada. Choosing the right facility is usually a larger leap of faith than buying into the concept of this type of financing. Speak to a trusted, credible and experienced advisor in this area to ensure you understand the benefits of this valuable and popular method of Canadian business financing.

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Stan Prokop is founder of 7 Park Avenue Financial - http://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 :
http://www.7parkavenuefinancial.com/Invoice_To_Cash_Factoring_for_Canadian_business.html

SR ED Financing – Factoring Your Sr Ed for Working Capital in Canada

Canadian business owners and financial managers don’t find waiting productive. So why should you have to wait to finance (in effect it’s a factoring or discounting) your SR ED claim. You shouldn’t have to and we will show you how.

To be able to finance a SR ED claim you of course have to have a SR&ED claim. That makes common sense.Canadian business owners know when they have a significant investment in their research and development and commercialization projects. That is more than intuitive, because they are spending real dollars, often considerable sums, to maintain their competitive edge in products, services, and processes.That’s of course why your firm should be finalizing a claim and filing it as soon as you can in conjunction with your fiscal year end. Naturally once you have filed the claim you can wait anywhere from 3- 12 months for the refund chq to arrive from Toronto or your provincial component from your provinces capital city.

Do you have to wait to recover those funds? Of course you can if you choose, but your claim is financeable if you seek out and talk to a trusted, credible expert in this area. Why not finance your claim, recover those funds now, and continue your investment in leading edge research den processes to maintain your competitive stance within your industry and product or service sector?

So what are the basics of financing that claim . Let’s review them in detail and ensure you have the under pinnings of a successful SR ED financing strategy.

As we mentioned you have to have filed your claim to begin financing it.In our experience the whole process, we tell our clients, takes two to three weeks if your full co operation is provided. Naturally if timing is important you could start the process a little in advance of filing your claim.Any Sr Ed calim can be financed, but those that are prepared by competent parties are in effect ‘more financeable ‘as they have a credibility and experience factor attached to them.

Does your own firm’s financial status play a part in the financing of your SR ED? We can say with assurance that 90% of the SR ED financing questions rely very specifically on using the SR ED as collateral for the financing. But naturally your firm has to be able to demonstrate some sense of on going viability with respect to sales prospects, etc. However lets be honest, many firms are usingSR ED tax credits because they are in growth or start up mode, so that should not deter you fromcontemplating and discussingthe financing of your SR ED .

A normal SR ED financing application includes the usual business info data you would submit with any business financing – i.e. info on your firm, its financials, info on the owners, etc. Loans or advances against your claim are generally made at 70% loan to value; in effect you immediately receive 70% of the total amount of your SR ED tax credit calim. The balance is remitte3d to yourself, less financing fees, when you calim is approved and funded in Ottawa.

A proper SR ED financing is structured so that you won’t make any payments while you wait, so it’s a pure cash flow and working capital strategy.

In summary, utilize your tax credits to recover significant portions of all your R&D expenses if you are a privately owned Canadian company. Ensure you consider a SR ED financing strategy if you wish to accelerate SR ED spending or simply use the funds for any general worthwhile purpose.Speak to a trusted, credible and experienced SR ED financing advisor to structure a claim that makes maximum financial sense for your firm.

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Stan Prokop is founder of 7 Park Avenue Financial - http://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 :http://www.7parkavenuefinancial.com/SR_ED_Financing_Factoring_Sr_Ed_For_Cash_Now.html

Film Television and Animation Tax Credit Financing – Canadian Solutions

Financing solutions and models continue to be sought after in the Canadian film televison and animation tax credit financing area. Additionally other working capital solutions for Canadian productions in this area are also available and generally less known as to their existence and their ability to assist productions of Canadian content.

Early in 2010 , as is by now well known by most players in the industry, the Canadian government at both the federal and provincial level ‘super charged ‘ tax credit grants and incentives . Rates and credits increased for specified expenditures by as much as 5-10 per cent in most areas of these tax credits. Additionally a fund was even creating for Intellectual property, with a projected funding of ten million dollars.

Productions with Canadian content are aggressively being produced and savvy principals in Canada are both taking advantage of these credits, and also financing them on an interim basis, or on completion.

A combination of private investing, government non repayable tax credits and even some participation by Canadian banks create a ‘tour de force ‘of financing assistance for Canadian content. Although a significant previous factor in Canadian growth was the cheaper Canadian dollar even the dollar at par now has not hindered Canadian productions in all three key areas, film, television, and digital animation. (And let’s not forgot those lesser known sisters - book publishing and music!)

Productions in Canada are of course financing in the same manner as almost anywhere else - equity by owners, tax credits, loans, and distribution deals. The most recent tax credit incentives in effect replace film tax shelters of previous days. In our opinion this method is more transparent, available, and takes a lot of the negativity associated with ‘tax shelters ‘.

So how do principals access tax credits and how can these tax credits be financed. Did you also know that financing is available on an interim basis also, so for properly documented productions you can obtain interim financing assistance that in many cases becomes a key up front component of your financing and will allow you to complete your project more advantageously from a financial perspective ?

