As a Canadian business owner and financial manager you want to ensure you can obtain best prices for equipment leasing, and at the same time maximize other benefits under the entire lease financing proves. How do you address these issues with equipment leasing providers, and who are these firms and how do you locate them?
There are a number of considerations when you choose to acquire assets through the lease financing process. There are consequences to each decision with the business equipment finance process. And then there are those benefits we mentioned – what are they and which ones should be maximized by your firm. Let’s explore some basics on these critical financing points.
We have of coruse assumed you have made the decision to enter into an equipment financing arrangement. We should say however that hopefully you have also evaluated the alternatives, such as a bank loan or term loan, and, dare we say it, paying cash for the asset. While lease financing is often deemed a bit more expensive than those two options in the long run at the same time it is in many ways the ultimate cash flow conservations strategy when acquiring new assets for your firm, so any perceived or real additional cost has to be factored against that point .
That analysis we referred to above can be performed by yourself, or your accountant or business financing advisor with a simply template known as a ‘lease versus buy ‘template. It takes into account key aspects of the lease such as the term of the transaction, i.e. how many years you want the lease for, the interest rate, and also factors in as an example what you could do with funds based on the return on equity that you traditionally achieve for your firm .
You also want to carefully consider the type of lease that you require – there are two key asset financing strategies, and the ultimate answer to each is simply achieved by asking yourself on key question – is your focus owing the asset or using the asset . If you want to focus on using the asset then look at what is known as an operating lease. This gives you maximum flexibility, and quite frankly usually has the best cash flow analysis because the lessor retains ownership of the equipment. However, at the end of the lease operating leases give you some great flexibility – those flexibilities include returning the asset, buying it for an agreed upon fair market value, or simply extending the lease, which usually also has a lower monthly payment at that time.
The key really to all pricing for equipment leasing is to ensure you have a competitive rate, and one that affects your overall credit quality. The beauty of equipment financing in Canada is that financing is available for all credit types and asset categories. Your overall credit quality as perceived by the lessor dictates your price, with other key factors being the size the transaction, the asset quality and remarket ability , and , unbeknownst to many business owners, the ownership and structure of the lease provider you are dealing with . Lease financing firms have different asset appetites, some prefer small leases, some only do multi million dollar leases, and they in turn have their own funding and capital structures which dictate pricing to you.
We tell clients that as a general rule they should expect the best pricing when they are established businesses, are profitable, and have positive cash flows and clean balance sheets and income statements. Unfortunately not all our clients fall into that category, but as we said, the good news is still that equipment leasing providers for all credit quality and asset types and deal sizes exist in Canada .
Speak to a trusted , credible, and experienced lease financing advisor who will guide you thought the process of how the lease marketplace works, which firm is the best partner for your specific financing needs, what economic advantages you can hope to achieve, and how do you do a true benefits assessment for this valuable type of business financing in Canada .
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http://www.7parkavenuefinancial.com/prices_equipment_leasing_equipt_leasing_providers.html
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Our blog highlights Canadian Business Financing solutions via receivable finance , equipment finance, working capital financing, asset based lending, business acquisition financing,franchise finance, and tax credit monetization via SRED and Film Tax Credits. Our goal is to educate and assist Canadian businesses with their financing needs. You Are Looking For Canadian Business Financing! Welcome to 7 Park Avenue Financial Call Now ! - Direct Line - 416 319 5769
Tuesday, September 21, 2010
How Commercial Factoring works in Canada -Receivable factoring Costs and Benefits
Commercial factoring in Canada addresses some of the major issue your firm faces everyday in cash flow and working capital challenges. You know the drill – customers have always been slow to pay, they seem even slower these days. Your cash flow requirements change daily as you address working capital needed to finance inventory and receivables, and at the same time manage your investments in ongoing operations, debt payments, commitment to suppliers, etc.
Is there a solution to those challenges, we think there is. Is it as expensive as you may have heard, we are pretty sure it is not.
Commercial factoring is the ongoing sale of your receivables for instant cash. For many customers it always comes down to the rates and pricing they have heard about this type of financing. In Canada those costs range from anywhere from 9% per annum to 1-2% per month. So let’s address that cost issue a bit. When many customers calculate their ‘all in ‘cost of borrowing from banks it is often in the 11% range as an example. So it is important not to get ‘seduced ‘by your low rate expectations around traditional Canadian bank financing. Furthermore most clients we meet with simply can’t meet the requirements, (the banks call them covenants) for borrowing on a revolving ongoing basis for working capital, particularly receivables and inventory. So the conversation around pricing becomes somewhat moot.
Instead of worrying b about the cost of factoring consider the following – If you have money tied up in accounts receivable for , as an example, 60 days, then you are losing the opportunity to receive payment and re invest in your business and increase your overall return on equity . The more quickly you can get paid allows you to reinvest in further sales for your firm, those sales create more profits.
