Surviving The Franchise Business Loan Process - Doing it Right In Franchise Finance Funding in Canada

We wouldn’t say that it’s a life and death situation, but clearly surviving the entire franchise business loan process with a final result of successful franchise funding of your new business is clearly a victory on your part.

Let’s examine how you find franchise finance funding in Canada and the most efficient methods to complete the process when it comes to time, resources, and utilizing proper expertise.

Although there is somewhat of a negative spin on business funding and business financing in general the reality is that as a whole the franchise industry is viewed as a positive ' vertical market ' by the lenders that participate in this area . Many new entrepreneurs will be surprised to hear that one government financing vehicle is actually the most utilized by new franchisees.

We also sometimes forget to reference the fact that when it comes to a franchise funding that whole process can also involve your purchase of an existing franchise where the current owner is motivated to sell. Certain processes, procedures and recommendations on buying an existing franchise are somewhat different than your traditional new ' turn key ' approach to a brand new franchise.

So let’s get back to our ' survival ' theme. What elements of preparation are critical to that? Many franchisees we talk to complain or tell horror stories of the time it took them to finance their business. Our observation on that is simply that if you are not fully prepared up front to present a package to the right party, containing all the critical elements... well you know what comes next... there is just simply a tremendous amount of back and forth and potential frustration on your part . And don’t forget you also run the risk of alienating your lender and being perceived as ill prepared to own and run an entrepreneurial business.

So what you do need to have in that packaged that allows you to survive the entire financing process?
The key elements are a concise business plan as a good start! We also caution franchisees that the plan should focus on repayment of the loan and franchise funding itself - with less emphasis on all the marketing and ' pr ‘type material that is in many plans we see.

Key elements of that plan are your background and experience. If you are purchasing a business and looking for a franchise business loan in an industry in which you have no experience be aware that that will be come a discussion point with the lender. In reality any business person that has solid overall management experience and skills, coupled with some financial acumen should be in a position to ‘up sell ' their skills as a new franchisee and entrepreneur.

We speak of the ' lenders ' in franchise finance funding in Canada. If you don’t know who they are we can virtually guarantee you frustration and a potential decline of your proposal.

The largest franchise lender in Canada... are you ready for this... is the government of Canada by virtue of their support of a special program called the BIL/CSBF loan program . The majority of franchise business funding is done through this program. By the way it has great rates, terms and structures that are often perfect matched to your needs.

In summary, we can clearly say that a franchise business loan is not 'rocket science ' ; identify a suitable BIL/CSBF loan partner , prepare a clear package that’s focused on your and repayment of the financing, and consider seeking the services of an expert in Canadian business financing in the franchise area . You'll find you have survived the process and come out on the other end approved and ready to commence your role as a new Canadian business owner in the franchise industry.

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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/franchise_business_loan_franchise_funding_finance.html

Turbo Charge Your Banking Via A Business Line Of Credit ABL Revolver !

Small, medium or large? We're not talking about a coffee cup size... we're referring to the fact that no matter what your size of business your access to a business line of credit is the lifeblood of your company . That's why an ABL revolver (ABL = asset based line of credit) is potentially the solution to turbo charge your working capital and cash flow. Let's examine how.


Clients seem to always wrestle with the fact that they don't really understand the differences between this type of business financing and banking as opposed to a ‘regular’ operating facility with the bank. The differences could not be more dramatic. While a bank facility (by the way, we are all for them also, when they work! ) focuses significantly on your balance sheet ratios and over all profitability , etc the ABL revolver solution hones in on one issue only - your assets and their overall quality and size . It is on that quality and size that the ABL business line of credit is structured.

Borrowing power is what business lines of credit are of course about. When you utilize the ABL approach you in effect leverage all the power of the assets, which certainly isn’t like what we like to call ' traditional bank borrowing '.

So, why would a business such as yours want to unlock that borrowing power? The reality is there are some very recurring needs for firms which choose this type of business financing. First of all they either can’t get or can’t get enough working capital borrowing power against their inventory, receivables and equipment. Secondly, all sorts of other problems, challenges, and yes opportunities can e overcome with an asset based line of credit.

Many examples exist of firms who have doubled and in some cases tripled their business financing access via this type of finance. The answer is simple - it’s based on asset size, not ratios and covenants and external collateral.

Those include firms which have large seasonality issues, companies who which to merge with or acquire a competitor on an asset financing basis, and, most commonly, firms that view themselves in turnaround or restructuring mode when it comes to where they are at in their life cycle - i.e. coming out of a challenging economic time or negative business event (operating losses, etc).

