At Last ! Solid Info On Canadian Accounts Receivables Loans & Financing – A Business Credit Alternative

Nothing is more important to a Canadian business owner or financial manager than being well informed - in business living in the past generally leads to failure in today’s competitive environment

So when it comes to business financing and credit knowing the advantages and costs of accounts receivables loans becomes valuable.

Many Canadian businesses still feel they are somewhat of a captive prisoner in the difficult business credit environment. While interests are low in Canada and the stock markets seem to be doing fairly ok its clear that access to business credit and financing is still very difficult.

It’s kind of like a slow thawing out, with the freezer of course being Canadian chartered banks. Many surveys suggest that a good percentage of Canadian business that applies for working capital and cash flow facilities do not get all of the financing they need, if in fact they are approved at all.

This forces you, the business owner or manager, to take a second look at what is available out there to keep your operating capital adequate. We're definitely not putting blame on the banks (we love Canadian banks) but could there be a better way for small and medium sized businesses to access credit...well we think so .

Isn’t the saying that ' necessity is the mother of invention '? In our case independent finance firms, both U.S. owned and Canadian have stepped up to the bar, providing accounts receivable loans for your financing needs. We hasten to point out that the word ' loan ' is a misnomer here... our clients use the term also but we caution them that the good news is that these facilities arent loans, they are just the moneitzation of your largest current asset - your a/r.

Accounts receivables loans in Canada go by many different terms, some you have heard of, some you may not have. They include invoice discounting, factoring, receivable financing, and our favorite, confidential invoice discounting or factoring. In effect you are maximizing your cash flow from operations by monetizing your assets, i.e. the receivables.

Accounts receivable loans are your answer to being stuck in the middle - at one end of the spectrum is your investment in accounts receivables and providing terms to your own clients, while at the other end it’s a questions of not being able to access traditional business credit to finance that same investment.

So, do you know a good solution when you see one? Receivable financing would appear to be that solution. Turning your company into a cash flow machine via receivable finance is a solid strategy being adopted by thousands of Canadian firms.

The process is simple, as you generate sales invoices are immediately sold, i.e. converted into cash, at a discount. In Canada the rates of business factoring range widely - anywhere from 9% per annum to 1-3% per month.

Business owners accept this pricing when they realize they have decent gross margins to absorb this cost, while at the same time using the new found cash to take discounts with suppliers and sell more and generate more profits. In some cases 50-100%of the financing cost can be offset in the manner in which you use your new found cash flow.

Canadian business owners would prefer that their clients and suppliers didn’t know they were financing their A/R via accounts receivable loans. That’s whey they investigate C I D, confidential invoice discounting, allowing them to bill and collect their own receivables as they wish. (Traditional factoring via the U.S. and U.K. model requires your clients be notified.

In summary, thousands of firms in Canada are moving to this type of financing. Speak to a trusted, credible and experienced Canadian business financing advisor who can review costs, procedures and benefits, allowing you to win the cash flow and working capital battle!





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/accounts_receivable_loans_financing_credit.html

Don’t Hire A Business Advisor / Brokers For Your M And A And Capital Loan Needs In Canada

Never, we repeat, never hire or work with a Canadian business financing advisor for your loan or m&a needs , unless of course you know everything about business financing in Canada, have unlimited credible contacts, and have the time and resources to do it yourself .

Well, we think we have hopefully made our point that there will be many times when there will be significant value in not wasting internal resources and people time when you are looking for business financing. Who would ever want to be accused of making the mistake of trying to manage and execute on all your business financing needs without any professional help. No one we know, that’s for sure.

Over time, and trust us we don’t know why, we have come to dislike the word ' broker '. In reality we confess at the same time that we see everyone uses a mortgage, insurance or other type of broker to get a qualified, credible ' best deal '. So the middleman approach clearly has value to the consumer. Does it have value to a business? We think so, and here’s why.

Whether your business is in hyper growth mode, or at the opposite end of the spectrum, in financial distress surely you welcome the concept of an expert. You could be looking to complete an m&a transaction, or looking for loan and working capital facilities. Naturally there are many routine aspects of a business that do not require expert help, but when it comes to key issues around your businesses ultimate success are you 100% confident, on your own, all the time , that you have data , information, and possibilities covered. We doubt it, and we think you do also.

