A Reality Check On Business Loans in Canada And asset Based Capital Funding

You're forgiven. For what? Surely Canadian business owners and financial managers can be forgiven for thinking that there is few, (if any?) capital funding asset based business loans for Canadian business.

Between the global credit crunch, a Canadian recession, and the traditional bank retreating on business credit in every owner or CFO must surely dwell on the potential inability to take advantage of growth and sales opportunities via access to the right amount of working capital and cash flow to satisfy both day to day needs, and of course, that growth.

Asset based lending in essence goes ' under the covers' of your balance sheet - and whats under those covers, assets, not rations or covenants!

By financing those assets in a creative manner that leverages there true value your business is on the road to working capital solutions that you never imagined.

When clients talk to us about asset based business s loans their situations vary dramatically. Industries fall in and our of favor - so firms are experiencing a variety of what we can only term unique situations. What are some of those situations - well they might include stratospheric growth via new purchase orders or contracts, restructuring for a variety of reasons , buyouts or acquisitions , and that old catch all ' the turnaround '.

So is there one solution for all of these major business situations and challenges. We are always hesitant to say that ' one size fits all' but in reality the asset based lending available in Canada is quite frankly the new kid on the block that gains more acceptance everyday .

Why does this solution work better than a traditional one? One of the things we explain to clients is that in effect is a customized solution that takes a hard look at all your assets - those include inventory, A/R, equipment, and in some cases you can actually margin real estate.

So who qualifies and who doesn’t is a typical question asked by business owners. The reality is that larger firms are very closely suited to an asset based line of credit, but a whole second tier of offerings are available for firms who need 250k and up on a monthly basis .

Pricing often becomes a discussion point for this type of working capital and cash flow facility. We quickly point out to clients that although asset based business loans in Canada are more expensive than bank facilities; the reality is that they are custom tailored to your firms ongoing daily cash flow needs. They don’t require ratios and covenants to get the loan facility approved, and guess what, no debt goes on the balance sheet, you are simply monetizing those assets.

Its all about access to capital funding - if the old ways don’t work then clearly you should explore the significant benefits of an asset based line of credit. Speak to a trusted, credible, and experienced business financing advisor who can assist you in navigating the Canadian market.
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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/asset_based_business_loans_canada_capital_funding.html

Secrets of Dealing With Equipment Leasing Financing Companies

What's my rate? Are we approved? What are my rights and obligations under this transaction? What's the capital of North Dakota... oh sorry, forget that last one..!

And on it goes... these are just some of the many questions that clients ask us when they are looking for assistance in sourcing and negotiating equipment leasing and working with financing companies in that regard . We do acknowledge it’s a big challenge sometimes - the Canadian marketplace is a bit different than its counterpart in the U.S. The finance industry is fragmented, and business owners and financial mangers absolutely could not be expected to know the credit appetite, the asset appetite, and the structuring options available from literally hundreds of firms offering lease financing.

Let's share some ' secrets' and tips around ensuring you can be successful in your equipment financing strategy. First of all, different strokes for different folks - what do we mean by that? Simply there are number of very well published ' equipment leasing benefits ' offered by finance firms. Do they all apply to your firm? Probably note, so focus in on understanding which benefits of lease financing work for you, and then... maximize them! Through effective negotiations.

For the record those benefits usually include payment structuring to your cash flow, tax advantages, upgrade and return options, and simply being an alternative to traditional debt and loan negotiation. Oh and we forgot one other key benefit, its generally recognized that lease financing credit approval is significantly easier to obtain than bank term debt or other loan mechanisms of a more traditional nature .

Psst... Want to know another secret. Here's a good one, that almost no transaction is too large or too small for the Canadian equipment financing market. So, if it makes sense to lease a 2000.00 photocopier consider it, and if you're buying a corporate jet for 3 Million dollars, there is a lease approval for that asset also.

If there is on obvious secret or tip that most owners miss it’s simply that when it comes to any type of ' technology ' you should consider equipment leasing with financing companies that are knowledgeable about the asset. We are mostly talking about computers, but the tech universe today covers telecom, and many other types of assets. Technology changes, tech assets depreciates very quickly, and the best kept secret in town is often a technology operating lease , allowing you full use, but not ownership, of the asset .

Many clients seem confused by the ' lingo' used by financing companies. You can be forgiven for not knowing ' off balance sheet leasing, residuals, fmv, all in rate, amort, ' etc, etc etc. So the best and final secret we can probably provide for you is simply to search out a trusted, credible, and experienced Canadian business financing advisor who will help you identify priorities and finalize equipment leasing success for your asset acquisitions.

