Pitfalls And Solutions When You Finance A Franchise With Franchise Financing Companies In Canada

When you want to finance a franchise in Canada the type of financing companies you work with and how you address your new business acquisition as an entrepreneur is as important we think as the time and research you spent on choosing your new business.

Let’s examine how you can make it much easier process from a viewpoint of time, cost, and ultimate success.

Is franchise financing in Canada viewed as an excepted and positive method of acquiring a business. The facts certainly point to that. The Canadian franchise association has hundreds of franchisor members, and most financial institutions that participate in franchise finance advertise aggressively on their support of this type of Canadian business financing.

Once you have made that decision and chosen your franchise type you want to be in a position to spend the minimum amount of time in securing financing for your business, while at the same time doing it right. That’s when you need to understand the basics of a complete package that will virtually guarantee you success and full approval for the funding you need.

Are there some pitfalls along the way? There sure can be. Time and time again we meet with clients who either have little or no experience in the business they are getting into, and coupled with that, don’t have any financial support or cushion that allows them to properly finance a franchise without full depleting their personal financial resources.

We all read about companies that fail because they have too much debt and are unable to meet loan obligations - that’s the pitfall you want to avoid in franchise finance. The reality is, and this is a surprise to many clients... that you dont want to borrow 100% of the funds you need, but at the same time you dont want to cash in your RRSP savings or fully mortgage your house either. The optimal blend of debt and equity in your franchise tends to be 2 or 3: 1. By that we simply mean that for every dollar you put into your new business you should plan to have only 2 or 3 dollars of debt. And quite frankly that applies to most businesses in corporate life.

You absolutely need a business plan for your franchise, as franchise financing companies and banks want to ensure that you have properly thought out how the business will generate sales, and hopefully profits.

The pitfall we see many times in client plans is that their plan is very marketing oriented, and in reality all the lender wants to see is some financial logic that will demonstrate how the franchise loan will be repaid .

Lenders call that debt service, and you want to be able to demonstrate that you will have cash flow coverage that allows you to both run the business and repay your franchise loan.

If you want a one stop solution for the majority of franchises in Canada, from a finance perspective it’s a customized loan called the BIL/CSBF program. It's underwritten by the government, has fabulous rates, terms and structures, and provides you in most cases with the majority of financing you need. Reasonable personal credit history is a requisite for this type of financing. Some private independent firms also offer franchise solutions when it comes to financing, including leasing of equipment.

Speak to a trusted, credible and experienced Canadian business financing advisor on what solutions you can effectively and properly implement to achieve financing success.

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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 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Benefit of IT Technology Financing From a Laptop To Your Server Farm !

The greatest obstacle you have in realizing IT technology financing benefits its balancing your largest obstacles to innovation - cost and obsolescence.

From one laptop to your server farm and cloud computing its a constant risk and challenge to balance the investments you make in technology and computer against your cash outflows and the need to constantly upgrade to stay completive .

Many traditional financing options are available to meet your tech finance needs, but where we think you really attain maximum benefits with lowest risk is in highly specialized areas such as off balance sheet financing and residual risk partnering and sharing.

Should you be financing your technology or buying it. The age old adage in equipment financing, whether it be technology IT financing or plant equipment leases is that if it appreciates, buy it, if it depreciates, lease it!

We can categorically assure you that the largest, smartest, most cash rich, and successful companies utilize the benefits of lease finance, whether it’s one laptop, a fleet of laptops, or a server farm upgrade. (A server farm is simply a group of computers in a data center that run your business data - for reasons of balance usage, scale and security).

The most sophisticated approach to technology IT financing in the past has been the use of off balance sheet leases - these still are a very cost effective way of running your tech finance programs. The challenge is working with the right partner that allows you fairly, and seamlessly, to invoke your three rights as a lessee under this lease. Those rights are the ability to purchase when you want, upgrade, or return. Extending also plays into those rights - for example - you enter into a 36 mo fmv lease with the option of returning, but you need to use the equipment 5 more months, perhaps for a special project, or to run a new system in parallel, etc .

Fortunately, or unfortunately, depending on what side of the fence you are on a lot of the pure tax and accounting treatment historically recognized by FMV type finance are going away with new internationally accepted accountant standards changes . However, let’s be clear on this - your ability to secure lower payments, plus invoke your 3 rights under the benefits of IT operating lease financing still favor you, the lessee.