If you complete a receivable factoring agreement you have successfully negotiated a great coup – what is that coup? You have in essence provided your firm with unlimited working capital, because as your receivables and customer backlog of orders grow your cash flow from commercial factoring works lock step with that same growth. The bottom line is that most business owners view cash flow as unpredictable, and commercial factoring removes that unpredictability – you in effect control the cash flow valve – financing all or a part of your receivables when you chose.
Receivable financing is growing all over the world, North American no exception, and certainly in Canada it has been on the rise also. Many clients are in industries which might be viewed by others as ‘out of favor ‘. In general factoring doesn’t discriminate – if you have a receivable you can generate cash flow from that A/R – today!
Some of Canada’s largest corporations use this type of financing – when it comes to larger corporations fancier finance terms like ‘ securitization ‘ are used . Bottom line, General Motors factors, why you shouldn’t. That brings up a further point , which is that we do acknowledge that firms that have particular, unusual, or one of challenges are often the mainstream candidates for receivable financing . So your firm may have had some financial losses, be in a turnaround situation, etc – you are still a solid candidate for this type of business financing.
Factoring is the ultimate in off balance sheet financing – you are simply monetizing your receivables and generating cash instantly. The secret of factoring costs, or their perceived costs, is your utilization of those funds. You can use cash flow generated from receivables sales to pay invoices from suppliers and take a discount, or negotiate better terms and pricing for your products .
When you have additional working capital you can grow sales and revenue and increase profits – that financial flexibility is what this type of financing is all about. Sometimes it is a ‘bridge ‘solution, in certain cases it can easily become your long term ongoing working capital solution.
So whats our bottom line? Simply that you do have choices in working capital solutions. Commercial factoring is one of them. Understanding the true cost of the financing, how it works, and utilizing that cash for the right reasons just might be your best alternative for cash flow longevity.
Speak to a trusted, credible and experienced working capital advisor to ensure you understand the benefits of this unique type of business financing in Canada.
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http://www.7parkavenuefinancial.com/commercial_factoring_receivable_factoring.html
Is there a solution to those challenges, we think there is. Is it as expensive as you may have heard, we are pretty sure it is not.
Commercial factoring is the ongoing sale of your receivables for instant cash. For many customers it always comes down to the rates and pricing they have heard about this type of financing. In Canada those costs range from anywhere from 9% per annum to 1-2% per month. So let’s address that cost issue a bit. When many customers calculate their ‘all in ‘cost of borrowing from banks it is often in the 11% range as an example. So it is important not to get ‘seduced ‘by your low rate expectations around traditional Canadian bank financing. Furthermore most clients we meet with simply can’t meet the requirements, (the banks call them covenants) for borrowing on a revolving ongoing basis for working capital, particularly receivables and inventory. So the conversation around pricing becomes somewhat moot.
Instead of worrying b about the cost of factoring consider the following – If you have money tied up in accounts receivable for , as an example, 60 days, then you are losing the opportunity to receive payment and re invest in your business and increase your overall return on equity . The more quickly you can get paid allows you to reinvest in further sales for your firm, those sales create more profits.
If you complete a receivable factoring agreement you have successfully negotiated a great coup – what is that coup? You have in essence provided your firm with unlimited working capital, because as your receivables and customer backlog of orders grow your cash flow from commercial factoring works lock step with that same growth. The bottom line is that most business owners view cash flow as unpredictable, and commercial factoring removes that unpredictability – you in effect control the cash flow valve – financing all or a part of your receivables when you chose.
Receivable financing is growing all over the world, North American no exception, and certainly in Canada it has been on the rise also. Many clients are in industries which might be viewed by others as ‘out of favor ‘. In general factoring doesn’t discriminate – if you have a receivable you can generate cash flow from that A/R – today!
Some of Canada’s largest corporations use this type of financing – when it comes to larger corporations fancier finance terms like ‘ securitization ‘ are used . Bottom line, General Motors factors, why you shouldn’t. That brings up a further point , which is that we do acknowledge that firms that have particular, unusual, or one of challenges are often the mainstream candidates for receivable financing . So your firm may have had some financial losses, be in a turnaround situation, etc – you are still a solid candidate for this type of business financing.
Factoring is the ultimate in off balance sheet financing – you are simply monetizing your receivables and generating cash instantly. The secret of factoring costs, or their perceived costs, is your utilization of those funds. You can use cash flow generated from receivables sales to pay invoices from suppliers and take a discount, or negotiate better terms and pricing for your products .
When you have additional working capital you can grow sales and revenue and increase profits – that financial flexibility is what this type of financing is all about. Sometimes it is a ‘bridge ‘solution, in certain cases it can easily become your long term ongoing working capital solution.
So whats our bottom line? Simply that you do have choices in working capital solutions. Commercial factoring is one of them. Understanding the true cost of the financing, how it works, and utilizing that cash for the right reasons just might be your best alternative for cash flow longevity.
Speak to a trusted, credible and experienced working capital advisor to ensure you understand the benefits of this unique type of business financing in Canada.
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http://www.7parkavenuefinancial.com/commercial_factoring_receivable_factoring.html
Monday, September 20, 2010
Purchase Order Financing Tips and Secrets for Canadian Firms Seeking Trade Finance
Your worst business nightmare just occurred. You got the order/contract! Now what?!
