Canadian Business Financing Challenges ? Let The Expert Lease Of Equpment Lending Be Your Guide!

No one said it was easy, that’s for sure. We're talking about the challenges Canadian business owners and financial managers face in business financing, specifically asset acquisition. So why does 80% of Canadian business utilize the lease of equipment as the solution to that challenge? Let’s look at equipment financing and lending as your stop gap to acquiring those new (or used) assets.

When you make the investment decision to purchase any asset for your business the ability to put together a lease agreement to match the useful life of that asset becomes puzzling sometimes. What type of lease and term is best?

Probably the best advice we can give clients is simply to make a reasonable assumption on the useful life of the asset and match the lease term to that same assumption. The quick example is of course not to use a 7 year lease to own scenario if you are financing a computer system. (Unless you're buying your computers at a better place than ours, we don’t seem to have generated 7 years from our last system!).

The other part of that equation is simply two worlds, ownership, or use. By focusing on those two elements you now have the ability to choose either a capital lease (ownership at end), or an operating lease (return or upgrade at end of term).
And those same two lease decisions can yield cash flow benefits, as well as accounting and tax implications that will work best for your firm.

It's probably just us, but we sometime intuitively feel that 99% of client looking to lease make that decision to conserve working capital. The lease of equipment is simply the answer to the lending question you've been facing - ‘How can we acquire the most amount of asset for the smallest amount of cash?".

The variety of assets in asset lending and leasing finance is endless. From a small photocopier of lap top to a major piece of production equipment on your shop floor, they all can be financed.

It's not unusual to view client thoughts on the lease of equipment as simply short term or temporary. But what is the shortest term you can lease an asset for? In the Canadian environment that term tends to be 2 years. Why 24 months. The honest answer is simply that it’s not really economical or profitable in the lending environment to lease an asset for a period less than two years. So now you know!

Many clients further enhance a shorter lease term by choosing an operating lease - recall that it is our lease to ' use ' strategy, which works best with assets not ultimately required by your firm, or those that have a lot of technological obsolescence attached to them. There are some accounting rules that need to be met when you are trying to achieve a pure operating lease, so it’s often best to talk to your accountant when structuring such a transaction.

At the end of the day the lease of equipment as your business financing strategy has to make sense from an overall viewpoint of rate, term and structure. Your firms own credit worthiness already determines your rate- you just have to ensure the lessor has the same opinion on credit worthiness as do you! And we’ve given you the ammunition on how to focus on term and type of lease already, so you're set.

So is equipment leasing the ' holy grail ' of business financing in Canada. We're not saying that. but, remember, 80% of all business is doing it, so that has to mean something. For expert advice, guidance and solutions on business financing via equipment lending consider speaking to a trusted, credible and experienced Canadian business financing advisor who can provide you with guidance for a proper asset finance solution.





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 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Canadian AR (A/R) Finance Exposed – How Receivables Factoring Companies Invoice Finance

Laid open to view. That's a solid definition for ' exposed '. It almost sounds like a steamy spy novel..! Well... perhaps not as exciting as that... but lets take the covers off A/R finance in Canada. How does receivables factoring and invoice finance work and another thing... didn't we hear it was expensive..?????

It's our observations that usually after Canadian business owners and financial managers understand how ar ( a/r ) finance works that they immediately focus in on trying to understand how they can achieve the benefits of receivables factoring , while at the same time reducing the cost . In years gone by the perception of factoring was that it was akin to the same negative perception we give to unscrupulous car dealers.

Bottom line? Things have changed, and invoice financing is powering, yes we say powering! thousands of companies all across Canada.

So, back to pricing - we're going to expose some of the key fundamentals around this type of business financing. In the case of how you are charged its actually more simply than you think, the pricing of your transactions revolves around the total time it takes to collect your invoices, the actual size of your approved facility, and thirdly, an d in our opinion as important, who you choose as an invoice finance partner !