In effect you're looking for a ' business doctor' if we can call it that. And that’s probably not a bad analogy given the importance you might place on going to a good doctor for serious reasons.

There are always questions you have when you are considering Canadian business financing, and a good business advisor will answer those questions based on experience, at the same time pointing out alternative you may never have thought of.

But, and its a bit but , never assume that everyone out there who tells you they can assist in business financing, loan and working capital needs, or m&a help .. Knows of what they speak. The choice of a solid advisor can make or break your success in Canadian business financing for new or refinancing capital.

So what should you look for in a good advisor? We're pretty sure it’s intuitive, but we speak to so many clients who feel either burned or let down by past experience. So focus on some key areas such as the advisor number of years in practicing what they do. Do they have solid credible contacts?

References are of course also great, and with the internet you can Google anyone in business with a reputation and determine a lot about the quality and reputation and credibility of that firm or person. Remember, you're entrusting them with your financing in a very confidential way, and that's important.

Don't settle for generalists also, focus in on someone who can deliver on the specific financing you need, in areas such as m&a, working capital, asset based financing, franchising, or more esoteric new products such as confidential invoice discounting, purchase order financing, tax credit financing, etc.

You ultimately want to feel comfortable on sharing information with this person or firm, reviewing pitfalls, and most importantly, representing your firm in its business financing needs.

So, call them anything, but call them. A Canadian business financing advisor, a loan broker or intermediary, a capital broker, etc. Focus on trust, credibility and experience, not the name. And some free help from Mr. Google isn’t a bad thing also. Utilize special or expert help when you need it, that's our recommendation.




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/business_advisor_m_a_capital_brokers_loan.html

Canadian Business Capital – Bank Business Lines of Credit & Alternatives

Business Capital. Easier said than done, right? Let's examine how bank and other secured lenders offer business lines of credit - More importantly, we're going to bet a dollar ( we're conservative by nature!) that you might not be aware of some other options and alternatives for business line of credit financing !

Business operating lines are used to finance your investments. Your investments in receivables, inventory, and other current asset accounts of course. Canadian banks willingly offer these credit facilities (no seriously, they do) but the quality of the collateral they take is critical to that offering!

So how do the Canadian banks structure that facility in order to be made whole and feel comfortable in providing you with that business line of credit that is so badly needed for working capital and cash flow financing. For a starter, they take a first charge on the actual assets that are used to margin the facility - those current assets are accounts receivable, inventory ( raw materials, work in process and finished goods ) , all secured via a common security agreement which is typically referred to as a GSA ( General Security Agreement ) . You'll of course be surprised at how un - general and very specific this agreement is!

So once you have a bank operating line of credit how long does it last for. In our experience these facilities are renewed on an annual basis - with the two criteria for renewal being your business financials of course, as well as how the account has operated over the past year.

How are limits established for bank business lines of credit in Canada? Typical ' ratios '' or ' margining ' as we have called it are 75% of accounts receivable under 90 days, and some per cent age of inventory. It's only our opinion, but Canadian chartered banks really struggle with the inventory component of your business lines of credit - most typically because they can’t be expected to have experience on the value and disposal of all types of inventory. So typically you are very luck if you can get anywhere from 10-50% inventory financing on the value of your inventory.

Do your customers ever find out about how you are arranging business capital? Not really, the security is registered at a central registry, but clients and suppliers are never notified unless, of course, your loan is called.

Naturally many firms do also require long term financing commitments for business capital assets - i.e. those ' fixed assets' on our balance sheet . Typical bank term loans in Canada range from 3-5 years, sometimes longer, and have strict repayment and cash flow coverage requirements

As many Canadian business owners know, often personal assets are also charged as extra collateral for business lines of credit in Canada. These include cash savings, home equity, cash surrender value of life insurance policies, etc.

So why do the majority of Canadian business owners and financial managers always try to get bank financing in place. In might just be force of habit, but we think two other factors play a role. They are the cost of bank financing in Canada (its low!) and, as importantly, their lack of knowledge of other financial options.

There are other financial options for business capital in Canada other than the banks? Yes, there are! Prudent owners and managers should investigate ever growing alternatives including asset based lending, confidential invoice financing, tax credit financing, and purchase order financing, and unsecured cash flow loans. How's that for alternatives!

To more closely explore traditional or alternative options in business capital in Canada consider talking to a trusted, credible and experienced Canadian business financing advisor, who can put you on the path of business lines of credit that make sense.




