Asset based lending companies have come a long way baby! Seriously though, business funding has dramatically changed in Canada - it was always a challenge - 2008 Global implosion happened, and guess what, business financing is more challenging than ever. Every Canadian business owner and financial manager for companies of all size and industry knows that.
We're all heard that when the going gets tough the tough get ... well you know what we mean. So business financing via asset based lending was slowly becoming more popular in Canada (It’s huge in the United States) and has become, can we say ' ultra popular' in our current time.
Asset based lending as new as it is in Canada certainly can't really be called ' innovative '- it simply focuses on, guess what ' assets '! It is essentially a great financing solution for companies that are normal, distressed, leveraged, experiencing high growth, etc.
The problem we have with the term asset based lending or asset based finance is simply that it is a bit of a catch all when it comes to being used or explained to business owners. We define this type of business funding as revolving lines of credit based on asset quality, receivable discounting, inventory and trade financing, which sometimes can actually include purchase orders or contracts.
The reality is that this type of financing can be customized to every industry for companies of all size, although typically we tell clients that the facility works best on transactions of 250k+.
Asset based lending companies can help you manage and grow your business, with the focus on ' grow’,
The biggest mis understanding around asset based lending is that typically it is not done via a bank; it is managed through private independent finance firms that are very experienced in asset valuation and funding. Their experience allows them to take a look at your financeable assets and maximize what is known as an ongoing ' borrowing base' for those assets. Typically we are talking about receivables, inventory, equipment, and as we noted, in some cases purchase orders and contracts.
The benefits of working with asset based lending companies are that it is a fast, innovative method of financing your company that is not focused around the requirements that a Canadian chartered bank would typically impose. We can honestly tell clients we have never seen an asset based line of credit not deliver on significantly more financing that the customer would have ever achieved with a bank revolver.
So what’s the bottom line - simply that by investigating this method of business funding you potentially have the ability to enhance your overall business financing for growth and success. Speak to a trusted, credible and experienced business financing advisor who can put you on track to better business financing! That’s a good thing.
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
Thursday, October 14, 2010
Wednesday, October 13, 2010
Working Capital Financing Ideas You Hadn’t Even Thought Of !
An old article in Canadian Business caught our eye as it focused on Canadian business financing and was entitled ' Beyond the Banks ‘. With all due respect to the good folks at Canadian Business Magazine we have some strong comments and additional info on the 15 (yes, that's 15!) suggestions they had on business financing in Canada. Working capital financing and business financing in Canada is always a challenge; today it’s more challenging than ever.
Let's cover off some of the business financing info that was shared and hopefully we can provide you with an update and some insightful comments into what is working and what is not from a business financing perspective . We'll focus in this article on the first 7 of the 15 business financing scenarios referenced in the Canadian Business article.
Angel Financing - We have rarely met clients who have successfully arranged angel financing - at the end of the day this is simply equity and ownership dilution and is often solely focused on high growth scenarios, which may or may not include your firm . The concept of another owner or board member within your company may not be palatable.
The article spoke of ABL - asset based lending - we firmly believe this is one of the best ways in which to achieve unlimited working capital Vis a Vis your growth prospects. Investigate asset based lines of credit, they are viable and they work.
Bridge Financing was also touched on as a working capital solution and it referenced ' premiums' rates and seemed to infer that you only used bridge financing when you are in distress or hyper growth. Again we disagree as a bridge financing solution has proven very successful for many of our clients who are start up in nature or who have significant projects that require a short term injection of temporary working capital.
The Canadian Business article also referred to the governments Crown corporation bank as a solution provide of innovative lending programs. Actually these programs essentially boil down into working capital term loans at fixed rates and Equipment financing.
The magazine also referred to buy out funds, and referenced a global investment in 2004 of 25 Billion. That is little consolation for small and medium sized firms in Canada who require business financing often available only to ' the big boys' via private equity and buyout funds. This really is, in our opinion, a small sector of the market and very UN - apropos from most of Canadian business.