Speak to a trusted, credible, and experienced Canadian business financing advisor in the area of IT financing - whether it’s your server farm, 1 laptop, or 2000 laptops your financial decisions make save or impact you by thousands of dollars.



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

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

Requirements for a Business Line Of Credit in Asset Finance and ABL Lending in Canada .

Let's cut rate to the chase, that’s often the best strategy in assessing a business decision. You are in the process of investigating ABL lending under and asset finance scenario as a replacement for your business line of credit.

More of than not you are either self financing currently (that’s not a perfect growth strategy by the way) or your ability to secure the business credit you need simply is not happening with your current banking or financing partner.

So lets look at whats required to bring you the full advantages of an ABL facility, that term being the acronym for ‘asset based lending' . The reason you are contemplating this type of business financing is simply, you want to maximize your borrowing power based on receivables, your inventory, and other potential assets which can actually be margined for temporarily liquidity. Think unencumbered equipment as an example.

Let's examine some of the key requirements for this type of facility. That will allow you to determine your overall success in securing a facility that meets all your needs, and comes at a cost that is commensurate with your situation. We mention cost briefly here in the context of our subject because many firms experience varying degrees of cost of financing in an ABL lending facility for their new business line of credit.

That is because asset finance pricing is based on criteria such as the overall financial health of your company. However, don’t despair because ABL lending actually works even if your company is in bankruptcy proceedings, because it always comes back to the same issue - if you have assets then an asset finance solution is possible!

So lets get back to those requirements - they include receivables that are under 90 days, which typically are margined at 90% of their value. Next comes inventory, and here is where it can get tricky. Although your new ABL facility and business line of credit margins your inventory you must be able to demonstrate that the goods are saleable in some form - whether that be work in process, raw materials, or finished goods . Most companies usually have a combo of all three types.

Asset finance often doubles your borrowing power under this type of business line of credit. That’s because the firms that offer it are experts in their business - typically, more often than not, they are not banks, but private boutique type firms that specialize in business asset financing. But, and here is the ' but ' you need to demonstrate proper accounting and regular financial statements - i.e. on a monthly basis, and you should be able to provide accurate reporting on things such as aged receivables, perpetual inventory reporting , and, in some cases, an appraisal on your other business assets - since these are temporarily margined for liquidity .

What we are simply saying of course is that in order to borrow in an ABL lending environment you have to have solid business records and demonstrate you are in control of your key assets. That quite frankly should be your goal whether or not you are borrowing at all, don’t you think?

Speak to a trusted, credible, and experienced Canadian business financing advisor who can help you maximize the benefits of asset finance and assist you in achieving full success in this non bank business line of credit facility that is becoming more common everyday.
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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 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.parkavenuefinancial.com/abl_lending_asset_finance_business_line_of_credit.html

Save thousands (or Millions ! ) Via Smart Technology And IT Financing Via Finance Benefits

We probably couldn't come up with the exact number but wouldn’t you agree it’s safe to say that Billions of dollars are spent annually on IT (that’s information technology by the way!) and technology financing. Can you really save thousands, or those millions?! by smart acquisition strategies . We're sure you can and we will show you how.


The acquisition of computer, it, and other technology assets is without a doubt one of the largest Capex spends any medium or large sized business makes. Your make those investments because you are optimistic about the future of your firm, coupled by the need to stay ahead of the competition in the ever changing technology curve.

If your are the owner, chief financial officer, or chief information officer of any firm you want to know what your alternatives are in the areas of IT and Technology finance. Those alternatives comes with different costs, different outcomes, and different risks, all of which make it often a daunting decision when you are at the proverbial fork in the road .

The author of this article spent over 20 years in technology financing and saw trends come and go. The largest trend by far, we think, was the desire of firms to go off balance sheet when acquiring computer, technology and telecom assets. That probably is still a good decision today for many reasons - the main ones being lower monthly payments due to the residual taken by the lessors, the ability to invoke your three rights at the end of the term of the lease, as well as the constant availability of upgrading during the term.

Having said all that there are of course some new international accounting rules that will bring those off balance sheet liabilities back onto the balance sheet. Is that a good thing? We won’t weigh in on that one today... it’s probably good for lenders to your firm as all that debt is now front and center on the balance sheet. Anyway, that’s a discussion for another day.

So how are smart decisions made in technology financing - whether its computers, phone systems, software (yes software can be financed!) etc.