Oh and by the way. Bismarck. That’s the capital of North Dakota.

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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/equipment_leasing_finance_companies.html

Understanding Cash Flow For Business and Why Receivable Factoring Just Might Be The Solution

Choices. Alternatives. Robert Johnson, an old blues legend wrote of being at the ' crossroads ' and had choices.
That’s what Canadian business is looking for more than ever when it comes to the Canadian business financing marketplace for small and medium size businesses. (We suspect the big guys want the same thing!).

If your business can't obtain any (or enough) cash flow for business growth then receivable factoring just might be an option. Naturally you're the client, so we'll let you decide.

Clients always ask ' why can my firm obtain working capital financing via receivable factoring when we can via the bank. The answer is really not that mysterious - it’s a case of your new financing partner looking solely at the asset and not the big picture, which our friends at the bank tend to be focused on.

And don’t get us wrong, if you firm can obtain ' all ' the financing it needs from a Canadian chartered bank you clearly have the ultimate cash flow security in place... however the reality is that we havent really met many of those firms in the tumultuous environmnet post 2008-2009 global business financial meltdown.

So yes, the cost of factoring in general is more expensive (in some cases it actually might be cheaper!) but with receivable factoring your are operating your business in an entirely different manner.

As a Canadian business owner and financial manager you should not feel embarrassed that you haven’t heard a lot about receivable financing via a factoring working capital facility. It’s been around as a financing tool for quite some time, but it’s been a little under the radar, and oft considered an alternative tool for Canadian business financing.

Essentially it is the sale, on a one of, or ongoing basis (it’s your choice) of your receivables to a third party. You receive funds instantly, and we mean basically same day! And the total focus is very simple and straightforward - the transaction is only about the value of your receivable, its not additional debt for your balance sheet, and it monetizes your receivables to the extent that you choose.

Control is the key word here, as you control what you need to borrow, when, and what those funds will be used for. Traditionally all our clients use the funds for just one purpose - financing their business for more growth and profits.

Perception is often confused with reality, and the perception is that a receivable factoring strategy to generate cash flow for business is expensive. Yes, no... Maybe! The cost of this type of financing tends to be in the 1-3% per month range. What many of our clients miss is that putting yourself in this type of facility assures you unlimited sales and profit growth. Your investment in receivables (and inventory) has essentially been monetized on a long term basis. Also, the funds you obtain from this type of financing allow you to take supplier discounts, enhance supplier relationships, purchase smarter and in larger quantities, and increase your A/R and inventory turns, which technically play a huge role in your return on equity.

So, is receivable financing and factoring your working capital solution for business cash flow - only you can decide, but you do have choices and alternative you previously might not have been aware of. Speak to a trusted, credible, an experienced Canadian business financing advisor to ensure you choose the right method of financing when you're at the crossroads!
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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/receivable_factoring_cash_flow_for_business.html

Real World Lessons On Inventory Financing from Purchase Order To Cash

Information for Canadian business owners and financial managers on non bank inventory financing and purchase order finance . How do these finance mechanisms work, and are they alternatives to bank financing that make sense for sales and profit growth .

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It's possible. It’s certainly not easy though, but inventory financing and purchase order finance are two little known and under utilized Canadian business financing strategies for business owners and financial managers.

In certain industries, probably yours if you are reading this! , inventory is one of your key assets. The turnover and financing of that inventory play a key role in your sales and profit growth. You ability to purchase and turn inventory are key to the earnings you generate. That’s why when clients ask for information on their ability to finance purchase orders and inventory it becomes critical that they understand their options and the cost of those options.

It's worth stepping back a bit and focusing on the fact that your ability to manage your inventory will play a key role in the ability to finance it. Simply speaking your ability to demonstrate turnover of product, controls in purchasing, and as important, and your firm’s ability to demonstrate reporting around this key current assets on your balance sheet.

The purchase order/contract and sales generation is of course the ultimate balance act for any firm - no inventory, or improper levels wont allow you to fulfill sales, too much inventory can drain cash flow .

Financing inventory in Canada really boils down to two essential solutions, your bank, or independent finance firms who are willing to take greater risks and offer you additional leverage on financing your products. Why do they take more risk - simply because it’s their business to understand your industry and the nature of your products and the ultimate salability or liquidation value? Their expertise in this area translates into greater borrowing power for your firm - and that’s a good thing!

Investing and monetizing your inventory is a good thing, provided that the inventory produces a solid rate of return - therefore financing and management of your products is key to overall business success.