So what actually is the best pricing you can achieve in Canada from an ar finance strategy point of view? Well, let’s just say the spectrum is broad, with costs ranging from 5-6% per annum to 1-3% per month. Wow! Let's repeat that wow! That is clearly a huge range. So clients tend to ask where they fit into the pricing of their receivables factoring equation.

In Canada there are 2-3 tiers of firms which dominate invoice finance. They are a select group of U.S. and Canadian banks, some major independently owned Canadian and U.S. firms, and finally, hundreds of what ca be only termed as small ' mom and pop ' shops, providing facilities that might range in the 15-25k/month range .

Where does your firm fit. The truth around pricing is that once your firm has a volume of approx 250k per month you can start to achieve some significant invoice finance savings. Want to know another secret of the industry. It's simply that if lock into a facility for a year then you can actually achieve a price reduction, while open facilities tend to charge a bit more.

Our favorite and recommended type of facility is called C I D - It stands for confidential invoice discounting. What is it? It's simply a receivables factoring facility that allows you to bill and collect your own receivables. Your competitors might be using invoice finance but they are under the stringent control of their factor partner, who is intensely involved in the invoicing and notification to your customers of the financing you have arranged.

And, guess what, C I D financing, contrary to popular Rumour, is the same or less expensive that traditional U.S. and U.K. type factoring which have dominated the Canadian landscape for years,

AR Finance is at the end of the day a business financing facility that involves yourself and your partner firm. We recommend you deal with Canadian firms who understand the business landscape here and who ensure you have a facility that makes sense from a cost point of view. The right partner will also not ' nickel and dime ' you with respect to hidden fees, surcharges, etc. There isn’t a day when we don’t meet a client who ' thinks' he knows what they are paying for invoice financing, until, unfortunately, we expose the true pricing around his or her facility.

Want the real straight talk and goods on receivables factoring in Canada. Perhaps, just perhaps you might want to talk to an unbiased expert. Seek a trusted, credible and experienced Canadian business financing advisor, and get on the inside of the true benefits of receivables finance!





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 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Don’t Strike Out With Canadian Leasing Finance Companies – Hit Home Runs Via A Financing Equipment Company

Sports analogies don't always work, but this time we think it’s quite appropriate. Striking out, i.e. losing when you are considering financing equpment strategies in Canadian lease finance should not be part of your preferred ' home run ' strategy when you work with a lease company.

The exhilarating feeling of the ' home run ' in equipment finance comes from completing a transaction for a new or used asset, knowing that you have achieved solid success , i.e. your ' home run ' based on a final great approval, rate, lease term, and flexible structure .

Strike outs rather, come from that other feeling, the sinking one, realizing that you have been pushed into a transaction that doesn’t make sense. Many lease finance firms in Canada are only happy to put you into a final structure that fits their approval and security criteria, not necessarily yours.

So, keeping our sports analogy in place, how do you create a winning streak for financing equipment success in Canada? We believe its simpler than you think, if, and its a big if sometimes, you are ‘armed and dangerous’ relative to knowing your lease options , and what leasing finance benefits accrue most favorably to your company .

First it’s all a questions of ' fit '. In Canada there are three general categories of a financing equpment company. They are small, medium and large... ticket that is. (Almost feels like buying a suit, doesn’t it?!) So when you have a new or used asset to finance remember that you should be working with a firm that specializes in your size and asset type. Why spin wheels approaching , talking to , and asking for a lease quote for a new computer system for your office when the lessor is only looking at transactions several million dollars and over - bottom line its a waste of your time, and theirs .

Step 2 simply understands lease products. In Canada, we keep it relatively simple... (The U.S. has tax leases, trac leases, leverages leases, synthetic leases, etc!) But us Canadians can generally get by with capital or operating leases. A simple way to remember both is simply lease to own, ( capital ) or lease to use, (operating ). Knowing the type of lease you want can save you a lot of time, plus potentially thousands in interest rate and total payments made savings.