We heartily agree with the magazine when they referenced the Canada Small Business Financing program - the acronyms for this program vary, and they include BIL, CSBF, and ' SBL ‘. We believe strongly, and are always advising clients, that this is by far the best program for business financing of assets and real estate and property in Canada. Investigate this program, take advantage of it if you can, it does not get any better!
The final reference in the magazine that we will cover off and comment on is the concept of 'Factoring '. Virtually unheard of some year ago it is fast becoming the hottest method of financing working capital in Canada. Complexity in this form of financing comes in the form of how it works, what it costs, and selecting the right partner firm that matches your overall needs.
We strongly believe that the majority of firms in Canada currently don’t have a handle of their business financing options. We can of course forgive business owners and financial managers as they are caught up in the day to day running of their businesses and the financial challenges that come with that.
When addressing working capital challenges look for options that will help you speed up asset conversion - speak to a trusted, credible and experienced business financing advisor who will steer you down the right road to business financing success.
Let's cover off some of the business financing info that was shared and hopefully we can provide you with an update and some insightful comments into what is working and what is not from a business financing perspective . We'll focus in this article on the first 7 of the 15 business financing scenarios referenced in the Canadian Business article.
Angel Financing - We have rarely met clients who have successfully arranged angel financing - at the end of the day this is simply equity and ownership dilution and is often solely focused on high growth scenarios, which may or may not include your firm . The concept of another owner or board member within your company may not be palatable.
The article spoke of ABL - asset based lending - we firmly believe this is one of the best ways in which to achieve unlimited working capital Vis a Vis your growth prospects. Investigate asset based lines of credit, they are viable and they work.
Bridge Financing was also touched on as a working capital solution and it referenced ' premiums' rates and seemed to infer that you only used bridge financing when you are in distress or hyper growth. Again we disagree as a bridge financing solution has proven very successful for many of our clients who are start up in nature or who have significant projects that require a short term injection of temporary working capital.
The Canadian Business article also referred to the governments Crown corporation bank as a solution provide of innovative lending programs. Actually these programs essentially boil down into working capital term loans at fixed rates and Equipment financing.
The magazine also referred to buy out funds, and referenced a global investment in 2004 of 25 Billion. That is little consolation for small and medium sized firms in Canada who require business financing often available only to ' the big boys' via private equity and buyout funds. This really is, in our opinion, a small sector of the market and very UN - apropos from most of Canadian business.
We heartily agree with the magazine when they referenced the Canada Small Business Financing program - the acronyms for this program vary, and they include BIL, CSBF, and ' SBL ‘. We believe strongly, and are always advising clients, that this is by far the best program for business financing of assets and real estate and property in Canada. Investigate this program, take advantage of it if you can, it does not get any better!
The final reference in the magazine that we will cover off and comment on is the concept of 'Factoring '. Virtually unheard of some year ago it is fast becoming the hottest method of financing working capital in Canada. Complexity in this form of financing comes in the form of how it works, what it costs, and selecting the right partner firm that matches your overall needs.
We strongly believe that the majority of firms in Canada currently don’t have a handle of their business financing options. We can of course forgive business owners and financial managers as they are caught up in the day to day running of their businesses and the financial challenges that come with that.
When addressing working capital challenges look for options that will help you speed up asset conversion - speak to a trusted, credible and experienced business financing advisor who will steer you down the right road to business financing success.
Tuesday, October 12, 2010
Top 4 Most Overlooked Benefits of leasing of equipment as a Business Finance Strategy
Most Canadian owners and business managers wouldn’t think of always paying cash for equipment and other capital acquisition needs. They also can’t imagine, in the current economic climate, paying cash for everything. Whether you are in an industry that is highly capital intensive, or if you simply on occasion need to upgrade or purchase new equipment the leasing of equipment should be considered as an effective overall financing strategy for your company
Naturally no form of business financing in Canada could be considered perfect and meet absolutely every one of your needs, but let’s examine what are considered to be normally the top four benefits of equipment leasing. Naturally you want to ensure you are dealing with the right type of lease firm and you have also carefully examined your rights and obligations under the business lease.