Inventory financing and purchase order finance is Canada is available, it’s also specialized. As your firm generates new contracts and purchase orders that you are having a challenge in fulfilling (because of finance and cash flow pressures) you should consider finding an alternative source of financing based on your overall current business financing with your senior lender, typically a bank.

Specialized inventory financing and purchase order finance firms are most likely your problems solution. Funding is provided to fund the cost of your products with your suppliers, and the actual day to day finance strategy is much focused - payments are made to your suppliers, often directly, allowing you to receive product, and ship, thereby generating a receivable. Receivables turn into cash and the cycle is complete.

Inventory finance works best when it involves a holistic approach of collateralizing the purchase order, the inventory and the receivable that you generate as sales revenue .That by its necessity typically involves a non banking institution, i.e. the private independent finance firms we've discussed. One tool, an asset based line of credit which collateralizes inventory, A/R, and even equipment is often the total solution you are looking for.

Speak to a trusted, credible and experienced business financing advisor to ensure you understand solutions available to inventory and p o financing for long term sales and profit growth.
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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_finance_inventory_financing.html

Are There Canadian film financing banks For My Tax Credits?

It’s happening! Your project in film, animation, or television is moving forward - you've got shooting locations, principal photography details lined up, cast set, crew in place... but wait... someone forgot to take care of the film financing though!

Canadian film financing is certainly does not have dissimilar challenges from any other film geography in the world - its all about a great or interesting script, a solid cast, and , oh yes , funding and being cost efficient .

The reality is that your film project (again, we are always talking also about t v and animation in the same breath) has to be run like a business - because that’s what it is. In fact the reality is that 99.9% of all production is in fact set up as SPV's (special purpose vehicles) that reflect the financial success of just that one project.

So you project is funded just like any other company, with debt and equity , and has all the usual challenges around financing, payroll, accounting, meeting budgets, etc.

We always smile when we hear the phrase - ' I'm from the government and I am here to help’. But, guess what, in the case of the Canadian film, TV and televison industry you can make the case the generosity and clarity around the government tax credits for the industry are second to none, in the world, actually.

Your project owners, whoever they might be, want to know that you are fully financed. In Canada, using a broad brush example of 30 - 40% that money can come from our friend in the government, typically a combined federal and provincial formula, depending in which province you choose to shoot, post produce, etc.

When we talk to owners and producers of productions, either those having taken place, or in planning, it’s clear the road is a long hard one, it’s never easy! That’s why we encourage clients in Canadian film financing to monetize their tax credits and ensure they have the proper advice around structuring their budgets and what qualifies.

Many are surprised to hear that your productions can be financed on an accrual base. That is to say by working with film financing banks and private finance firms you can ' cash flow ' your project as you are in production. Again, the government is offering to help you with cash flow, and your film financing bank or private independent finance firm will cash flow those non repayable tax credits. It’s clearly a win win.

We’ve always felt that the tax credits in Canada for production services credits benefit independent producers, although we are assured major studios utilize them also. So as an owner or executive producer who is challenged with film financing you're automatically 1/3 of the way there in finding your equity and debt backers, by virtue of tax credit monetization.

As a producer or owner of a production you want to ensure the project is financed properly and responsibly - talk to a trusted, credible and experienced Canadian film tax credit consultant to ensure you're cash flowing your project to your maximum benefit.

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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/canadian_film_financing_banks_tax_credits.html

How To Leverage SRED (SR&ED) Tax Credit Financing And Factoring for Cash Flow

Leveraging your SRED (SR&ED) Tax credit via the financing and factoring of your claim is a responsible way to maximize cash flow and working capital. It’s all about timing, and if your firm requires additional working capital financing the ability to cash flow or discount your claim for working capital today is a clear and viable option.

Canadian business owners that partake of the program in Canada clearly have recognized the benefits of research and furthering their competitive position in product and services. Although tens of thousands of firm take advantage of the program we are always amazed at the number of our clients that either have not heard of the program, much less take advantage of it.

Let’s do a short primer on the program, and more importantly, the financing aspects of your claim. And trust us, we are not talking about going to your chartered bank for that financing, as this type of financing is somewhat boutique and niche requires specialized financing and financing assistance.

The federal SRED program is s of course for private companies that qualify for a non repayable tax credit, in effect a grant from the government for a large percentage of their R&D spending. Your ability to recover that cash flow is of course a very positive aspect, but, the ability to finance your claim as soon as it is filed, ( in some cases before ) simply is one more alternative in today’s challenging cash flow environment to monetize a short term asset and turn it into cash flow .

