Analyze This! What Exactly is “ Factoring” In Canada ? Business Financing Canada Options & Cost & How To!

Be your own ‘Analyst ‘ and challenge yourself to figure out the best type of a/r finance for your firm.

Information on factoring as a business financing Canada Option . What this financing costs and how it works.



It's hard enough to worry about business financing...Canada has numerous options - receivable financing... aka: “factoring" is one of them that Canadian business owners and financial managers keep hearing about. But, and its a big but, how does this type of financing work, what are the costs involved , and what type of factoring is the right one for my firm.

It kind of seems simple when you're first told about it... your company ' sells ' its receivables to a third party finance firm - you get cash ( the same day, by the way !).

The common questions asked by clients are very predicable to us - what is the collateral for the financing, how does it work, what does it cost, and perhaps most importantly, what is the key difference between this type of financing and a bank business loan.

The clearest way to explain factoring, (also often called ' invoice discounting 'and' receivable financing ' is that you should view your receivables as the essential collateral for financing of this type.

When you sell something you of course have agreed on a ' price ' with the buyer. In Canada the ' price ' of this sale is very predictable; it ranges between 1-3% per month. Your ability to have the receivable collected in a more timely fashion therefore reduces your cost of financing.

A good way to think of how this financing works is simply to think of it as a way to ' assign’ the rights you have in that A/R to the buyer, the finance firm.
Since you have received the funds for the sale immediately on invoicing your client the right to all the funds of course belongs to the buyer of your A/R.

So all of that is pretty basic, right? Where then are some of the... lets call them ' confusion points ' in factoring and business financing Canada A/R finance. A couple of key issues come immediately to mind - the finance firm holds back on each advance a certain portion of the funds - this is called the ' holdback'. If you are working with the right firm, and believe us there are some wrong ones! then the holdback will be refunded to you as soon as your client pays. The holdback you can typically expect to receive is in the 10 per cent range ... any more than that should be a strong negotiating point on the overall facility you set up.

Oh yes, what about the cost of the financing itself. Can that be negotiated? There are some quick ways to determine if you can negotiate better pricing on your facility. In factoring and A/R finance the cost often depends on a couple basics - the size of your monthly A/R, the general quality of your accounts receivable, and your own firm’s general financial condition.

The good news is that if your company is experiencing financial challenges of any sort you probably still quality for business financing Canada factoring. However, the better you are perceived as doing will often affect your ability to negotiate a better rate.

However you might perceive the cost of factoring, you need to always remember that the use of immediate fund allows you to grow your business - in other words you're finally not the bank for your clients, and that’s a good thing. S

So view factoring and its cost in the context of the tradeoff between growing and expanding your firm with benefits that exceed the cost of this type of financing. Naturally you can choose to simply self finance your firm, but why not grow your business y using external working capital financing generated by factoring. It's easier to obtain than bank financing, and can be viewed as a long term or a temporary strategy.

Speak to a trusted, credible and experienced Canadian business financing advisor who can steer you in the right direction on this valuable type of financing in Canada.


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

What’s So Little About the Small Business Government Loan In Canada ! SBL Guaranteed Financing

Repeat The Benefits SBL Loan Financing Today

Information on the Canadian small business government loan program. Why ‘ SBL ‘ guaranteed funding is right for your firm .



Ever wondered how your company never managed to hear about the Canadian small business government loan program? The everyday term for this financing is the ' SBL ' - the ' small business loan that’s guaranteed by the government of Canada. And another thing is it really ' small'? Everything’s relative, but we certainly don't think so, and here’s why!

Industry Canada is the sponsor and governing body of the Canadian government with responsibility for the SBL loan program in Canada. As government folks are wanted to do, they have a couple more formal names for the program, it’s called by them the ' BIL ‘, or ' CSBF' program. Whats our point with all these acronyms? I guess you could say ' call me anything, but call me!"