Anyway, benefit 1. Flexibility. The reality is that working with the right lease partner firm should provide you with the flexibility you want in your transaction. Flexibility is of course a broad term, but we are basically referring to the type of lease that works best - for your firm! Not everyone else’s. That flexibility comes in the form of low or no down payment, monthly payment structuring options ( here are possibilities abound!) , balance sheet optics around the amount of debt you can carry without getting your bank offside . Flexibility also comes in the form of the ability to return the equipment or extend the lease for a pre agreed period of time.
Benefit # 2 might well be called Cost efficient. The last thing you want to be doing is getting your firm locked into a long term lease on a depreciating asset - and the reason you lease financed the equipment in the first place is that you as a Canadian business owner and financial manager recognize that the equipment ultimately will probably have no value after its economic life is completed.
If the business world was slow moving and predicable you would never have to worry about competition, changing technology, etc- however things don’t work that way and as your needs change over time you can using equipment financing as the tool to address those needs .
Benefit 3- Tax benefits! We hate getting into long accounting and financial statement dissertations when we are lease financing info with clients, but the reality is that leasing of equipment as a business finance strategy has accounting and tax benefits re write off strategies around your payments .
Our final focused major benefit is simply Cash flow conservation. It's tough enough in today’s business environment to achieve positive working capital and cash flow for daily and long term needs. Utilizing lease financing as a tool to minimize cash outlay and reduced down payment requirements makes total sense. Choosing an off balance sheet operating lease strategy will also ensure your ratios and debt covenants stay intact.
In summary, as we stated, no overall business financing strategy works perfectly for all companies in all industries. But leasing of equipment has significant benefits that clearly outweigh other options such as purchasing for cash, entering into long term loans, etc.
Speak to a trusted, credible and experienced lease financing advisor to ensure you can take advantages of the 4 key benefits we outlined.
Naturally no form of business financing in Canada could be considered perfect and meet absolutely every one of your needs, but let’s examine what are considered to be normally the top four benefits of equipment leasing. Naturally you want to ensure you are dealing with the right type of lease firm and you have also carefully examined your rights and obligations under the business lease.
Anyway, benefit 1. Flexibility. The reality is that working with the right lease partner firm should provide you with the flexibility you want in your transaction. Flexibility is of course a broad term, but we are basically referring to the type of lease that works best - for your firm! Not everyone else’s. That flexibility comes in the form of low or no down payment, monthly payment structuring options ( here are possibilities abound!) , balance sheet optics around the amount of debt you can carry without getting your bank offside . Flexibility also comes in the form of the ability to return the equipment or extend the lease for a pre agreed period of time.
Benefit # 2 might well be called Cost efficient. The last thing you want to be doing is getting your firm locked into a long term lease on a depreciating asset - and the reason you lease financed the equipment in the first place is that you as a Canadian business owner and financial manager recognize that the equipment ultimately will probably have no value after its economic life is completed.
If the business world was slow moving and predicable you would never have to worry about competition, changing technology, etc- however things don’t work that way and as your needs change over time you can using equipment financing as the tool to address those needs .
Benefit 3- Tax benefits! We hate getting into long accounting and financial statement dissertations when we are lease financing info with clients, but the reality is that leasing of equipment as a business finance strategy has accounting and tax benefits re write off strategies around your payments .
Our final focused major benefit is simply Cash flow conservation. It's tough enough in today’s business environment to achieve positive working capital and cash flow for daily and long term needs. Utilizing lease financing as a tool to minimize cash outlay and reduced down payment requirements makes total sense. Choosing an off balance sheet operating lease strategy will also ensure your ratios and debt covenants stay intact.