Did we just say ' operating losses ‘? Yes, the reality is that even firms who are experience operating losses and could otherwise not achieve maximum operating cash flow are excellent candidates for ABL financing. We should mention that the type of facility you get, the pricing on that facility, and how the facility works vary within ABL revolver financing depending on your overall transaction size and asset coverage .

We must never forget also that these type of facilities never bring debt to your balance sheet, you view them similarly as an operating line, in that you are just monetizing your assets for working capital and cash flow - the only difference is you've got tremendous flexibility around borrowing power - because you are borrowing against a base of receivables, inventory, unencumbered equipment, and in some cases real estate also.

In summary ABL revolver financing gives you a full service business financing, its cost effective, addresses almost every financing problem you have had related to cash flow, and is available in facilities from 250k to many millions of dollars .

It somewhat of a secret to many that some of Canada's largest corporations choose this type of financing over a traditional bank facility. Speak to a trusted, credible, and experienced Canadian business financing advisor on why ' ABL ' give you that ' turbo charge' boost in cash flow we've talked about.

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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/business_line_of_credit_abl_revolver_banking.html

Want To Finance Working Capital ? Here’s Your Sources Of Cash Flow Financing

Are you focused on succeeding in financing working capital for your company? If you want to win that battle, and we categorically think business and cash flow financing is in fact a daily battle for most business owners... well you must be aware of the roots of your challenge the and sources and solutions .

As we head into the 2011 business year we're clearly coming out of a time when for many firms such as yours sales were down, margins eroded, and most importantly cash flow financing seemed to dictate where your firm was heading from a success point of view .So how can you assess how profits and growth can be managed from a viewpoint of cash flow financing.
The answer - your scorecard! What do we mean by that ?Simply speaking knowing where your working capital is tied up, and what is the cheapest method of unlocking sources to cash flow financing . And, although it’s a surprise to our clients more often than not, ' cheapest ' doesn’t necessarily mean ‘whats my interest rate '.

Can you point to your working capital? We can. It's tied up out back, in the form of inventory, receivables and equipment you've invested in, via fixed assets.

So business owners can hopefully start to see now that the secret or ‘holy grail’ to that unlocking of cash flow is freeing up cash you've got tied up in those assets. We will point out as a side note that you also have to manage those assets for prompt turnover - that comes with billing promptly, collecting receivables when they are due , and ensuring you have financing mechanisms in place, if you need them , for inventory and equipment .

Many business owners don’t realize that the inventory and equipment can be turned into sources of working capital. Those two assets can be combined as a part of a working capital operating facility , which for larger transactions is known as an asset based line of credit .

The hallmark of being able to finance working capital, more often than not, is managing your receivables. We can categorically say that although the majority of clients have 30 day terms to customer’s typical collection periods actually seem to be 60 and, yes, even 90 days.

How can you monetize that critical asset? In a perfect world (by the way its not) you access receivable financing via your bank. That comes with obligations though, including your need to maintain clean financials, show a profit, and meet ratios and covenants. So it’s agreed. What's plan B!

Plan B can also bring you closer to finance working capital solutions. Plan B could involves the following - securitizing your receivables if you are a mediums size or larger firm . Smaller firms and start ups and monetize A/R via selling their receivables, taking them off the balance sheet, and receiving cash flow today that can be re invested in the business. Terms for this type of financing are invoice discounting, factoring, confidential invoice discounting, etc. If your firm has decent gross margins, good clients, and can you're able to increase sales and profits by having additional cash on hand these solutions are for you.

The long term solution for cash flow could be more equity in your business, or borrowing via term loans for cash flow. Those as viable, possible, but consider your short term options first - giving up equity or taking on debt are not fabulous working capital strategies.

In summary, to keep you business running you must asses your cash flow needs and priorities .We have named 5 or 6 immediate and available solutions to consider. Speak to a trusted, credible and experienced Canadian business financing advisor on cracking those sources of cash flow financing.

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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_working_capital_sources_cash_flow.html

How Can My Canadian Company Sell Or Remarket Equipment That Was on an Equipment Lease and is Not Required

Lease financing continues to be one of the major methods of equipment acquisition in the Canadian business environment. Business owners and financial managers of Canadian firms often with to replace older equipment with newer technology, and that can be of course anything from shop floor equipment to computers.

So what does the business owner do with equipment that he currently owns that was on a lease that has come to end of term? That equipment needs to be disposed of in an efficient and economic matter.

As a business owner you want to dispose of the equipment in a method that gives you the highest price while at the same time minimizing your expenses around that entire process. Back at the leasing company this entire process has an industry term, generally known as 'remarketing '.