The 2 other areas of Canadian leasing finance that you should be knowledgeable about are lease options, and approval criteria. When you investigate leasing finance is aware of critical issues such as down payments, security deposits, the total all in rate, hidden registration fees, etc. Bottom line; spend some time on certain areas of the fine print when that makes sense.

We done necessarily agree, but most clients think that rate and monthly payment is the ultimate home run criteria in Canadian leasing company negotiations . We haven’t told them that in Canada, unbeknownst to most customers, you actually get to pick your own rate.

How? Simply because rates are provided based on credit criteria, and knowing your firms credit and how to present it generally allows you to gain the best rate possible without much negotiation. The good news is that Canadian firms with great credit can get lease financing, and firms with less than great credit, i.e. financial challenges can also achieve lease approval through a more structured approach - i.e. a shorter term, or perhaps a down payment.

Well that’s it. Hopefully you feel confident now as you step up to the bat that you can achieve a financing equpment home run. Its simple , just remember our basic tips around lease types, how rates are determined, and types of leases and how the industry is segmented in Canada .

P.S. See you at the World Series!



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 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Wanted ! Canadian Companies Looking For The Government Loan For Small Business – ‘ SBL Loans ‘

They are offering. Why isn’t your company taking?! We're talking about the best deal in town for Canadian small and medium sized businesses - the government loan for small business - in our affectionate terms - ' The SBL ‘! (Small Business Loan).

Do you equate business loans and the word ' success ‘in the same sentence when you think of your chances of business financing success? Most clients we meet don't! They recount countless challenges in meeting their financing needs from what we term as traditional financing sources.

So, time to give up. Never, we say. One of the most viable options you can explore are SBL business loans for your company. They are offered (perhaps the better word is sponsored) by the federal government and the rates, terms and structures of this small business loan beats anything out there, and we'll show you why.

A word of caution though - you need to invest a little bit of time in understanding two key elements of the program - first , what it offers, and secondly, how you get to the goal line .. Quickly! (Many clients we meet are frustrated by their timelines in achieving this financing - you don’t have to be in their shoes if you follow our advice)

So, what is the program and what does it finance? That seems like a good start. The SBL government loan - small business is sponsored by the federal Industry Canada department. The program has been in place for many years, and last year almost hit 1 Billion dollars in financing for your competitors. (We want to put you on that same boat!) . The programs official name is the BIL program, and it is a term loan, typically five or seven years in duration, at rates of 3% over prime.

While many larger corporations are required to provide full personal guarantees of owners for their business financings the SBL loan does not, requiring only that the business owner guarantee only 25% of the loan amount - how about that!.

Misunderstanding. That’s what we run into a lot when we explain to clients what the loan can be used for. Unfortunately it is not a cash flow, but a loan that can be used for 3 separate categories of assets, equpment, leaseholds, and real estate also. Our own experience is that it is rarely used for real estate, but it’s nice to know that that facility is available to your firm.

Timelines. Time is money - who hasn’t heard that one? You can easily facilitate your SBL utilizing the motto of the Boy Scouts of Canada - ' BE PREPARED!'

When you are ready to commit to the loan ensure you have a crisp business plan ready, one that addresses the needs of your business and has a financial model in place showing repayment of the loan. Your own respectable personal credit rating is key also, and the loan typically requires a credit bureau score of 650 to gain approval .

While we speak in terms of a government loan the reality is that the feds charge our chartered banks with the actual administration of the loan - so in actuality the loan is available on almost ever street corner in Canada - where there is a chartered bank branch of course !

Want to learn more, and, even more importantly, fast track success. Speak to a trusted, credible and experienced Canadian business financing advisor on government loan for small business - Get the SBL working for you... today!




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 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Is A ‘ Good Enough ‘ Equipment Loan & Finance Lease Better Than ‘ Best ‘ For Canadian Finance Lease Needs ?

We're pretty sure, in fact very sure, that ' good enough' is not the attitude you take in any aspect of your business or business financing needs. Settling for 2nd best in today’s competitive environment is not a recommended strategy! So let’s look at how you can achieve some of the best leasing and financing equipment loan strategies for finance lease success in Canada.