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/business_capital_bank_business_lines_of_credit.html

Business Finance Options Canada – Start Up & Commercial Loan Corporate Credit Facilities

It's not as bad as you think. No really, we're serious. We're talking about business finance options in Canada - all the way thru from start up to corporate credit commercial loan facilities.

It's not uncommon for clients to know what or how much they need for their Canadian business financing needs. What their challenge usually concerns knows what their financing choices are, what the various benefits are, and most importantly, how to go about securing that financing. Let’s review!

When you think about it we are talking essentially about sources of funds - and that comes from either borrowing facilities of personal or corporate equity. We're not going to focus too much today on personal resources - typically those are collateral home mortgages, credit cards, and the proverbial friends and family. We'll let you address those yourselves - instead let’s focus on corporate borrowing, whether you are a start up or an established business.

So what are the key essentials in corporate credit facilities? They are supplier credit (most business owners don’t unfortunately consider that as a source of financing, but it is, working capital financing, and loans form banks and the government. (The Canadian SBL loan program goes to 350k and we firmly believe its one of the best facilities available to small and medium sizes business in Canada).

When you think about it no one financing solution will rarely cover off everything you need. In reality it’s a combination of borrowing structures that will allow you achieve all the working or long term corporate credit and capital you need. For example, the majority of equipment in Canada is finance via equipment leasing and financing - which in the 2011 environment enjoys a very robust popularity.

However, lease equipment financing is long term capital, matched against the useful life of the asset - in many cases you are instead looking for operating capital, the ever required ' cash flow ' that is the life blood of your company . That capital is sourced via a bank operating line of credit, a working capital facility via a non bank lender, or a major asset based lending facility that comprises receivables, inventory and fixed assets.

One of the most popular and growing methods of financing today is termed ' factoring ‘. Other names it goes by are receivable finance, invoice discounting, and our favorite C I D, which stands for confidential invoice discounting. This type of financing gives you all the working capital and cash flow you need, hence its popularity, but is more expensive than traditional corporate credit facilities via a bank. It's a very misunderstood form of finance; essentially it’s the sale of your receivables as you generate revenue.

Our afore mentioned C I D facility is a factoring or invoice discounting facility that doesn’t force you to tell your customers that you are financing your firm thru this type of arrangement .

In summary, the type of capital and the amount of business finance you require depends on which stage or cycle your business is in , either start up or advanced and mature .

You can best understand the type of financing you need by ensuring you have a solid handle of your operating expenses and capital costs requirements. Cash flow projections and a list of potential other collateral are always helpful... allowing you to feel confident that you can appro0ach external financing successful.

Consider speaking to a trusted, credible and experienced Canadian business financing advisor on funding you need today and for the future.




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/business_finance_options_corporate_credit_loan.html

Revealed ! How Funding Of A Franchise Purchase Works In Canada – Franchise Financing Lenders & Your Loan

We're never ones to be negative, so all we can say is that you can look at it as a problem, or an opportunity. We're talking about how franchise financing lenders work in Canada. Unless we're missing something, you've just made the decision to purchase a franchise in Canada - so how exactly does the approval and funding of that loan work? We're going to clarify that for you, right about now..!

The positive aspect of our information is simply the fact that franchising is ' hot ' again. Of course it’s always been around, and the actual stats on how much of the industry plays an important part in the overall economy is surprising to most. But when world fell to its knees, financially speaking, in the 2008-2009 global recession (and boy did that include Canada) many industries felt the pain, as did franchises. Well, the good news is that's over.

Clients always seem a bit overwhelmed with all the different aspects of putting together their total plan for their new franchise business. That includes choosing the business that matches your skills and investment, picking a location, finding employees, etc. But the biggest challenge seems to be the financing of that purchase via a franchise loan.

So is traditional bank financing available for a pure franchise loan. We're not 100% sure we can give you a ' yes ' on that one, but don’t despair as you will soon see. We suppose if you have pristine credit, a high net worth, strong outside collateral and guarantors, etc you could facilitate a term loan to purchase your business. That unfortunately is not he profile of many of the clients we meet that are looking for loan funding.