In order to begin the process you need to look at a couple ' big picture ' scenarios - namely what do you currently believe the equipment is worth, and is there any sort of demand out in the market place for the equipment. If there is some solid sense that the situation can be advantageous in value to your firm ( we wouldn't recommend remarketing 1990 DOS based PC's..!) you need to asses what sort of costs will be involved and who in your firm will be primarily responsible for the divestiture.

So what's one of those 'bottom lines'? It is of course, what is the asset worth, and how do I determine that. Many industry publications for the asset type might provide you with a 'black book 'residual value on the equipment - that is similar to the 'black book 'we hear about at a car dealer's lot. Clearly this sort of number is only a guideline, as a lot of factors now come into play, like technology obsolescence (think computers!) as well as maintenance if in fact maintenance was applicable.

When you are looking at a disposition number that is reasonable you are in fact looking at three different numbers. Let's clarify that comment. You are looking for a number that matches the three industry terms -

FMV

OLV

FLV

Confused?? It's not that bad really. FMV stands for fair market value, and is a broad term which simply says that is it the price that a reasonable buyer will pay with no time constraints and some good market activity. It's quite comparable to selling your house and determining with the realtor what the current market will bear.

OLV is Orderly Liquidation value, and is essentially the auction process that might be held by you, an appraiser, or an auctioneer. The asset is put up for sale, and given current market conditions, is sold at highest bid.

FLV is forced liquidation value, and that is, from your perspective, kind of the ugly number - the asset has to be sold, it has to be sold tomorrow, who will give me what for it immediately, etc!

So the bottom line is we like FMV, we don't like FLV as the current asset owners.

Again, using our house analogy as an example you need to do some research into recent sales, that is of course because it gives you a ' comparable '. Your market research should come from both vendors and manufacturers and resellers of that type of asset.

In summary, disposing of a major off lease asset is a defined process. Care needs to be given to current market conditions and several industry terms revolving around the potential type of sale you will ultimately agree to. Successful completion of this whole process will allow you hopefully to enter into a new Equipment Lease financing transaction for assets to help your firm's growth and profits!

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www.7parkavenuefinancial.com

We finance the little guy - P.S. We finance the big guys also!

Need Equipment Loan and Lease Financing ? Re-program Your Leasing Finance Strategy Today !

Sometimes you just need to re-program things to make them work better - that's what we're also suggesting when you review your lease finance and equipment loan financing strategies for your company.

Let's examine how you can maximize your leasing strategy to attain maximum benefits and minimum hassle! That's clearly a win win strategy.

Focus clearly on eliminating what we can only call the ‘hassles’ of dealing with other types of financing , It's all about ' time' and your ' business bandwidth ' today when you are visiting a new asset acquisition . Without a doubt we can state that leasing equpment is by far the quickest method of obtaining an approval, satisfying both your vendors need as well as your own time constraints.

With only a very basic financial calculator you can quickly review all your lease finance options - the favorite question of almost all clients is: ' What will my monthly payment be?’ It's about time for you to answer that question yourself, and make sure that your cash flow and working capital remain intact on the equipment loan financing you are contemplating. How? Just remember that the only elements to any lease are: term, rate, amount financed, payment, and end of term option. If you know any 4 of those you can always solve for the final item, which in our case is payment. You should assume an interest rate that is consistent with your firms overall credit quality.

Business owners and financial managers should view their lease finance acquisitions in the context of your overall financial strategy. You might need to’ re - program ' your thinking on buying and paying for assets outright . Doesn’t it make more sense to keep your cash and line of credit reserves intact, and match the useful economic life of the asset you are acquiring to a predicable cash outlay?

A quick way to’ re program ' your leasing needs is simply to always use the same business template for each asset you are acquiring . They key aspects of that decision template, if we can call it that are: cash flow budgeting re the monthly lease payment, reviewing the asset in the context of not having to draw on your business operating line of credit, determining how long you will use the equipment for (thereby matching term and payment) and finally, factoring in balance sheet and tax advantages into your asset acquisition decision.

What's the biggest’ re programming' issue with most firms . It’s simply their mild obsession with ' rate ‘. Yes a rate has to be competitive, but view the lease financing rate in the context of the current interest rate environment , the challenge of getting traditional bank financing, and the fact that in the current 2011 environment rates are probably going up and not down . The real reality is that you determine your own rates in your new leasing re programming strategy! That’s because the largest factor in determining rates for equipment financing is the manner in which you properly present your overall credit quality and financial health.

In summary, equipment loan financing, aka ' leasing' has been around for over a hundred years in North America. Take a hard look at why you finance your assets, reprogram your strategies around benefits and ' how to ‘, and acquire your assets with the knowledge you have made the best financial decision for your firm. Need help ? Given a choice we’ll take an expert over a rookie any day ! Speak to a trusted, credible and experienced Canadian business financing advisor who will work on your ' re programming strategy with you!