In summary, as we stated, no overall business financing strategy works perfectly for all companies in all industries. But leasing of equipment has significant benefits that clearly outweigh other options such as purchasing for cash, entering into long term loans, etc.
Speak to a trusted, credible and experienced lease financing advisor to ensure you can take advantages of the 4 key benefits we outlined.
Monday, October 11, 2010
What is the Factor Cost Of Factoring Accounts Receivable?
Canadian business owners and financials managers who are considering financing accounts receivable often ask us how they can calculate , or moreso, understand the factor cost of factoring accounts receivable .
There are a whole bunch of factors ( excuse the pun ) that seem to be coming together to make the financing of accounts receivable a high growth , popular, and accepted method of business financing in Canada . The reality is that even just a few years ago most business owners did not even realize that they could sell their accounts receivable to a private non bank firm, gaining valuable working capital, i.e. cash flow! in the process .
Business is being driven to this method of Canadian business financing out of a very basic need - meet payrolls, make fixed term obligations, and purchase products and services. And when your customers make you wait, 30, 60, and unfortunately 90 days for your funds all of a sudden factoring, also known as invoice discounting and receivable financing becomes very popular. Not hard to understand.
Business owners want to know more about factoring and receivable financing simply because they recognize that cash flow challenges hinder them from growing, and yes, even surviving. And, we are sorry to say, many clients simply can’t get the bank financing they need to fund and grow their business - that isn't necessarily a condemnation of Canadian chartered banks, it’s a case of individual financing challenges within the current credit crunch and global economic challenges.
So, let’s cover off what you need and want to know about factor cost and the true way in which you should be looking at the pricing around factoring accounts receivable in Canada.
There are three; lets call them ' drivers ' in the pricing process of financing your receivables. Those three drivers are the time in which it takes for your invoice to be paid, and we mean right down to the day. Secondly the factor firm calls their pricing a ' discount ' - so the actual discount rate they quote you becomes critical in your knowledge of understanding your true cost of financing A/R. And finally, to keep things simple we often explain to clients in initial discussion that they receive immediate cash for their receivables once they finance them, i.e. same day cash.
However the reality is that the industry advances a (significant) portion of your receivable le, the rest is a hold back. Typically this portion is 90%, but many firms calculate total financing not just on the holdback but the invoice amount.
When do I get the holdback? Ask clients. The answer is that they receive the holdback as soon as the actual invoice is paid.
We thing its clear that the discount rate, of the three key drivers we have mentioned is the most focused on by clients. Because the commercial receivable financing industry is not regulated firms charge what markets will bear.
In summary, understanding the returns of your commercial factor firm will better assist you in determining if this overall receivable financing strategy is for you. Speak to a trusted, credible and experience Canadian business financing advisor to better understand the benefits of this growing method of financing your company.
There are a whole bunch of factors ( excuse the pun ) that seem to be coming together to make the financing of accounts receivable a high growth , popular, and accepted method of business financing in Canada . The reality is that even just a few years ago most business owners did not even realize that they could sell their accounts receivable to a private non bank firm, gaining valuable working capital, i.e. cash flow! in the process .
Business is being driven to this method of Canadian business financing out of a very basic need - meet payrolls, make fixed term obligations, and purchase products and services. And when your customers make you wait, 30, 60, and unfortunately 90 days for your funds all of a sudden factoring, also known as invoice discounting and receivable financing becomes very popular. Not hard to understand.
Business owners want to know more about factoring and receivable financing simply because they recognize that cash flow challenges hinder them from growing, and yes, even surviving. And, we are sorry to say, many clients simply can’t get the bank financing they need to fund and grow their business - that isn't necessarily a condemnation of Canadian chartered banks, it’s a case of individual financing challenges within the current credit crunch and global economic challenges.
So, let’s cover off what you need and want to know about factor cost and the true way in which you should be looking at the pricing around factoring accounts receivable in Canada.