The SBL loan provides financial assistances to thousands (almost 7500 loans were done in Canada in 2010) of Canadian small businesses. And lets get the word ' Small ' out of the way quickly, the program actually goes to $ 500,00.00 if you want to use it for real estate, in the majority of cases the program caps out at 350,00.00$ . Is that 350k small to your firm ?We've never felt a 350k financing is small, but as always, we'll let you decide, we just clarify and educate !

So whats the eligibility of the program? There are some really basic criteria for SBL guaranteed financing. Your firm can be a start up, or already established. Your actual or projected revenues have to be under 5,000,000.00 per annum.

Although 7500 business took advantage of the program last year can you imagine how many companies like yours there are in Canada with revenues fewer than 5 Million dollars? We can only imagine why the thousands of other eligible firms aren’t taking advantage of this financing. Is it perhaps because they haven’t heard about the program - well they can’t say that now.

Small business government loan financing is great for start up and growing small businesses in Canada. The government guarantees the loan to a significant portion, which is why thousands of businesses utilize this financing when they can get traditional Canadian chartered bank financing in Canada.

Borrowing for the program is focused on equipment, leaseholds and real estate. Software is also covered under the category of equipment.

Other great benefits of the program are that you as a business owner do not have to personally guarantee all of the loan, which in many, if not all! other Canadian business financing is a requirement. Oh, and by the way, rates, terms and structure for the loan, including no penalty for prepayment are additional great reasons to consider this type of financing in Canada.

Want to fast track your SBL small business government loan? Speak to a credible, experienced and trusted Canadian business financing advisor on how you can fast track an SBL financing for your firm.



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 . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :

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

Don’t Let Business Franchise Financing Approval Stop your Start Up Or Restaurant Dream In Canada

The Secret To Business Franchise Start Up Loans For Canadian Entrepreneurs



Information on business franchise financing in Canada . Whether it’s a restaurant or other type of business, start up, or established you have financing options to ensure success.



You're there... almost. You've made the decision to buy a business - it could be a restaurant or any other business for that matter. So let’s make sure franchise financing is not going to hold you back on realization of your dream and vision as a Canadian entrepreneur.

So how exactly do you find the funds you need. It's actually a process of careful planning around the type of financing that suits your purchase, and finding and working with the right lender to ensure the business is finance properly. Naturally planning and demonstrating you have thought out the financing is key also.

In terms of franchise financing your business - again it could be a restaurant, or one of the hundreds of other franchising opportunities out there in the Canadian marketplace... its important to break down the total financing need into categories, because in most cases each ' category' of your requirement is financed a bit differently . As an example the working capital component, what you need to run the business on an on going basis is usually financed by a traditional offering such as a business line of credit, or business credit cards if it’s a smaller business.

We encourage clients to cover the actual franchise fee out of their own equity contribution to the business, as it's challenging, if not impossible in the Canadian marketplace to finance your actually franchise fees. Items such as equipment, leasehold improvements, software, point of sale systems, etc are very financeable. And truth to be told these items make up the bulk of your financing needs more often than not.

Franchise financing around your business is in fact a 'niche ' or specialized sector in Canada. But the reality is that many of the same principles apply to financing your start up, restaurant purchase, or any other business for that manner.

What then are some of the basics around the process that allow you to get to the financing goal line... successfully! Items such as having a handle on your personal net worth and knowing what you maximum equity contribution to the business will be in terms of your personal financial situation are important.

We won’t say it's impossible, but the reali8ty is that you must have a decent personal credit score and history to be considered for franchise financing for your chosen business. The entire credit history of every Canadian is actually based on one number called a beacon score, and you require a certain ' beacon ' to be approved for business or for that matter any other type of financing. Bottom line, obtain your score and understand how it fits into the big picture.

In your business plan or executive summary ensure you focus on key items such as the following - info on your own experience, information on the industry and type of business you re purchasing, and finally . Perhaps most important, a financial projection.

Ensure that financial projection makes sense from a viewpoint of reasonable profit expectations - with a focus also on how your loan financing will be paid back. The reality is that this document and how it is presented can make or break your financing approval.