Purchase order financing is a great tool for firms that have unusual purchase order and contract sales financing needs but are potentially unable to access traditional financing via banks or their own capital resources within their firm. How does trade finance P O financing work, does your firm qualify, what are the costs, and how does it work? Great questions, now let’s explore some answers!
Typically Canadian firms looking for this type of financing are distributors, manufacturers, or perhaps wholesalers. A variety of industries in Canada have access to this type of financing, but those certainly tend to be the typical firms needing assistance.
Your need for purchase order financing arises out of what we call the classic working capital gap. What do we mean by that? It’s a case of your suppliers requiring payment either up front or within 30 days, with your firm unable to generate those funds for payment and therefore unable to fill large purchase order and contracts in your favor . Your supplier is asking your for payment in advance or 30 days, and you wont receive payment for at least 60-90 days, perhaps more depending on your build cycle, etc.
Naturally you don’t want to turn down orders or lose competitive market position.
The obvious solution for low cost large amounts of funds are Canadian chartered banks, but our observation is that many firms simply cant satisfy the banks requirements for this type of financing to occur. If your firm is growing, profitable, has a clean balance sheet and strong historical cash flows and history you of course have a solid chance of meeting bank requirements, however that typically is not the case, certainly in the amount of clients we talk to who are looking for alternatives to their growth challenge !
When you access p o financing you can have comfort that your suppliers will be paid, and at the same time you generally have access to all the funds you need. Typical purchase order financing applications take anywhere from 2-4 weeks to complete and involve basic financial due diligence on your firms ability to fulfill the order, who your customer is (they must be credit worthy), and your proper supplier sources must be identified and vetted. It’s as simple as that.
So what are the basic pre requisites for a solid P.O. Financing deal? Naturally your company must be in possession of a contract or order that is not cancelable by your client. The P O finance firm arranges to pay your suppliers directly, that alleviates all you cash flow and working capital concerns. The transaction is completed when you ship the goods and your receivables are generated on the sale. It is at this time the purchase order finance firm expects to be paid, and this is traditionally handled by your firms monetizing of its receivable via a bank or factoring facility. Factoring facilities are great partners to the P O financing strategy, because use of them guarantees payment to your P O firm.
Let’s cover off a couple tips and secrets around the cost of purchase order financing – It generally is in the 2-3% per month range in Canada, and that means you have to have solid gross profit margins in order to be able to sustain the finance charges. But let’s be honest, let’s say your firm has been doing 750k of revenue for the last couple years and you finally get the large order from a major customer for 1 Million dollars. Wouldn’t you give up 2-3 % of your profit margin in order to make one sale which is the equivalent of your entire year’s business? We think you should positively consider that! Clearly the higher cost of this type of financing covers off the complexity and risk that the P O finance firm takes in paying for goods , waiting to get paid, and having the belief that your firm will fulfill the contract order .
It has been our observation with certain clients that your successful completion of a purchase order finance deal typically significantly enhances your relationship with your major suppliers and of course customers, that’s a secret benefit that is intangible but invaluable at the same time.
Is P O financing for everyone. Maybe not. Could it be possibly the solution to major working capital needs if your business is growing and can’t be financed traditionally – we certainly think so? Speak to a trusted, credible and experienced purchase order finance expert to explore your options.
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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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:
http://www.7parkavenuefinancial.com/purchase_order_financing_trade_finance.html
Purchase order financing is a great tool for firms that have unusual purchase order and contract sales financing needs but are potentially unable to access traditional financing via banks or their own capital resources within their firm. How does trade finance P O financing work, does your firm qualify, what are the costs, and how does it work? Great questions, now let’s explore some answers!
Typically Canadian firms looking for this type of financing are distributors, manufacturers, or perhaps wholesalers. A variety of industries in Canada have access to this type of financing, but those certainly tend to be the typical firms needing assistance.
Your need for purchase order financing arises out of what we call the classic working capital gap. What do we mean by that? It’s a case of your suppliers requiring payment either up front or within 30 days, with your firm unable to generate those funds for payment and therefore unable to fill large purchase order and contracts in your favor . Your supplier is asking your for payment in advance or 30 days, and you wont receive payment for at least 60-90 days, perhaps more depending on your build cycle, etc.
Naturally you don’t want to turn down orders or lose competitive market position.
The obvious solution for low cost large amounts of funds are Canadian chartered banks, but our observation is that many firms simply cant satisfy the banks requirements for this type of financing to occur. If your firm is growing, profitable, has a clean balance sheet and strong historical cash flows and history you of course have a solid chance of meeting bank requirements, however that typically is not the case, certainly in the amount of clients we talk to who are looking for alternatives to their growth challenge !
When you access p o financing you can have comfort that your suppliers will be paid, and at the same time you generally have access to all the funds you need. Typical purchase order financing applications take anywhere from 2-4 weeks to complete and involve basic financial due diligence on your firms ability to fulfill the order, who your customer is (they must be credit worthy), and your proper supplier sources must be identified and vetted. It’s as simple as that.