So what are those options then? In reality the specialty finance firms that focus on providing only franchise finance are a very small number in Canada. There are more of them in the U.S., but that’s not our turf! The specialty firms that provide the financing for the industry in Canada focus on the large well know brands that have lots of franchise units, strong franchisor financials, etc. That is only of course a small percentage of the total industry.

So whats the solution then if you're in the other majority, the hundreds or thousands of entrepreneurs who still require some major financing assistance. The answer is the Canadian BIL/CSBF program. It’s a customized federal program for businesses in Canada, with a loan funding cap of $350,000.00.

This program allows a Canadian bank to be your new franchise funding partner - mostly because the loan is guaranteed by the government so there is only nominal risk to the bank. Would the bank lend you those funds outside the program? As we said, maybe... but we're sketpical.

So if you are a new entrepreneur with a reasonable record of business success and experience how exactly do you proceed to qualify for your franchise loan purchase financing?

We going to break that down into a few key areas - they are focusing on the size of your investment, determining your own equity or deposit into the transaction, and then focusing on key fundamentals required for a loan approval.

Key elements to focus on are ensuring you can prove you have a reasonable credit history. Prepare a business plan, or have a plan prepared for you , that focuses on you, the franchisor, the financial potential of your business , one that demonstrates you're ready to run a business, and , oh yes, repay that loan .

Typical investments by yourself in the new business range from 25-40%... and as far as that credit rating goes you should have a credit bureau score of 650+.

Is there one secret to getting a final approval? We think it’s a bit more complicated than that, but not as troubling as you might think. Focus on a business plan, presenting yourself properly during the proposal process. We point out to clients that every new business, small and large actually goes through these same processes.

We recently came across a statement that maintains the four ' P’’s of franchise success are people, purpose, payment and protection. In summary, a good business candidate, a good franchise pick, ability to show you will be successful, and a back up plan if things don’t work out - example: spouses outside income.

So can we summarize? Franchising is popular again today... the best franchise financing lenders are specialized firms as well as the ever popular BIL/CSBF loan. Be prepared, and if you need assistance, consider seeking a trusted, credible and experienced Canadian business financing advisor who can fast track you to loan funding success for your new business.




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/franchise_financing_lenders_funding_loan_purchase.html

ABL Asset Based Financing - #2 But Trying Harder In Canadian Business Lending!

Is it really that bad to be #2 in anything? In business and in particular business lending it could actually be an advantage sometimes don't you think? With apologies to Vince Lombardi (... 'winning is the only thing ...’) we're talking specifically about ABL asset based financing.

While even we admit ABL lending might be # 2 today behind Canadian chartered bank commercial financing there is no doubt that asset based financing, or abl commercial lending facilities are fast becoming the financing mechanism of choice for thousands of Canadian businesses . Let's examine why ABL trys harder!

Revolving commercial credit lines via asset finance are essentially secured credit lines collateralized by your assets. Could it be any more simple? You use the ' value ' of your working capital assets to generate borrowing capability on a daily basis. By the way, in some cases your fixed assets can be part of that daily borrowing equation also!

Let's come back to that word ' value’ re those assets. That is the true power of asset finance and probably why ABL business lending is so fast growing in popularity. As compared to a bank facility which relies heavily on many other formulas and ratios to determine your borrowing base on a monthly basis ABL finance focuses solely on the maximum amount of real true liquidity in your receivables, inventory, etc .

The hard truth is that ABL lenders actually want you to borrow to the maximum of your facility, because as independent finance firms their only source of income is the finance charges on your facility. It is as simple as that. While Canadian chartered banks (we still love them by the way!) can be on occasion criticized for fluctuating on where they stand on commercial borrowing in a number of industries ABL business lending tends to always be there, in good times and bad.

And speaking of those good times , the risk profile that ABL lenders look at is clearly all over the map - by that we simply mean that your company can be doing great and in ' hyper growth' mode, or you can actually be seriously challenged financially and still be a prime candidate for ABL finance.

In business it's as much about the people, and in asset based lending the management of these firms are typically ultra experienced in asset valuation of your receivables, industry, and your industry as a whole .That is partially why we have seen numerous cases where a commercial credit facility has been tripled when it converted to an ABL facility from a bank facility.

And here’s a little secret about ABL finance in Canada , some of the chartered banks actually have small boutique ABL divisions within the bank that compete with regular commercial divisions within that same entity . How ironic!