While financing in some form could be provided by your franchisor, this in our experience is very rare - they are selling franchises, not borrowing funds to allow you to borrow from them. So review carefully, with professional assistance, your key financing options - these include the specialized BIL/CSBF loan, equipment financing tailored to your asset needs, and working capital options that might come in a variety of financing ' flavours'.

You have a good chance of accelerating your approval by working with an expert - that works in all manners of business. So seek a trusted, credible and experienced Canadian business financing advisor who can assist you in turning the business ownership dream into financial reality.



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_franchise_financing_restaurant_start_up.html

ABL Commercial Credit Lines Work - Why Asset Based Lenders Are Your Business FInancing Choice

Climb Aboard A New Way To Finance Your Business


Information on asset based lenders in Canada . Why are ABL commercial credit lines what you have been looking for in Canadian Business Financing .


ABL (Asset Based Lending) commercial credit lines from asset based lenders in Canada are providing tangible proof everyday that they are both an alternative or a first choice for Canadian companies seeking operating and working capital financing.

Let’s look at a documented example of how this facility helped one company. Although our example profiled is a U.S. firm we can assure readers that all comments and data apply to the Canadian business environment.

In our example the company was an importer and distributor, but the reality is that ABL commercial credit lines financing applies to numerous industries, in fact any industry that has receivables, inventories and assets.

So what did the ABL facility in fact do for this firm? It became a business line of credit that was able to ensure the company could grow outside of its sustainable growth rate (the growth rate at which a firm can expand without borrowing based on its current cash operating cycle).

Funds from the asset based line of credit were used, in our example to also reduce long term debt. Simply speaking the company was able to monetize current assets, get more liquidity by doing this, and reduce long term debt - enhancing their balance sheet ratios at the same time.

Many companies in Canada find themselves in the unfortunate position of being delinquent or behind on government source deductions. These arrears are viewed seriously by any lending institution, and in Canada place a severe responsibility on the owners and directors of a company. In many cases, including our example the additional liquidity you get from asset based lenders is used to pay off those government arrears and source deductions which have built up.

Naturally in any company supplier relations and the amount of your payables play a key role in your firms viability. Borrowing facilities from asset based lenders allow you to reduce payables and maintain better supplier relations.

ABL is the therefore the new alternative and are commercial credit lines of choice by Canadian firms of all sizes. Speak to a trusted, credible and experienced Canadian business financing advisor in this area of business financing to ensure the benefits of this financing can pay off for your firm.




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_commercial_credit_lines_asset_based_lenders.html

Understanding Canadian Working Capital Finance – Cash Flow and Institutional Loans & Private Lenders

Commercial Business Cash Flow Financing In Canada

Information on working capital finance options in Canada . What offerings are available from banks and private lenders when you need business loans or cash flow financing.



Having the right information simply becomes a small investment of your time and can turn into tremendous benefits... that are why your ability to understand working capital finance loans from both private lenders and other institutions is noteworthy.

When Canadian business owners and financial managers think in terms of capital typically Canadian chartered banks come to mind. That’s what business people tend to call traditional financing in Canada. But is it always readily available and possible to obtain? Many businesses find themselves in the position of needing to grow, or in some cases simply survive around the need for extra cash flow and liquidity.

The optimal solution is of course simple - have some sort of facility in place to access cash... when you need it! Two choices come to mind - a traditional working capital term loan from a bank - its essentially long term working capital with fixed monthly payments. Alternatively, and in many cases the better option, a non bank facility from private lenders is a better, if not more accessible solution.

And to be clear, let’s define ' private lenders' as that term is often mis understood in the context of a Canadian working capital loan. It may mean other things to you, but in our discussion today we are simply referring to a non bank entity, quite often a commercial finance firm that has a specialized niche in business lending and working capital.

What facilities are offered by these ' private lenders' if we can call them that? They include offerings such as receivables purchasing, working capital facilities that combine the borrowing ability of your inventory and receivables into one facility. Essentially a business line of credit from a non bank entity. Other offerings, somewhat more specialized include purchase order and contract financing, tax credit financing, and what we call the ' big kahuna ' of working capital cash flow financing in Canada - ABL (Asset based lending).