New assets are always a challenge for acquisition when Canadian business owners and financial managers assess their respective financial positions. The price and therefore how you will finance these assets is of course critical to your overall asset acquisition strategy.

So when it comes to reducing cash outflows and in effect saving monies via a financing strategy is any wonder why over 80% of Canadian businesses utilize leasing financing as an integral part of their finance strategy.

But the reality is that many owners and managers don't understand the make up and the competitive offerings that make up the Canadian equipment loan and lease landscape. Even more importantly just understanding the rights and obligations and options of different types of leases can save any business owner or manager thousands of dollars, depending on overall purchase price. Even more dramatically we can say that making the wrong decision can actually cost you significantly.

Let’s utilize a quick example. Let's say you are focused on the amount of monthly payment and want to buy a 150,000 computer and software package (yes, software can be leased). So you contact a firm who you think can give you the best monthly payment, and you find you are quoted and approved for a 5 year term, monthly payment of 3000.00$. A quick expert calculation will tell you that you will pay 31000$ in interest over that 5 year term at current competitive rates. Sounds ok?? Maybe, maybe not.

Moving on... what if we told you that you could finance that same system for 3500$ / mo for a 3 year term , and at the end of the term you could return, upgrade , or choose to extend the lease .
For only 500$ more you have shortened your term, recognizing that most computers don’t last 5 years. In effect you have utilized an operating lease strategy to effectively manage your assets - that’s a solid financing decision in leasing financing.

We have utilized a simple example of how you need to in essence separate the pricing and the purchase of the asset from the decision of how to finance that same asset.

We're the first to admit the leasing process can be perceived as complex in Canada. There are hundreds of equipment loan and finance lease firms. They have different ' credit boxes ‘- meaning simply you must fit into their asset, deal size, and credit criteria box. Additionally numerous firms tend to complicate matters by throwing arcane terms at you such as ' down stroke ' , ' security deposit ', 'capital lease ' ' off balance sheet financing ' ' admin set up fees ' .. Etc. And on it goes.

In summary, leasing financing in Canada has huge benefits. Billions of dollars of assets are leased every year. Your competitors finance their assets. And yes, you could very quickly go out and achieve a ' good enough ' lease.

Want a better solution though? Simple speak to a trusted, credible an experienced Canadian business financing advisor. ' Good enough ' will soon become best when it comes to sourcing and structuring asset financing that makes sense from a Canadian equipment loan perspective .

P.S. We knew you would never settle for 2nd best!





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 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Canadian Lenders In Franchise Finance – Lending & Funding Options For Franchisee Financing

Wouldn't it be great to know that after you made one of the largest decisions in your business life - (buying a franchise business) that you had some solid options and tips around acquiring the business?

Let examine the current state ( we always work in the real world ) of franchise finance in Canada - who are the lenders in franchising and what funding and lending options might work best for you .

Many clients that approach us seem automatically skeptical that franchise finance can be easily achieved in the current Canadian business environment. No doubt they can be forgiven as its been a couple tough years with respect to the financial implosion (2008-2009), recession, etc. So boy do their eyes light up when we assure them that franchise finance financing funding is still available, and the lending criteria and solutions are not as demanding as they might think.

On the other hand though, what part of business is not a ' cake walk ' .Almost none, right. Therefore your ability to be prepared is critical.

We can generally put the idea of being prepared into two categories - having a strong proposal, and ensuring also that you are prepared to keep up your half of the bargain with your funding partner. Whats that part of the bargain? It's your equity investment of down payment into the business, the balance coming from your franchise finance loan funding.

Think about it... in many ways it is probably actually more easy to secure business franchise funding than any other normal start up since you have the benefit of a ' brand ' and ' reputation' backing you .. I.e. the Franchisor.