So what are the basic pre requisites for a solid P.O. Financing deal? Naturally your company must be in possession of a contract or order that is not cancelable by your client. The P O finance firm arranges to pay your suppliers directly, that alleviates all you cash flow and working capital concerns. The transaction is completed when you ship the goods and your receivables are generated on the sale. It is at this time the purchase order finance firm expects to be paid, and this is traditionally handled by your firms monetizing of its receivable via a bank or factoring facility. Factoring facilities are great partners to the P O financing strategy, because use of them guarantees payment to your P O firm.
Let’s cover off a couple tips and secrets around the cost of purchase order financing – It generally is in the 2-3% per month range in Canada, and that means you have to have solid gross profit margins in order to be able to sustain the finance charges. But let’s be honest, let’s say your firm has been doing 750k of revenue for the last couple years and you finally get the large order from a major customer for 1 Million dollars. Wouldn’t you give up 2-3 % of your profit margin in order to make one sale which is the equivalent of your entire year’s business? We think you should positively consider that! Clearly the higher cost of this type of financing covers off the complexity and risk that the P O finance firm takes in paying for goods , waiting to get paid, and having the belief that your firm will fulfill the contract order .
It has been our observation with certain clients that your successful completion of a purchase order finance deal typically significantly enhances your relationship with your major suppliers and of course customers, that’s a secret benefit that is intangible but invaluable at the same time.
Is P O financing for everyone. Maybe not. Could it be possibly the solution to major working capital needs if your business is growing and can’t be financed traditionally – we certainly think so? Speak to a trusted, credible and experienced purchase order finance expert to explore your options.
--------------
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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:
http://www.7parkavenuefinancial.com/purchase_order_financing_trade_finance.html
Sunday, September 19, 2010
Film Tax Credits Canada – Creative Finance That Is Real And Works!
If your production in film, television or digital animation requires financing then Film Tax Credits in Canada are solid ways to augment your overall finance plan. In order to finance your credits your tax credit certificates must of course qualify for Canadian content in the appropriate categories and must satisfy the rules set out by Ottawa and your province relative to personnel and production costs.
In the last couple years the government has made a commendable effort to streamline the application processes for film tax credits and we must remind readers that these credits apply equally to the television and digital animation areas.
In the digital animation areas you might also be eligible for SR&ED credits under what is known as the Scientific Research and Experimental Development program. This is without a doubt Canada’s largest program for tax credits, far surpassing the film, TV and animation area
Financing of productions can be very traditional or very creative, but without a doubt tax credits can play a key role in either total finance strategy. Typically productions are financed in the following manner: Non studio producers, i.e. the independents arrange distribution and pre sales of the project. Typically you are entering into an agreement to give the other party the rights to display your production via TV, DVD, etc in that particular geography. Many pre sales budgets we have seen show a best case and worst case pre sales scenario. The pre-sale financing are, in effect, promissory notes to your special purpose entity for this production. The next financing challenge is to ‘finance’ those promises to pay for a number of different finance entities, including banks, specialized firm finance firms in Canada, etc. In Canada 2 or 3 of the nations banks are somewhat actively involved in this area – while others shun the industry as too high risk for traditional lending.
You of course are also required to post a completion bond covering cost over runs and the ultimate completion of your project.
Film tax credit financing is one of the final elements of your overall finance strategy. Your tax credit is, in Canada, in essence a government subsidy, so why shouldn’t you take advantage of it. Tax credits finance a very large part of what is known in the industry as the ‘below the line ‘budget. These are, in effect, your actual production expenses.
You therefore must ensure your production qualifies for the right expenses, and typically those are validated by an accountant or firm with entertainment accounting experience. By utilizing a Canadian actor component , as well as technicians and other resources you have set your project up to both qualify for the tax credits, and, then more specifically to cash flow or sell these credits .
In order to finance your credits you should have an overall finance plan, and a strategy for the equity and debt components of your production. Validate your budgets and ensure your productions have the required ‘points’ in order to qualify. Film tax credits can be financed on filing, or, more popularly, as you spend funds, which are then re imbursed via the tax credit financing.
Speak to a trusted, credible, and experienced film tax consultant around your ability to maximize and capitalize on this critical strategy within ‘Hollywood North’, aka Canada!
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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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:
http://www.7parkavenuefinancial.com/FILM_TAX_CREDITS_CANADA_FILM_TAX_CREDITS.htm
In the last couple years the government has made a commendable effort to streamline the application processes for film tax credits and we must remind readers that these credits apply equally to the television and digital animation areas.