When we think of the facilities as describe above we're talking about the ' current assets ' part of your balance sheet - that’s where the liquidity lies.

Working capital outflows though can also be stemmed by utilizing lease financing or a sale leaseback strategy... that’s for your fixed assets of course.

Thousands of retail businesses in Canada often find themselves in the working capital finance conundrum. In recent years merchant cash advances, or loans against future sales have become a solution for the smaller retail business.

Advantages of a bank loan for working capital purposes are pretty clear - it enhances your commercial credit history, rates are the lowest and most desirable.

So the essence of your subject today is that you're in effect surrounded by working capital finance and loan options from both private lenders and Canadian chartered banks. It's a question of knowing what those sources are, and, most importantly... which one works best for your firm, whether you're a small retail business or a small to medium sized established corporations. (The big boys do quite well on their own, thank you).

Permanent or temporary solutions are available in many forms, as we have noted.Speak to an experienced, trusted, and credible Canadian business financing advisor who can ensure your working capital sources are just steps away.



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/working_capital_finance_private_lenders_loans.html

Let Equipment Leasing Finance Be Your Forward Momentum for Asset Financing – Use Lease Companies Today More Than Ever

In Uncertain Times Let Equipment Lease Finance Be Your Sure Thing Asset Financing

Information on equipment leasing finance in Canada . How lease companies and accelerate your asset financing needs.


A condition of advancement. That’s how ' forward ' is defined, and isn’t that whats it’s all about in business and competition. And acquiring assets via equipment leasing finance categorically moves your company forward. It’s the proper use of lease companies in asset finance that we'll examine, with a focus on ' why ‘!

Canadian business owners and financial managers do best when they view asset financing via equipment leasing finance as a ' tool '. It's utilizing that tool to leverage assets for your business sales and profit growth that makes lease companies the logical solution for fixed asset acquisition.

So for what type of asset does equipment finance not work? Quite frankly we cant think of one - whether its the new kid on the block - energy assets , or manufacturing, chemicals, food, planes, construction, auto , public infrastructure ... well .. we think you get the story. All assets can be financed, simple as that.

Whats so hard about understanding the value that lease companies bring to your firms table? It's a simple case of you ensuring you have chose then right asset, and that asset then being purchased on your behalf .. ensuring your ability to profit and grow from the use of the asset.

But that’s not all of course, because the inherent flexibility that comes with leasing gives you the right to acquire the ownership of the asset depending on what type of lease you construct and on what terms.

Advantages of this method of asset acquisition are fairly well known. You are in effect matching the outlays of cash for the lease to the benefits you will derive from the asset. The Canadian lease financing marketplace is on a total roll in 2011 and the asset finance industry is ready for business, yours! Interest rates are low, lease rates are ultra competitive and in many cases can even match bank financing, especially when you consider the processes and collateral you might be required to go through via a bank term loan for an asset .

2 to 5. What do we mean by that? Simply that that’s the typical duration of an asset lease in Canada - anywhere from two years to five years. We can’t remember when we have seen a lease term less than two years, because it simply doesn’t make sense for lease companies - although on occasion 7 and 10 year terms are available for certain asset classes... think heavy constructionb, aircraft, infrastructure, etc.

Clients can be forgiven for usually focusing only on the cash and working capital preservation aspects of equipment leasing finance .If you have limited capital, or don’t wish to disturb other financing you have in place leasing makes sense. Yes it’s true, this method of financing doesn’t deliver cash to your company, but it sure prevents it from leaving quickly... and in large amounts.

It’s of course an understatement to say that we’re doing business in a tech driven environment, so computers, telecom, and other tech assets lend themselves perfectly to equipment finance.

If you're concerned or simply want to become better informed about how to go about achieving the best benefits of this financing vehicle speak to an experienced, trusted and credible Canadian business financing advisor who can assist you in ensuring you're ' moving forward ' via this valuable tool in Canadian business financing.