We encourage all clients to start assessing their financing options way in advance of their franchise final decision. While you may think that you have to tap into major savings or home equity, or collapse RRSP's, the reality is that you need to come up with anywhere from 30-40% , generally speaking , of your desired loan amount.

Unfortunately, and we run into this almost all the time, many franchisees don’t have a sense of how the franchise funding lenders assess their personal credit history. It's more simply than you think. The entire personal credit history of everyone in Canada comes down to a numerical score at the credit bureau. The magic number you need is 650 (or more!). You can easily check your score yourself.

Next steps generally revolve around assessing your financing options. For some of the larger franchise chains one or two well known independent finance companies can handle all your franchising needs from a lending / loan viewpoint. But, here’s the kicker, the majority of franchises in Canada are funded by the Government BIL program .It is absolutely the best deal in Canadian business, flexible rates, terms and structures, low personal guarantees, ability to prepay without penalty... bottom line it couldnt get any better .

Naturally you want to expedite your transaction. That is done by ensuring you have a crisp business plan and financial forecast in place - highlighting your business experiences, profit and cash flow potential, and info on the success of your franchisor as your new partner in Canadian business. You simply want to focus on one thing, showing your ability to repay the franchise loan.

Supplemental financing can also be achieved quite creatively if you have the right assistance - that might come in the form of a merchant advance loan against future sales, equipment leasing, or a straight unsecured working capital term loan.

So the good news is you have some great options in franchise finance and financing your new business. It’s up to you to assess those options, be prepared to present your plan. Want some great assistance? Consider working with a trusted credible and experienced Canadian business financing advisor in franchise finance funding.





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 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Power Your Business Financing with Canadian ABL Services – Why Asset Based Lending Works

It's always about the bank. Well ... not always... It seems that Canadian business financing continues to evolve and Canadian ABL services via asset based financing credit facilities are slowly getting to the top of the popularity pile.

Why does this type of financing work well and why is it becoming the accepted alternative to traditional Canadian chartered bank financing? We think we know why.

Although it might seem that the Canadian business and economic environment changes quickly these days we maintain that for the last two or 3 years the one thing that hasn’t changed is the ability for Canadian business owners and financial managers to get ' traditional ' financing from those great folks at the bank.

Skepticism and bank regulations in Canada seem to eliminate more and more qualified business borrower’s everyday. So it’s a struggle and if you are a small or medium sized firm in Canada the ability to grow or change your business is difficult.

Enter ABL lending in the Canadian marketplace. This type (we call it non-bank) of revolving credit facility is the new ' band aid ' for almost any size business, filling the void between traditional financing.

So why an asset is based lending facility able to work for your firm when a bank facility might not even is attainable. We guess it’s about risk and reward, in that for the same or higher cost almost any decent sized business has the ability to qualify for ABL services and financing.

The other side of the coin is also that the whole approval process is often quicker, in that there is only one key agenda item to review - your assets. Typically these assets are receivables; inventory and equipment, with real estate a borrowing possibility also, included right in your asset based lending facility.

We speak of the ' power ' of ABL. The true power lies simply in the fact that the assets we mentioned that are used as collateral are margined significantly higher than in the manner that a bank would margin those same assets. So it isn’t your financial statements strength that has the power - it’s those ' assets ' within the financials!

The broad appeal of asset based lending also lies in the fact that it’s flexible, that the other side of our ABL power equation. Your firm doesn’t necessarily have to be profitable (it helps ... but not required) and even if you face current financial challenges and setbacks you are still eligible. Even special loans clients can use ABL to escape from the restrictive claws of a special loans environment.

So whats our bottom line - it simply that if the Canadian banking environment continues to be unable to serve the demands of fast growing or challenged business... well... ABL financing services will step in and nicely fill that gap.

Ultimately it still might be your business goal to obtain a ' traditional ' facility. That’s ok of course. In the meantime thought consider the true power of asset based lines of credit as a funding option that will meet all your financing needs... today! Speak to a trusted, credible and experienced Canadian business financing advisor to eliminate that uphill financing battle you've been facing.



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 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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