In the digital animation areas you might also be eligible for SR&ED credits under what is known as the Scientific Research and Experimental Development program. This is without a doubt Canada’s largest program for tax credits, far surpassing the film, TV and animation area
Financing of productions can be very traditional or very creative, but without a doubt tax credits can play a key role in either total finance strategy. Typically productions are financed in the following manner: Non studio producers, i.e. the independents arrange distribution and pre sales of the project. Typically you are entering into an agreement to give the other party the rights to display your production via TV, DVD, etc in that particular geography. Many pre sales budgets we have seen show a best case and worst case pre sales scenario. The pre-sale financing are, in effect, promissory notes to your special purpose entity for this production. The next financing challenge is to ‘finance’ those promises to pay for a number of different finance entities, including banks, specialized firm finance firms in Canada, etc. In Canada 2 or 3 of the nations banks are somewhat actively involved in this area – while others shun the industry as too high risk for traditional lending.
You of course are also required to post a completion bond covering cost over runs and the ultimate completion of your project.
Film tax credit financing is one of the final elements of your overall finance strategy. Your tax credit is, in Canada, in essence a government subsidy, so why shouldn’t you take advantage of it. Tax credits finance a very large part of what is known in the industry as the ‘below the line ‘budget. These are, in effect, your actual production expenses.
You therefore must ensure your production qualifies for the right expenses, and typically those are validated by an accountant or firm with entertainment accounting experience. By utilizing a Canadian actor component , as well as technicians and other resources you have set your project up to both qualify for the tax credits, and, then more specifically to cash flow or sell these credits .
In order to finance your credits you should have an overall finance plan, and a strategy for the equity and debt components of your production. Validate your budgets and ensure your productions have the required ‘points’ in order to qualify. Film tax credits can be financed on filing, or, more popularly, as you spend funds, which are then re imbursed via the tax credit financing.
Speak to a trusted, credible, and experienced film tax consultant around your ability to maximize and capitalize on this critical strategy within ‘Hollywood North’, aka Canada!
--
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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:
http://www.7parkavenuefinancial.com/FILM_TAX_CREDITS_CANADA_FILM_TAX_CREDITS.htm
Saturday, September 18, 2010
What If Your SR &ED Research Tax Credit Grant Could be Financed For Funding Today via a SRED Loan?
If your company is filing what is known as Scientific Research and Experimental Development Tax Credits, (SR & ED) your firm has expended significant funds on developing or improving products, processes, etc. Receiving that cheque from Ottawa is of course always a great thing, but why waits?
One of the smartest things you can do is to consider the financing of your claim – that can be done via a short term sred loan – we could almost call it a bridge financing loan for your sr&Ed claim. Why is that a good strategy? Well , one main reason might be that since the tax credit is in the form of a non repayable grant then receiving funding for it today , ( rather than several months or a year from now ) allow you to put that money back to work into your business . That valuable cash, which you have already spent, can be re directed to general working capital, further re investment in r&d, reduction of payables, investments in new equipment, well you get it, for an general worthwhile corporate purpose .
To finance your claim it only makes sense that, first of all, you are eligible, and that you have in fact filed the claim. Your claim is of course filed by yourself and your accountants at your fiscal year end, via policies developed by Canada Revenue. Each province might have a little different spin on the amount you can claim but the federal portion of the claim always stays the same.
When financing a SR and ED claim the lender pays careful attention to who prepared the claim for your firm. This is typically via what the industry calls a SRED consultant, who typically has expertise in one or a variety of industries, including such areas as computer science, technology, physics, chemistry, manufacturing, etc.
SR ED claims can be financed whether your claim is a first time claim, but the process often goes quicker and easier if you have filed successfully in the past. Our point is simply that you should not be deterred if in fact you are filing for the first time – however as a cautionary note you should note that more focus will probably be paid to the overall quality of the claim and who prepared it for your firm. You can actually claim for a 2 year period, i.e. your current year and the previous fiscal year.
Clearly most business owners and financial mangers who utilize the program recognize the tremendous benefit of increasing your overall return on R&D by filing a claim and recapturing your funds. And if you can utilize those funds sooner rather than later, why not consider financing, or in effect monetizing the claim.
Financing your SR and ED claim can of course assist in your overall cash flow and working capital position. Claims are generally financed at 70% of their filed value, that allows a 30% buffer in case adjustments are made to the claim , and , guess what, you make no payments on the sr ed loan . Funds you receive are netted out against the final cheque from Ottawa and your provincial jurisdiction when your claim is ultimately audited, approved, and funded.
Clients often ask how complex a sred loan is, and what the timing is to receive funds. With your full co operation funding can usually be done within a couple weeks of your application, and the reality is the sred funding is no different than any other business financing your might entertain. It’s that simply, you complete a standard business application, and at the same time provide details of your sr Ed claim which in effect is the collateral for the financing. You aren’t incurring debt, which is a relief to business owners; you are simply ‘monetizing ‘your asset, in the same manner as you would if you were financing a receivable .
Speak to a trusted, credible, and experienced advisor in sred loans, and determine the advantages of monetizing your sred claim into valuable cash flow and working capital. That’s solid use of one of Canada’s greatest programmes for industries of all type.