It all comes down to a couple key areas - first of all, if you aren’t proficient in lease calcs work with an expert who will help you assume residuals, interest rates, and proper economic life cycles . If you could afford it (some can’t... some can) the smartest thing to do would be to finance technology and IT on a 2 year FMV lease. That way the residual value established by the lessors would be high, you would be able to flip into new technology in 24 months.

Let's use a 2 million dollar major technology finance acquisition as an example - Using smart financing via an FMV lease a monthly payment on our 24 month term would be approx 71k per month.

Your firm would be the beneficiary of a 400,000 residual investment by the part on the other side of the lease. Your monthly payments to acquire 2 million dollars of technology for 24 months would be only 1.7 Million dollars. If you chose the lease to own route or loan on your technology financing your payments on a typical 36 month transaction would be over 2.2 Million dollars, almost 400k more than in our ' smart finance ' scenario.

So, what’s smart IT and technology financing all about? Its knowing the use of your equipment, its expected useful life, how lessors can play the interest and residual game and how some very basic expert information can put you back into the driving seat on those thousands (or millions) that Canada spends on IT finance for technology .Speak to a trusted, credible, and experienced expert to assist you in your benefit recapture in this critical area of business.
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Stan Prokop is founder 7 Park Avenue Financial ;

Originating financing for Canadian companies,specializing: working capital, cash flow, and asset based financing , the 6 year old firm has completed in excess of 45 Million $ of financing for companies . For info / free consultation on Canadian business financing / contact details see:

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

Canadian Solutions To Your Working Capital Management And Cash Flow Loan Needs

Are there real world solutions to your business working capital management challenges? Is there a solution to your cash flow needs? Is that type of loan even available?

Today we'll be the finance doctor and we'll start y asking you if you have any of these symptoms : Is your firm growing too quickly , to the point where you are forced to focus on daily cash flow needs almost all the time . And are you also finding that you seem to be selling more and making less, from a net profit or income perspective. Do you even have a cash flow budget in place that allows you to assess your supplier payables, and lastly, but certainly not least and perhaps most serious... are you finding it unable to make certain loan or term obligations that your busines has?

It would appear to us, clearly, that you require a ' prescription ' for those symptoms, and that prescription is simply a working capital solution that works specifically for your firm.

Expanding too quickly allows you to stay ahead of the competition of course, but brings with it something the finance folks call ' overtrading ' which is a cash conversion cycle of negativity when those commitments we referred to cant be made because of the high investment in receivables, inventory, and fixed assets you have made to grow your business .

In other words you have the assets, but they are all tied up, leading to a case of poor liquidity. And we must be honest here; if you didn’t have the assets or sales potential there is almost no way we can help. So your ability to bring liquidity and monetize your assets focuses strongly on identifying how you are able to convert assets to cash.

So, never the ones to be accused of just talking abut the problems, lets talk about the solutions we spoke of.

It always comes down to current assets, so you require a solution to be able to monetize sales quickly, and convert A/R and inventory in working capital management success.

In Canada your alternatives are several, and quite frankly these would apply to almost any business anywhere. Many clients that come to us focus on what they term a ' cash flow loan ‘. Is that available, yes... is it recommended maybe. It’s a term loan for permanent working capital. Naturally that comes with more debt and fixed interest payments, so that is many times not an optimal solution.

Our preferred solutions to the working capital management challenge are the following: Confidential invoice financing, asset based lending, purchase order financing, and inventory financing. These solutions come in a variety of combinations depending on the size of your working capital requirement, as well, as the general financial profile of your business - i.e. are you currently financial challenged , or are all aspects of your business simply great . (It’s rarely the latter when we talk to clients.

In summary, investigate the benefits and mechanics of the 5 solutions we have outlined. Determine which ones work for your firm, and speak to a trusted, credible and experienced business financing advisor on your ability to secure in short order the cash flow and working capital you need to run your business successfully.

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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 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Commercial Business Equipment Leasing Services Provided by Financing Companies in Canada

Business owners want to maximize services and benefits related to commercial business equipment leasing and financing. Being able to work with companies that can provide you with asset acquisition financing allows you to resolve that age old question - ' should I buy or lease that new asset? ’

The reality of business assets, 99% of the time, is that they depreciate and eventually become obsolete - whether its 3, 5, or even ten years down the road. When you think of leasing you should view it as a ' utility ' service. What do we mean by that?Let’s use electricity as our example . You want to use electricity, but you dont want to own it. That’s how you need to view business equipment finance - a solid way of financing something that is depreciating in value. You are, in effect, matching your cash outlays against the useful equipment life of the asset.