So getting back to our # 2 and trying harder scenario, why does this form of business lending seem to work better. It's just that your assets are converted into a higher level of borrowing for liquidity and working capital. Typical rations for this type of facility are 90% of your A/R and 40-50%, or more of your inventory and fixed assets. Now that’s a true borrowing base!

We'll never know why, but the cost of asset based credit lines is always a top of mind priority for our clients understanding of this method of finance. To be honest, the range of cost in asset based financing is wide.

Facilities are available at even better rates than your chartered bank, but in many cases they are equal to or more costly. But don’t forget that it’s about access to capital, not borrowing cost, since you can take that capital and convert it to more sales and profits. It's all about leveraging your assets for growth!

For your higher borrowing power you attain with this type of business lending you must have the ability to report on your assets, so regular financials and constant updating of inventory and A/R is an essential requirement. The collateral for ABL lenders is those assets, not ratios and covenants!

So, in summary, ABL is clearly #2 today in asset finance. Will it be number one, we're not sure we know or care care !... but we are sure that if Canadian business owners and financial managers check out this form of commercial financing they will clearly see the financial benefits of more liquidity and working capital .



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/abl_asset_based_financing_business_lending.html

How To Finance Working Capital – Imagine Your Canadian Company had the Credit & Financing It Needed

It almost seems like a pipe dream, does it not? Actually having the cash flow and financing you need. And yes, don’t take it personally; even the big guys have that same challenge. Let’s examine how your company can assess and address methods to finance working capital, accessing credit and financing in a manner that works.

A good way to look at things is both externally and internally. From the internal perspective it’s a question of knowing the amount of working capital you need - as well as managing your day to day current assets (primarily A/R and inventory) in a way which optimizes cash flow.

And from the external perspective it’s about assessing solutions, but more importantly, solutions that work. It's those inflows and outflows that count. Probably the simple way to look at it is simply knowing your operating costs, while at the same time collecting sales, i.e. your A/R, efficiently as possible.

When clients tell us they have made mistakes in their decision to finance working capital we can almost guess what happened. They have mis-matched funds, meaning that cash flow and working capital from operations may in fact have been used to pay for fixed assets.

It's easier said than done, but the ' normal ' way to finance your business is short term lines of credit, typically through your bank. But credit and financing is difficult for small and medium sized firms that can’t meet all the criteria required by a chartered bank.

One solid option is injecting what we can call permanent working capital into the business. In effect it’s a cash flow loan, payable in fixed monthly installments. This type of transaction is typically available through Canada's government owned business bank, and you have to have a solid proof of historical cash flow to show you can repay the term loan, which is typically unsecured!

We spoke of matching funds, properly. That’s important. So if you are considering asset purchases utilize lease financing, minimizing your cash outflow of course, and allowing your company to structure a long term lease payment that matches the useful life of the asset you're purchasing.

Smaller and medium sized business, mostly smaller, tend to mix the personal finances of the owner with the business. That has positive and negative effects. In the last few years the merchant cash advance loan has become popular for many smaller businesses, retail in particular. It allows you to monetize, or ' cash flow ' today, future sales.

When address the need to finance working capital it’s recommended you have a handle on the assessment tools. It's not as complicated as you might think. Calculate your days sales outstanding, as well as a similar calculation for inventory. Those two calcs will show the total time it takes for a dollar to flow through your company. You have to bridge that gap now with cash flow financing.

General rules of thumb indicated that you need to have 2 dollars of receivables and inventory for one dollar of payables. That’s never been our favorite calculation because it simply reflects the build up of those current assets. We're more concerned about turnover,

So how do Canadian firms assess working capital solutions? In many cases it all comes down to two issues, the size of your cash flow need, and your firms overall credit quality. Simply speaking larger firms with solid financials can access bank credit.

Smaller and medium size firms have numerous options, some are short term in nature, and many times they come with a higher cost, but, and its a big but , it allows you generate all the cash flow you need to grow your business .

So what are those solutions? They are receivable financing, inventory financing, purchase order financing, tax credit financing, and asset based lending. Some, or a combination of these solutions will allow you to finance working capital properly and access credit you need to grow and profit.

Speak to a trusted, credible and experienced Canadian business financing advisor on how these solutions work, what they cost, and how they can, either singularly, or grouped, solved the Canadian working capital and credit enigma.



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/finance_working_capital_company_credit_financing.html