---
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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:
http://www.7parkavenuefinancial.com/sr_ed_research_tax_credit_sred_loan_sr_ed_loan.html
One of the smartest things you can do is to consider the financing of your claim – that can be done via a short term sred loan – we could almost call it a bridge financing loan for your sr&Ed claim. Why is that a good strategy? Well , one main reason might be that since the tax credit is in the form of a non repayable grant then receiving funding for it today , ( rather than several months or a year from now ) allow you to put that money back to work into your business . That valuable cash, which you have already spent, can be re directed to general working capital, further re investment in r&d, reduction of payables, investments in new equipment, well you get it, for an general worthwhile corporate purpose .
To finance your claim it only makes sense that, first of all, you are eligible, and that you have in fact filed the claim. Your claim is of course filed by yourself and your accountants at your fiscal year end, via policies developed by Canada Revenue. Each province might have a little different spin on the amount you can claim but the federal portion of the claim always stays the same.
When financing a SR and ED claim the lender pays careful attention to who prepared the claim for your firm. This is typically via what the industry calls a SRED consultant, who typically has expertise in one or a variety of industries, including such areas as computer science, technology, physics, chemistry, manufacturing, etc.
SR ED claims can be financed whether your claim is a first time claim, but the process often goes quicker and easier if you have filed successfully in the past. Our point is simply that you should not be deterred if in fact you are filing for the first time – however as a cautionary note you should note that more focus will probably be paid to the overall quality of the claim and who prepared it for your firm. You can actually claim for a 2 year period, i.e. your current year and the previous fiscal year.
Clearly most business owners and financial mangers who utilize the program recognize the tremendous benefit of increasing your overall return on R&D by filing a claim and recapturing your funds. And if you can utilize those funds sooner rather than later, why not consider financing, or in effect monetizing the claim.
Financing your SR and ED claim can of course assist in your overall cash flow and working capital position. Claims are generally financed at 70% of their filed value, that allows a 30% buffer in case adjustments are made to the claim , and , guess what, you make no payments on the sr ed loan . Funds you receive are netted out against the final cheque from Ottawa and your provincial jurisdiction when your claim is ultimately audited, approved, and funded.
Clients often ask how complex a sred loan is, and what the timing is to receive funds. With your full co operation funding can usually be done within a couple weeks of your application, and the reality is the sred funding is no different than any other business financing your might entertain. It’s that simply, you complete a standard business application, and at the same time provide details of your sr Ed claim which in effect is the collateral for the financing. You aren’t incurring debt, which is a relief to business owners; you are simply ‘monetizing ‘your asset, in the same manner as you would if you were financing a receivable .
Speak to a trusted, credible, and experienced advisor in sred loans, and determine the advantages of monetizing your sred claim into valuable cash flow and working capital. That’s solid use of one of Canada’s greatest programmes for industries of all type.
---
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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:
http://www.7parkavenuefinancial.com/sr_ed_research_tax_credit_sred_loan_sr_ed_loan.html
Friday, September 17, 2010
What You Need To Know About Franchise Financing In Canada
Franchise financing in Canada has to work for you as the franchisee as well as your franchisor and of course your lender(s). How do you access franchise finance after you have made the critical decision to purchase a new or existing franchise – in many cases you may be fighting timelines and need to ensure that you have access to all the proper information about financing your business , and , more importantly, ensuring you have put together the best franchise financing package . Let’s examine some of those issues.
Financing is available for pretty well very type of franchise in Canada , and most people are very surprised to hear that franchising as a whole in Canada accounts for close to half of all our retail sales – that’s a staggering figure, so franchisors must be doing something right !
We are all probably keenly aware that many franchisors in Canada are in fact branch organizations of U.S. based systems. That is ok as long as your franchisor has an acceptable and successful franchise model. Financing for your Canadian purchase should not be affected by a U.S. ownership of your franchise system.
There are a couple of major questions that, if clarified early on in the process, will allow you to finance your new business in a successful manner. One of those key questions is whether your franchisor has a program in place that they either self fund, or perhaps work in partnership with a Canadian financier such a bank. However, in our experience we caution clients not to rely or think they will receive a huge amount of assistance, particularly financial, in setting up their business. There is one clear reason for that, the franchisor is in the business of selling franchises and using your funds to build the next one – that’s how it works, and there is of course nothing wrong with that.
What the franchisor can in fact do though is to give you guidelines around how their franchisees have been financed in the past, and provide you with sample breakdowns of financing needs. Financing needs for a franchise come in a couple concise categories – they include the franchise financing fee itself, equipment and leaseholds that may be required to open the business, and of course on going working capital .
On going working capital is a key point, imagine the disappointment or stress of financing a franchise for purchase and then slowly discovering you don’t have enough working capital to fund receivables, inventory, growth, equipment and expansion needs, etc .
Clients are always asking if financing a franchise in Canada is different from financing any other business. The answer won’t be one of your favorites – the answer is yes and no! Any business, franchise or not, requires a finance plan to purchase the business, a business plan to map out costs and growth, and ongoing working capital financing. In that manner franchise finance is similar to starting any business. Where it differs is that there are a limited number of ways in which a franchise is financed in Canada. It may surprise most entrepreneurs that banks and other lending institutions and firms view the industry fairly positively – we think that’s because there is strength in a proven business model, resaleability, and the branding that comes with your purchase.