As business people we want choices, alternatives so to speak. Clearly that’s where lease financing in Canada steps up to the table. Want prompt credit approval - leasing is probably the fastest method of obtaining a commercial credit approval in the Canadian financing landscape.

Want choices - boy have we go choices. Some of those very real choices, services and benefits include matching the type of lease you write to your asset type. If you are leasing technology such as computers you want to probably focus on what is known as an off balance sheet or operating lease. Even though the accounting popularity of accounting for this type of lease is disappearing there are still significant services and benefits - i.e. lower payments, ability to upgrade or return the asset, etc .

It's almost always about cash flow and working capital when it comes to looking at asset acquisitions for your company. You have a budget, you want to maximize it. You dont want to outlay huge sums of capital, and to top all that off you want to stay competitive and buy the newest, latest, and greatest . That clearly is the service offering com financing companies in Canada, who want to tailor your commercial business equipment leasing needs to what makes optimal sense for your firm.

In larger corporations executives are measured on key financial metrics / ratios such as return on capital and return on equity. Simply speaking if they can improve profits and shareholder wealth by minimizing capital outlay, or structuring off balance sheet transactions... well, you guessed it, that’s why they employ lease finance and loan strategies. (By the way a lease is not a loan but the terms are often intermingled by our clients).

So do these services really keep you ahead of the curve in capital asset acquisition - we certainly thin we have shown you they have? Utilizing lease finance allows you to acquire current technology, maximize financial statement and accounting benefits, and give you maximum flexibility relative to assets acquire and cash outlay.

Speak to a trusted, credible and experienced Canadian business financing advisor on how commercial business equipment leasing in any area of your business provides you with services and benefits you previously weren’t aware of or were not maximizing.

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

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

Advice on Canadian leasing company Equipment And Finance Loan Transactions

Canadian and U.S. firms finance billions of dollars of business assets via an equipment loan every year. Leasing companies provide some of the strongest benefits for capital acquisition than any other type of financing. Let's examine what some of those advantages are, and provide you with some clear tips and advice on obtaining the best equipment financing rates and structures.

Your firm only has an advantage when it is benchmarked against another alternative. That alternative in business financing tends to be outright purchase of the assets.

Canadian business owners and financials managers tend to be less aware of the accounting and financial aspects of an equipment lease. The most obvious advantage is simply that you know on a monthly recurring basis what your payment is - which hopefully you have budgeted for in your cash flow and working capital outlays.

Some of the best advice we can provide clients with is tips on selecting the right type of equipment finance lease or loan transaction. That revolves around the concept of either ' owning ‘, or ' using '.
If you wish to own the equipment at the end of the lease term you need to pick what is known as a capital lease or ' full payout' transaction as it is known in the industry. The concept is simple - The elements of the lease are the term, interest rate, end payment, monthly payment, and of course the value of your transaction. Using a financial calculator you can calculate any one of these key finance loan elements if you know the other data points.

Business changes constantly and so do financing rules on occasion. Many Canadian business owners and financial managers are not aware that there is an international accounting movement afoot to significantly diminish the value of operating leases, which is the other type of lease that leasing companies offer. This is a ' lease to use' transaction, where you have the right at the end of the finance transaction to return the equipment if you choose.

Over the years the key advantage of operating leases was that you could record the transaction off your balance sheet, it was simply an expense, and didn’t alter your debt and equity ratios, etc. However, international accounting standards are now going to require that you show the transaction on your books.

So the best advice we can give you is to discuss that issue with your accountant. Quite frankly a lot of the other benefits of operating leases still probably make it worthwhile - they have lower payments than a regular lease, and you still have that option to return the asset when you no longer require it at end of term.

Additional advice on your leasing company search or negotiation revolves around the whole issue of cash management. Did you know that you can potentially structure your transaction for payment flexibility, as well as adding in several intangible items such as warranty, delivery, installation, etc?

So what's our bottom line - simply to research which benefits make the most sense to your firm, pick the lease that suits your business and accounting needs, and speak to a trusted, credible and experienced Canadian business financing advisor about a leasing company that matches your firm’s needs.

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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 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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