What are the basics of this type of financing – let’s review them. To say that film, TV and animation financing is a boutique industry in Canada is of course an understatement. For that reason we strongly recommend that you work with and speak to an experienced and knowledgeable advisor in this area. To access financing you must ensure your project or projects are eligible to be certified for any one or more of the six major tax credits that are available, for example, in Ontario. (We will use Ontario as our example, but each province has similar regimes to assist yourselves.) You should ensure you have created a single special purpose entity, essentially the legal shell under which your production or project will be qualified.

Carefully choose which credits you are eligible for, and ensure you apply for proper certification as soon as possible. Improper or incomplete certification only (as in any business financing process) slows down and stalls your tax credit and the ability to finance it.

Maintain proper disbursement and payroll records – we strongly recommend to clients that they use a specialized accountant or firm in this area. If you can demonstrate your background and experience, have proper certification in process, and are committed to document the project through completion by proper filing of tax returns and financials your tax credit can be financed as immediately as when it is accepted and provided to your project . If you seek interim financing for the same project, and are committed to maintaining and demonstrating the quality in the key fundamental areas noted above you are eligible for accrual financing, or cash flow and working capital assistance immediately even prior to the certification of your project(S).

In summary, ‘Hollywood North’ appears to be booming again. The economy has picked up, consumers want entertainment in all key sectors, and even the Canadian dollar has not deterred investment in production. Tax credits have increased, and even better yet, by working with the proper experienced partner your credits can be financing when they are certified, or even earlier if you can document a strong go forward action plan on disbursements, payroll, and your experience in this great area of the Canadian economy. And by the way, speaking to an expert in area doesn’t hurt – extra tips and assistance may be worth thousands or hundreds of thousands of dollars in cash flow and working capital for your projects!

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Stan Prokop is founder of 7 Park Avenue Financial - http://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 :
http://www.7parkavenuefinancial.com/Film_Television_Animation_Tax_Credit_Financing.html

Franchise Financing Canada – The Process and Approvals

Franchise Financing – Prospective franchisees in Canada want to know what is involved in obtaining the proper financing for their business. Many new franchisees are not aware of how franchises are financed and whats involved, so let’s share some critical information in this exciting and growing industry in Canada. Statistics show that franchises in Canada are in fact a huge part of the Canadian economy, and business and consumer franchises are involved in virtually every industry in Canada.

As a prospective franchisee you are either looking to purchase a turn key new opportunity from a franchisor or master franchisor, or you may perhaps be entertaining the purchase of an existing franchise that is already established . It goes without saying that you should carefully examine in that instance why the current franchisee is selling. More often than not it is because the current franchisee wishes to move on to another business or career, but you should examine why he is leaving for all the obvious reasons.

There are some innovative ways to finance your franchise in Canada. So how are franchises actually financed? The majority of them are done via a government programme called the BIL (also known as CSBFL) programme. This program is subsidized in rate and structure by the federal government and in our opinion is, bar none, the best small business financing program in Canada. It can of course be used for existing and new franchises. The program offers rates and structures that even larger corporations can’t achieve – i.e. Longer terms and amortizations, very competitive rates, and limited personal guarantees.

When clients approach us with transactions that are more difficult to structure an often used strategy we employ is the VTB. That stands for vendor take back, and allows the current owner in effect to reduce the total financing cost for the customer considerably. The owner takes a promissory note arrangement from you and these notes are structured for maximum flexibility to both parties. Lets to a quick example to show you the power of the strategy.

Lets say you are purchasing a franchise for 400,00.00 .00. The monthly payments on a 5 year loan for that amount of funding would be approx 7600.00. If the seller was willing to accept a 75,000 note from yourself to repay this portion later your new finance amount is 325,000.00 and your monthly payment are now only 6200.00. It goes without saying it’s easier to make a 6.2k / mo payment than a 7.6k/mo payment! In circumstances such as this good negotiating and the good intentions of all parties are required, that’s what makes a deal work, when both parties adopt a win win attitude.

Typical franchise loans tend to be in the 100-350k range in our experience. Much larger loans often involve the most well known names in their industry, and in many cases might have some real estate attached to the transaction.

We have found with great success that the ‘cobbling together’ of a franchise financing is, in the current economic environment, the most successful strategy. That usually involves our previously mentioned BIL franchise loan, perhaps some equipment leasing, and in some cases an unsecured working capital cash flow loan. A total package usually comes with a business Visa and an initial operating line of credit to suit the overall needs of the business.

To properly execute your franchise financing strategy you require a business plan and some carefull planning around what you need to purchase the business, and, as importantly how you will finance future cash flow, inventory, and growth needs.

In summary, franchise financing in Canada is unique and a specialized type of financing. We strongly suggest you seek and utilize a business financing expert in this area in order to help you determine your overall needs and how you will execute on a successful franchise financing. Its step one to being a new successful entrepreneur!

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Stan Prokop is founder of 7 Park Avenue Financial - http://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 :
http://www.7parkavenuefinancial.com/franchise_financing_canada_process_and_approvals.html