Financing your business purchase has to be a carefully followed roadmap. In Canada the majority of franchises are financed by a special program called the CSBF program, which in fact is a program supported by the government and administered by the banks. As an owner you have to put some of your own equity into the business. The key challenge is whats the right balances for that amount – you don’t want to borrow too much, and conversely you may or may not have a huge amount of equity to put into your purchase of a new or existing franchise. We say existing franchise because it is perfectly acceptable to purchase a business, and finance it, from an existing franchisee. In some cases the financing is actually easier because there are financial statements and a finance history to the business already, as well as possible existing assets to the business.
In order to finance your franchise you require a breakdown of the different asset categories – as well as a business plan that shows cash flows and projected profits. As a business owner you should have some experience or skills related to your purchase, and we already have mentioned that fact that you must put a ‘reasonable ‘down payment into the business from your own funds. Business owners with spotty personal credit histories have a larger challenge in getting financed, as there is an emphasis on how you have run your affairs in the past.
In summary, focus on getting the right franchise that suits your skills and risk tolerance. Understand your finance plan as it relates to the purchase and ongoing needs of your business. Speak to an experienced, credible, and trusted franchise financing expert to ensure you can successfully complete your acquisition and commence your entrepreneurship journey!
--
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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:
http://www.7parkavenuefinancial.com/franchise_financing_in_canada_today.html
Financing is available for pretty well very type of franchise in Canada , and most people are very surprised to hear that franchising as a whole in Canada accounts for close to half of all our retail sales – that’s a staggering figure, so franchisors must be doing something right !
We are all probably keenly aware that many franchisors in Canada are in fact branch organizations of U.S. based systems. That is ok as long as your franchisor has an acceptable and successful franchise model. Financing for your Canadian purchase should not be affected by a U.S. ownership of your franchise system.
There are a couple of major questions that, if clarified early on in the process, will allow you to finance your new business in a successful manner. One of those key questions is whether your franchisor has a program in place that they either self fund, or perhaps work in partnership with a Canadian financier such a bank. However, in our experience we caution clients not to rely or think they will receive a huge amount of assistance, particularly financial, in setting up their business. There is one clear reason for that, the franchisor is in the business of selling franchises and using your funds to build the next one – that’s how it works, and there is of course nothing wrong with that.
What the franchisor can in fact do though is to give you guidelines around how their franchisees have been financed in the past, and provide you with sample breakdowns of financing needs. Financing needs for a franchise come in a couple concise categories – they include the franchise financing fee itself, equipment and leaseholds that may be required to open the business, and of course on going working capital .
On going working capital is a key point, imagine the disappointment or stress of financing a franchise for purchase and then slowly discovering you don’t have enough working capital to fund receivables, inventory, growth, equipment and expansion needs, etc .
Clients are always asking if financing a franchise in Canada is different from financing any other business. The answer won’t be one of your favorites – the answer is yes and no! Any business, franchise or not, requires a finance plan to purchase the business, a business plan to map out costs and growth, and ongoing working capital financing. In that manner franchise finance is similar to starting any business. Where it differs is that there are a limited number of ways in which a franchise is financed in Canada. It may surprise most entrepreneurs that banks and other lending institutions and firms view the industry fairly positively – we think that’s because there is strength in a proven business model, resaleability, and the branding that comes with your purchase.
Financing your business purchase has to be a carefully followed roadmap. In Canada the majority of franchises are financed by a special program called the CSBF program, which in fact is a program supported by the government and administered by the banks. As an owner you have to put some of your own equity into the business. The key challenge is whats the right balances for that amount – you don’t want to borrow too much, and conversely you may or may not have a huge amount of equity to put into your purchase of a new or existing franchise. We say existing franchise because it is perfectly acceptable to purchase a business, and finance it, from an existing franchisee. In some cases the financing is actually easier because there are financial statements and a finance history to the business already, as well as possible existing assets to the business.
In order to finance your franchise you require a breakdown of the different asset categories – as well as a business plan that shows cash flows and projected profits. As a business owner you should have some experience or skills related to your purchase, and we already have mentioned that fact that you must put a ‘reasonable ‘down payment into the business from your own funds. Business owners with spotty personal credit histories have a larger challenge in getting financed, as there is an emphasis on how you have run your affairs in the past.
In summary, focus on getting the right franchise that suits your skills and risk tolerance. Understand your finance plan as it relates to the purchase and ongoing needs of your business. Speak to an experienced, credible, and trusted franchise financing expert to ensure you can successfully complete your acquisition and commence your entrepreneurship journey!
--
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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:
http://www.7parkavenuefinancial.com/franchise_financing_in_canada_today.html
Thursday, September 16, 2010
What If ABL Was Your Secret Weapon in Business Financing in Canada?
Do you believe there is a business financing tool that works perfectly when other forms of financing, traditional or otherwise will not? Is there a secret acronym for this tool? Yes, there is, it is ABL.