So how does Sred (Sr&Ed) tax credit financing and factoring work? We use the term factoring because its becoming more broadly understood and accepted in Canada - so what we are simply saying is that your sred (sr&Ed) claim is in effect a receivable, and in the same manner that you would consider financing a receivable is really the same logic and methodology around a sred financing.

Is it difficult to finance a Sr&Ed? We keep that explanation to our clients very simple. If you have a sred that has been prepared by a qualified consultant or accountant and your company has viability then your claim is financeable. Is that complex, we don’t think so.

Have you ever applied for any type of business financing before? What was involved? - Typically it was filling out an application, providing back up documentation, and clarifying, if required to a business lender, any information that required explanation. Guess what, that’s the SRED process also.

A claim can be financed in a matter of weeks, which we think is a very typical time for any type of business financing these days. After a basic business application and review of your sred a term sheet is issued. Typically the main collateral for the financing is of course the sred claim itself. In Canada its typical to receive about 70% LTV for your claim, meaning that if you calim is 300k you would receive immediate financing for 70% of that amount .Whats the monthly payment clients ask? Here's the good news, there is none. You put that cash flow to work and when your claim is finalized, adjudicated and paid by Ottawa then you receive the other 30% of your claim , minus of course the financing costs, which typically are in the 1.5 -2% range per month .

Speak to a trusted, credible, and experienced Canadian business financing advisor on how SRED (SR&ED tax credit financing and factoring works. Cash flow today from a government non repayable grant - How could you not consider that option!

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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/sred_tax_credit_financing_and_factoring.html

The Secret of Franchise Financing Loans

It's appealing, we know that. It’s the idea of owning your own business that is a proven brand and money maker. Franchise financing loans can help you address your entrepreneurial vision of owning a franchise in Canada. The ability to own your own business and generate profits and wealth is of course appealing to all.

Picking your franchise in some ways is half the battle, as you probably have been focused on purchasing a new or existing franchise that matches your skills, interest, and experience. The other half of the battle and some say the harder one (we would agree) is arranging franchise financing loans that make sense for your business and your own personal situation.

As we point out to clients, whether entrepreneurs are starting a major manufacturing company that might employ hundreds, or a pizza shop with a staff of three two considerations come to mind, always - they are debt and equity. We're of course referring to how much you will put into the business, and how much business credit for a franchise loan can be accessed.

So are there some great secrets and tips we can share with yourself as a prospective entrepreneur - there sure are.

First tip/secret # 1 is simply to investigate carefully the financial requirements that your franchisor requires. These must be addressed in a solid and dedicated manner. If you don’t understand the requirements how can you address them? So ensure you understand the amount of financing the franchisor recommends. Is that all? Definitely not, that’s where our previous concept of planning was mentioned. Make sure you consider two other aspects of the business financing; they are working capital for daily operations, and some sort of plan for long term growth or expansion.

It's probably not written in stone somewhere, but we have always felt that clients aligning themselves with a major brand that has a larger number of multiple units have a strong chance of financing success. Of course that isn’t always the case, as some new concepts in a number of industries continue to be introduced all the time, but it sure helps if the lender is enamored by the franchisors brand and success.

Another great tip and secret is simply that as opposed to spending all the time on the business itself when you are discussing financing, rather also focus on your own personal financial situation and experience. This is absolutely one of the most important criteria that banks pay attention to - namely how have you run your personal affairs, and at the same time do you have the type of business of management experience.

Some franchisees think because they don’t have very direct experience it might hinder their financing - the reality is by properly positioning your skills in a general sense, i.e. previous sales experience, customer service, etc you can capitalize on general business skills required to run any business .

You may not like to hear the news, but the reality is that you do in these times need a sizeable personal investment into the business, aka your owner equity. Those typical ranges between 30-50% depending on the size and nature of your franchise. In some cases you might be in fact buying an existing franchise from another franchisee who wishes for some reason to 'move on.

Let’s share probably our greatest secret in financing your franchise - the government of Canada. Many clients are surprised to hear that a government program known as the CSBF / BIL program is the largest financier of franchises in Canada. Its underwritten, structured, and supported by the government and offers great rates, terms and structures for amounts up to 350,000.00 - that amount was increased from 250k in previous years.

A final secret - experts are preferred - Speak to a trusted, credible and experienced Canadian business financing advisor on how you can efficiently and successful gain knowledge on franchise financing loans for your new business.

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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/franchise_financing_loans.html