There are three; lets call them ' drivers ' in the pricing process of financing your receivables. Those three drivers are the time in which it takes for your invoice to be paid, and we mean right down to the day. Secondly the factor firm calls their pricing a ' discount ' - so the actual discount rate they quote you becomes critical in your knowledge of understanding your true cost of financing A/R. And finally, to keep things simple we often explain to clients in initial discussion that they receive immediate cash for their receivables once they finance them, i.e. same day cash.
However the reality is that the industry advances a (significant) portion of your receivable le, the rest is a hold back. Typically this portion is 90%, but many firms calculate total financing not just on the holdback but the invoice amount.
When do I get the holdback? Ask clients. The answer is that they receive the holdback as soon as the actual invoice is paid.
We thing its clear that the discount rate, of the three key drivers we have mentioned is the most focused on by clients. Because the commercial receivable financing industry is not regulated firms charge what markets will bear.
In summary, understanding the returns of your commercial factor firm will better assist you in determining if this overall receivable financing strategy is for you. Speak to a trusted, credible and experience Canadian business financing advisor to better understand the benefits of this growing method of financing your company.
Sunday, October 10, 2010
How To Finance Your Business With a SR ED SRED Tax Credit Secured Loan
Can you actually finance your Canadian business via the monetizing of a sred tax credit secured loan? Absolutely, positively... maybe. We say maybe because if you don’t have a SR&ED tax credit then it is of course not possible. However, if you participate in Canada's primary R&D tax credit program then you're potentially on your way to increased cash flow and working capital.
Recent articles in the Canadian business press have criticized the need for the government to even further increase these tax credits. Typically most Canadian business owners and financial managers think that the sred tax credit applies only to manufacturing, which is the farthest thing from the truth. A recent article in the Globe and Mail , one of Canada's premier business publications, stated clearly that firms in the resource, services and technology sector also participate vigorously in the program .
If your firm in fact innovates and spends money on R&D the last thing you can be criticized for is under investing in your future. Therefore monetizing your tax credit after it is filed (it can also be cash flowed prior to filing! in certain circumstances) makes great financial sense.
Is monetizing your tax flow credit risky in any sense of the word? Our clients hardly think so, as you are simply ' cash flowing ‘, or ' discounting' your claim today , and you are not even adding debt to your balance sheet . Think of the sred credit as a current asset, in fact it’s a receivable, and you are simply collateralizing a bridge loan against your sr&Ed claim.
SR&ED tax credits are more often than not prepared by an external consultant, although some firms choose to prepare the claim itself - we suspect it's because they think that they have a better handle on the nature of the claim. The reality is however that you gain an additional ' brownie point ' - if we can call it that by having the claim prepared by a professional sred consultant. Many firms in Canada aren’t aware that these consultants will even prepare your claim on a contingency basis - so if they are prepared to take the risk of time and expense on your claim you can quite rightly assume they feel it will be approved , as professional rarely choose to work for free!.
While the Globe and Mail survey indicated that 70% of Canadian business thought the tax credits currently in place were not as generous as they thought they should be , lets be honest and cant we agree that receiving 40-50% back of every dollar you spend on r&d isn’t that bad a start! And you if can turn your spent funds into instant cash flow by monetizing your claim doesn’t that give you a leg up on your competition . We certainly think so.
Cash for research tax credits is not a complicated process. A short overview is as follows - have your claim prepared in a manner that suits the government’s current filing process. File your calim with your tax return. Seek out a trusted, credible and experience business financing advisor who will work with you to complete a SRED financing application - it is not dissimilar to any other business financing application you have ever filled out. Include your sred claim as additional back up, as it is in effect the collateral for your sred loan. Claims can be financed in two to three weeks after some basic due diligence.
Financing sred puts you in line with other firms to get your share of the 3 Billion (yes that’s billion!) dollars of non repayable cash grants. Turning your claim into a cash infusion makes great sense if you are a small to medium sized firm with need for additional working capital.