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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/lease_finance_equipment_loan_financing_leasing.html

Is Business Receivable Invoice Finance your Guaranteed Cash Flow solution ? What Factoring Costs

The ups and downs of business often relate directly to those same ups and downs in business financing - let's examine why invoice finance , i.e. the financing of your business receivable is a guaranteed solution to solve some of those ups and downs.

We're the first to admit that any Canadian business owner or financial manager can be skeptical about the word guaranteed - so we'll offer up the basic facts and let you determine the validity of that ' guarantee '.

Business receivable finance, commonly called factoring is the immediate hard core alternative to monetize your business cycle. Your firm typically is finding cash flow and working capital finance harder to manage, and most probably you have discovered you can access the business financing you need.

To feel better about that ' guarantee ' we mentioned clients want to know what the cost of this type of financing is, and is it easy or cumbersome to use on a day to day basis.

The cost of invoice finance in Canada is widely mis understood. Let's look at a few facts around this issue, which tends to be often the most worrisome part of any clients decision to enter into this type of business receivable financing. First of all the cost of invoice financing is always viewed by customers as an interest rate - the actual lender, who is not financing your receivable (like the bank) is buying your receivable. It's purchased at a discount to yourself, and that discount in Canada can be anywhere from 1-3%. So in determining your interest in factor financing make sure you are singing from the same hymn book as the factoring firm,

Want an easy way to look at the cost of invoice finance? Think of it this way - if you were able to increase your prices by 1-3% , or take the cash you achieve from this type of financing and utilize it for supplier discounts from your vendors you have pretty well just broken even on your business financing . That’s powerful! You have turned your company into an automatic cash flow machine with unlimited credit, without the banks help and all that comes with bank financing.

Let's turn again to our ' guarantee ‘. We can categorically say that if your business is new or a start up, or if you are experiencing high growth, or is unable to access bank financing because of financial challenges you've faced or are facing then business receivable factoring is the guaranteed solution to those challenges . We repeat, none of these 4 issues affects your ability to turn your company into the cash flow machine we describe - that’s the guarantee.

So why aren’t hundreds or thousands of Canadian businesses taking us up on our ' guaranteed financing ' concept? Guess what, they are - everyday hundreds of firms turn to or start exploring this valuable type of business financing.

In summary, determine if your firm fits into the challenged businesses we spoke of. Make sure you understand the real true cost of this financing, which can in many cases increase your access to credit by 100% or more. Speak to a trusted, credible and experienced Canadian business financing advisor and turn that ' guarantee ' we spoke of into successful business receivable financing.

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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/invoice_finance_business_receivable_factoring.html

How Merchant Advance Capital Works in Canada And Why Retail Merchant Financing Produces Cash Flow Today

Numerous small businesses in Canada are investigating merchant advance capital and want to know how this type of retail merchant financing can help solve their cash flow challenges.
We have come to think of it as another version of cash flow financing, also called factoring. Under that type of financing you receive cash immediately for sales as you generate them, less a discount fee. In the case of merchant advance capital financing it’s somewhat similar in that you receive cash flow and working capital financing immediately, but you are pledging a portion of your future credit sales and revenue.
One of the key advantages of this type of financing is that there is no additional debt on your balance sheet - as we noted, there is no fixed payment by our firm - instead a portion or percentage of future sales is used to pay down the loan you receive. You continue paying down the merchant advance capital loan until the loan is totally retired.
In actuality though you are also in a position to renew or increase the loan even during the duration of the initial repayment - in effect it becomes a ' top up ' to your loan. Clients often ask how long the loan can be for - and typically the answer is one year or less.

So why is this type of financing attractive to many Canadian businesses? The reality that most business owners and managers realize is that cash flow fluctuates, as of course do sales. On occasion there are what we can call ' bulges' of activity that require you to purchase more inventory, and, conversely, there are always periods of slowness due to seasonality, etc. So business owners can take solace in the fact that as sales slow down so does the payments on their retail merchant financing loan, since, as we stated, you only pay back the financing from future sales.
Are there alternatives to this type of financing? Of course there are, and typically many clients we speak to have attempted to obtain cash flow financing from their Canadian chartered bank. If your firm is viewed by the bank as retail, or cash business, and you have an inventory component to your business you have of course discovered the general reluctance of banks to participate in this type of financing. Certainly that is the case without you providing additional personal collateral and equity in your business, which many business owners simply cant or don’t want to do.

Speak to a trusted, credible and experienced Canadian business financing advisor as to how merchant advance capital can grow your business and smooth out those cash flow challenges.
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http://www.7parkavenuefinancial.com/retail_merchant_financing_merchant_advance_capital.html