You know the next questions clients ask, what is ABL?! It stands for asset based lending, and it is something that just might be your best choice for financing your business in Canada.What if you have a financing mechanism that was a non bank type financing that covered all every size of business, all industries in Canada, and did not place a major emphasis on your balance sheet, income statement, profits or lack thereof! And was, relatively speaking easy to arrange.
We can hear you lining up as we speak! Let’s talk a bit about what this financing is, how it works, and cover off some key questions that clients have about costs, day to day paper flow and reporting, and the key advantages. If there is a ' downside ' to this financing we will cover off a couple of those concerns also, and we'll let you make up your own mind.So what is ABL, or asset based lending. It simply allows you to borrow, on a regular, ongoing basis, against; you guess it, ' assets '! Your assets in any business are always going to be the same and they can be categorized into a few key categories which include receivables, inventory, equipment, and, in some cases real estate.
When you are in a traditional Canadian chartered banking relationship your lender lends against those same assets, but probably not to the extent that a true asset based line of credit would provide you with. And the pre requisites for that banking facility are all two clear for Canadian business owners and financial managers - they include profitability, solid balance sheets, profits, personal guarantees of owners, and potentially external collateral. That’s now what ABL is about, it’s about only your assets, and monetizing them in a fashion that makes them as liquid as you need them to be.
A typical asset based revolving line of credit would margin all your receivables, a significant extent of your inventory, and include drawdown ability on unencumbered equipment and real estate if they in fact were available and required. You therefore only have to remember one thing in ABL lending, ' assets ' - if you have them they can be financing.
Clients always want to know if and how they qualify for such a facility. You must be in a position to provide some decent reporting around the aging of your receivables, the turnover of your inventory, and the market value of your equipment. We would respectfully suggest if you can’t do that you might not even be a candidate for staying in business, so those certainly aren’t onerous requirements.
Business that are the best candidate for this type of financing are those with high growth patterns, or firms which are coming out of a challenging period in their history . A frequent misunderstanding around this type of financing is that it is ' debt ‘. That is not the case. It is simply the monetizing and cash flowing of assets, which are accelerated by your borrowing ability and your management ability to create a further turnover, and hopefully profit around those assets.
A perfect world rarely exists in business financing - but ABL could be your solution. The two disadvantages, or potential concerns are the higher cost of this financing, as well as the additional reporting we spoke about.
Looking for a secret business financing weapon or tool to stay ahead of the competition? It just might be ABL, or asset based financing - Speak to a trusted, credible and experienced advisor in this area who can help you gain the competitive financing edge you are looking for.
You know the next questions clients ask, what is ABL?! It stands for asset based lending, and it is something that just might be your best choice for financing your business in Canada.What if you have a financing mechanism that was a non bank type financing that covered all every size of business, all industries in Canada, and did not place a major emphasis on your balance sheet, income statement, profits or lack thereof! And was, relatively speaking easy to arrange.
We can hear you lining up as we speak! Let’s talk a bit about what this financing is, how it works, and cover off some key questions that clients have about costs, day to day paper flow and reporting, and the key advantages. If there is a ' downside ' to this financing we will cover off a couple of those concerns also, and we'll let you make up your own mind.So what is ABL, or asset based lending. It simply allows you to borrow, on a regular, ongoing basis, against; you guess it, ' assets '! Your assets in any business are always going to be the same and they can be categorized into a few key categories which include receivables, inventory, equipment, and, in some cases real estate.
When you are in a traditional Canadian chartered banking relationship your lender lends against those same assets, but probably not to the extent that a true asset based line of credit would provide you with. And the pre requisites for that banking facility are all two clear for Canadian business owners and financial managers - they include profitability, solid balance sheets, profits, personal guarantees of owners, and potentially external collateral. That’s now what ABL is about, it’s about only your assets, and monetizing them in a fashion that makes them as liquid as you need them to be.
A typical asset based revolving line of credit would margin all your receivables, a significant extent of your inventory, and include drawdown ability on unencumbered equipment and real estate if they in fact were available and required. You therefore only have to remember one thing in ABL lending, ' assets ' - if you have them they can be financing.
Clients always want to know if and how they qualify for such a facility. You must be in a position to provide some decent reporting around the aging of your receivables, the turnover of your inventory, and the market value of your equipment. We would respectfully suggest if you can’t do that you might not even be a candidate for staying in business, so those certainly aren’t onerous requirements.
Business that are the best candidate for this type of financing are those with high growth patterns, or firms which are coming out of a challenging period in their history . A frequent misunderstanding around this type of financing is that it is ' debt ‘. That is not the case. It is simply the monetizing and cash flowing of assets, which are accelerated by your borrowing ability and your management ability to create a further turnover, and hopefully profit around those assets.
A perfect world rarely exists in business financing - but ABL could be your solution. The two disadvantages, or potential concerns are the higher cost of this financing, as well as the additional reporting we spoke about.
Looking for a secret business financing weapon or tool to stay ahead of the competition? It just might be ABL, or asset based financing - Speak to a trusted, credible and experienced advisor in this area who can help you gain the competitive financing edge you are looking for.
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