Monetizing your claim will drive cash flow which will no doubt inspire your firm to further innovation.
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http://www.7parkavenuefinancial.com/sred_tax_credit_secured_loan.html
Recent articles in the Canadian business press have criticized the need for the government to even further increase these tax credits. Typically most Canadian business owners and financial managers think that the sred tax credit applies only to manufacturing, which is the farthest thing from the truth. A recent article in the Globe and Mail , one of Canada's premier business publications, stated clearly that firms in the resource, services and technology sector also participate vigorously in the program .
If your firm in fact innovates and spends money on R&D the last thing you can be criticized for is under investing in your future. Therefore monetizing your tax credit after it is filed (it can also be cash flowed prior to filing! in certain circumstances) makes great financial sense.
Is monetizing your tax flow credit risky in any sense of the word? Our clients hardly think so, as you are simply ' cash flowing ‘, or ' discounting' your claim today , and you are not even adding debt to your balance sheet . Think of the sred credit as a current asset, in fact it’s a receivable, and you are simply collateralizing a bridge loan against your sr&Ed claim.
SR&ED tax credits are more often than not prepared by an external consultant, although some firms choose to prepare the claim itself - we suspect it's because they think that they have a better handle on the nature of the claim. The reality is however that you gain an additional ' brownie point ' - if we can call it that by having the claim prepared by a professional sred consultant. Many firms in Canada aren’t aware that these consultants will even prepare your claim on a contingency basis - so if they are prepared to take the risk of time and expense on your claim you can quite rightly assume they feel it will be approved , as professional rarely choose to work for free!.
While the Globe and Mail survey indicated that 70% of Canadian business thought the tax credits currently in place were not as generous as they thought they should be , lets be honest and cant we agree that receiving 40-50% back of every dollar you spend on r&d isn’t that bad a start! And you if can turn your spent funds into instant cash flow by monetizing your claim doesn’t that give you a leg up on your competition . We certainly think so.
Cash for research tax credits is not a complicated process. A short overview is as follows - have your claim prepared in a manner that suits the government’s current filing process. File your calim with your tax return. Seek out a trusted, credible and experience business financing advisor who will work with you to complete a SRED financing application - it is not dissimilar to any other business financing application you have ever filled out. Include your sred claim as additional back up, as it is in effect the collateral for your sred loan. Claims can be financed in two to three weeks after some basic due diligence.
Financing sred puts you in line with other firms to get your share of the 3 Billion (yes that’s billion!) dollars of non repayable cash grants. Turning your claim into a cash infusion makes great sense if you are a small to medium sized firm with need for additional working capital.
Monetizing your claim will drive cash flow which will no doubt inspire your firm to further innovation.
---
http://www.7parkavenuefinancial.com/sred_tax_credit_secured_loan.html
Using Film Tax Incentives For Television, Animation and Film Finance in Canada
Most of the players here in Canada as well as in the U.S. seem to agree that the film, television and digital animation business has bounced back nicely in Canada. Film tax incentives in film finance (we’re of course talking about television and animation projects also) continue to play a strategic role in the challenge of cobbling together a full and successful finance package for projects.
The financing of your project seems the opposite of the glamour and dare we say it ' sexiness ' of the film and TV industry. The challenge clearly is to maximize financing while minimizing risk to investors and owners and Canadian tax credit incentives do just that. When these tax c credits are financed, or ' monetized ' they in fact supercharge the working capital and cash flow of your production.
Many parts of a project financing have what the financial analysts call ' unpredictable revenue streams ' via foreign sales, DVD sales, and of coruse the box office itself.
Why not therefore make some of those ' unpredictable' future cash flows very predictable with money from federal and provincial governments in Canada. As you are certified and approved for your projects your ability to finance the credits in the private sector simply enhances your productions chance of overall success.