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_leasing_finance_lease_companies_asset.html

10 Considerations For Equipment Leasing and Lease Financing In Canada – From Start to Buyout !

Use This Savvy Expertise To Master Equipment Lease Success For Your Company


Contrary to what Canadian business owners and financial managers might think it’s not always about the approval and the rate in lease financing in Canada. Let’s look at ten (yes ten!) other things you need to consider, from the start of an equipment leasing transaction to the end or buyout!

There a number of terms and issues that play a key role in the overalls structure and proper documentation of an equipt. lease in Canada. In some cases they should be viewed as your rights, in some it’s critical you understand your obligations.

Let’s dig in. In Canada the customary point of a starting to an equipment lease is essentially when you the lessee have signed off on an acceptance certificate. Your signature on that document should mean that you are prepared to start payments on the lease, which in Canada typically range from 36- 60 months, with some exceptions based on asset type and your overall firms credit quality. By signing the acceptance it’s critical you understand that you have deemed the asset in good working order, as often times the lease company is not the vendor you have worked with, they are just the financier.

Lease terms as we said are typically 3-5 years in Canada. Many clients fail to recognize they sometimes have flexibility in adjusting payments to a quarterly or semi annual basis - dont always think in terms of monthly payments when you are adjusting your cash flow budgets.


In many instances, certainly for larger transactions you may be asked to provide a certificate of incumbency on the transaction - simply speaking that’s just your firms statement that the signing officer on the lease can obligate the company for this particular transaction.

Warranties on an equipment leasing transaction in Canada. As we stated in the majority of cases, unless you are dealing with a captive finance co owned by your vendor the lease company is just financing the transaction - so they are concerned solely with payment, not functionality of your asset. So ensure you have a solid understanding with the vendor on maintenance, warranties, etc., because; ask we said, these often should not involve the lease financing firm.

Although your asset is leased you should consider that it be properly maintained. In certain asset categories you might be asked to adhere to a specific level of maintenance, also relating to the fact that on return of the asset the lessor might in fact re lease or sell the equipment.

We aren’t big fans of leasing companies in Canada placing ' stickers' or other asset ownership references on the assets you lease. In some cases lessors might insist, but in general we feel clients can negotiate strongly on this point, especially if your firms overall credit quality is strong.

A certificate of insurance is generally required for any equipment leasing transaction, or even a term loan, in Canada. Your insurance broker will typically be very familiar with a standard form that lists the lease financing firm as ' loss payee' in the even of any unfortunate incident, i.e. fire, theft, etc.

End of term. Only a three word phrase but boy is it important in Canadian equipment leasing financing. These three words can make or break you when it comes to ensuring the lease transaction you entered into brought benefits to your firm. The basics around this issue are as follows - ensure you know how to terminate the lease from a legal obligation point of view. If you have entered into an operating lease understand clearly your ability to terminate, return, extend, or upgrade. In technology financing this is all important, but equally important to other asset categories also.

In Canada some lease companies will want a right of first refusal on all your business. We'll be very clear on our feeling on this issue - simply they should have to earn this right, not demand it! Enough said!

In certain instances you might want to be in a position to assign your lease, prior to the end of the term. Typically this is negotiated up front, and requires simply that a credit worthy other entity be prepared to pick up your rights and obligations. Because of how lease financing companies are funded in Canada you might often find your own firm as the recipient of a notice of assignment by your lessor - the bottom line - nothing should really change as your rights still remain under and assignment unless you have agreed otherwise .

Well, that’s it. A lot of issues, some important to your firm, others less so. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with rates, approvals, plus the number of other issues we have detailed than can make or break equipment leasing success in Canada.


Stan Prokop is founder 7 Park Avenue Financial ; see

http://www.7parkavenuefinancial.com

Originating financing for Canadian companies,specializing: working capital, cash flow, and asset based financing , the 7 year old firm has completed in excess of 80 Million $ of financing for companies . For info / free consultation on Canadian business financing / contact details see:

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