Financing your tax credits in Canada essentially has you putting together a hybrid of equity, debt and tax credit financing which, done properly, allow your project to success from a financial perspective. (We won’t get into the entertainment or public acceptance merit of your projects!)
Whether you are a car manufacturer or a film producer, director, owner it’s all about ROI, return on investment. Leveraging your project from a tax credit incentive simply enhances ROI.
Canadian entertainment projects in film, TV and digital animation are very much ' blossoming ‘.
Even though the Canadian dollar has grown stronger the enhanced credits that have come into place in the last year or so simply are driving U.S. and foreign productions into Canada. Even Bollywood is looking at Canada!
Maybe Canada is a little boring and conservative when it comes to many other countries but being a stable country with a diverse filming geography and strong financial system offsets that Canadian ' boring ' personna quite well!
Single productions cannot apply for both the domestic film/tv credit and the production services tax credit - you are required to choose one or the other assuming you qualify. In many cases applications are being streamlined and even filed online in Canada.
Speak to a trusted, credible and experience film fax advisor to maximize the financing of your tax credits - they should no doubt enhance project success.
--------
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_incentives_film_finance_tax_credit.html
The financing of your project seems the opposite of the glamour and dare we say it ' sexiness ' of the film and TV industry. The challenge clearly is to maximize financing while minimizing risk to investors and owners and Canadian tax credit incentives do just that. When these tax c credits are financed, or ' monetized ' they in fact supercharge the working capital and cash flow of your production.
Many parts of a project financing have what the financial analysts call ' unpredictable revenue streams ' via foreign sales, DVD sales, and of coruse the box office itself.
Why not therefore make some of those ' unpredictable' future cash flows very predictable with money from federal and provincial governments in Canada. As you are certified and approved for your projects your ability to finance the credits in the private sector simply enhances your productions chance of overall success.
Financing your tax credits in Canada essentially has you putting together a hybrid of equity, debt and tax credit financing which, done properly, allow your project to success from a financial perspective. (We won’t get into the entertainment or public acceptance merit of your projects!)
Whether you are a car manufacturer or a film producer, director, owner it’s all about ROI, return on investment. Leveraging your project from a tax credit incentive simply enhances ROI.
Canadian entertainment projects in film, TV and digital animation are very much ' blossoming ‘.
Even though the Canadian dollar has grown stronger the enhanced credits that have come into place in the last year or so simply are driving U.S. and foreign productions into Canada. Even Bollywood is looking at Canada!
Maybe Canada is a little boring and conservative when it comes to many other countries but being a stable country with a diverse filming geography and strong financial system offsets that Canadian ' boring ' personna quite well!
Single productions cannot apply for both the domestic film/tv credit and the production services tax credit - you are required to choose one or the other assuming you qualify. In many cases applications are being streamlined and even filed online in Canada.
Speak to a trusted, credible and experience film fax advisor to maximize the financing of your tax credits - they should no doubt enhance project success.
--------
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_incentives_film_finance_tax_credit.html
Friday, October 8, 2010
Is There A Better Way To Finance A Business Loan ? Consider An Asset finance strategy.
When you need asset finance and a business loan in the 2010 economic environment alternatives are great. One of those solid alternatives is an asset based lending arrangement which focuses on what counts, your assets!
As a business owner and/or financial manager you are looking for business financing that makes sense. ABL is the acronym for one of the more exciting business financing alternatives that is growing in popularity every year in Canada. Are we actually saying that asset finance via an asset based line of credit is ' exciting '? We will let you decide that, but if this financing is easier to achieve than bank financing, is cost effective, and provides you with unlimited capital... well our clients are excited... you make your own thoughts on that !
Asset based lines of credit simply are drawn down by your firm based on the value of ongoing assets. The assets that are always there are inventory, A/R, and to some degree your fixed assets that aren’t already financed. By collateralizing your assets, and, most importantly, leveraging them to the max if you need to, you are creating available working capital.
We are always explaining to clients that this leverage of assets is not taking on debt, you are not borrowing on a long term basis, and you are simply monetizing current and fixed assets based on current values. What are those values, typically they are 90-100% of receivables under 90 days, 40-75% of your inventory, and a liquidation type value on any equipment you want to temporarily monetize. Clients always ask - ' Do you mean that we can borrow, if we need to, on a temporary but ongoing basis on our fixed assets?". The answer is yes, if you are considering this type of financing strategy.
Let’s cover off the two key points clients always tend to focus on when they are investigating this unique business loan strategy- namely costs, and timelines to get the working capital facility in place.
In some ways cost is the most difficult area of explanation and investigation in an asset finance working capital facility. Putting aside the normal due diligence or commitment fee required to get a facility in place the reality is that there are a couple of key drivers that affect pricing . Asset finance revolvers can be just as competitive as a Canadian chartered bank financing (and less onerous to get approved) but prices varies all over the board in Canada because of the fragmented and specialized nature of this type of financing.
Typically we see rates as low as 9% per annum and as high as 1.5% per month. That’s a big spread and ultimately it depends on the size of the facility, the mix of your current assets, as well as any perceived industry or business risk associated with your firm. But again, we remind the reader, what price would you pay for unlimited working capital?
Typically it takes 2-4 weeks to close such a facility. In Canada as we noted the market is fragmented and these lenders are very focused, specialized, and by nature experienced in what they do, which is value your assets and finance them!
Speak to a trusted, credible and experienced Canadian business financing advisor around asset finance as a business loan strategy if your working capital needs ' aren't working ' now!
As a business owner and/or financial manager you are looking for business financing that makes sense. ABL is the acronym for one of the more exciting business financing alternatives that is growing in popularity every year in Canada. Are we actually saying that asset finance via an asset based line of credit is ' exciting '? We will let you decide that, but if this financing is easier to achieve than bank financing, is cost effective, and provides you with unlimited capital... well our clients are excited... you make your own thoughts on that !
Asset based lines of credit simply are drawn down by your firm based on the value of ongoing assets. The assets that are always there are inventory, A/R, and to some degree your fixed assets that aren’t already financed. By collateralizing your assets, and, most importantly, leveraging them to the max if you need to, you are creating available working capital.
We are always explaining to clients that this leverage of assets is not taking on debt, you are not borrowing on a long term basis, and you are simply monetizing current and fixed assets based on current values. What are those values, typically they are 90-100% of receivables under 90 days, 40-75% of your inventory, and a liquidation type value on any equipment you want to temporarily monetize. Clients always ask - ' Do you mean that we can borrow, if we need to, on a temporary but ongoing basis on our fixed assets?". The answer is yes, if you are considering this type of financing strategy.
Let’s cover off the two key points clients always tend to focus on when they are investigating this unique business loan strategy- namely costs, and timelines to get the working capital facility in place.
In some ways cost is the most difficult area of explanation and investigation in an asset finance working capital facility. Putting aside the normal due diligence or commitment fee required to get a facility in place the reality is that there are a couple of key drivers that affect pricing . Asset finance revolvers can be just as competitive as a Canadian chartered bank financing (and less onerous to get approved) but prices varies all over the board in Canada because of the fragmented and specialized nature of this type of financing.
Typically we see rates as low as 9% per annum and as high as 1.5% per month. That’s a big spread and ultimately it depends on the size of the facility, the mix of your current assets, as well as any perceived industry or business risk associated with your firm. But again, we remind the reader, what price would you pay for unlimited working capital?
Typically it takes 2-4 weeks to close such a facility. In Canada as we noted the market is fragmented and these lenders are very focused, specialized, and by nature experienced in what they do, which is value your assets and finance them!
Speak to a trusted, credible and experienced Canadian business financing advisor around asset finance as a business loan strategy if your working capital needs ' aren't working ' now!
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