How Canadian Government Small Business Loans Work . Is the SBL Loan For You?

Intrigued By The Government Small Business Loan?



Information on the SBL loan for Canadian business. How government small business loans work in Canada.






‘So, exactly how does it work?' If we had the proverbial nickel for every time a client asked us that question about how Canadian government small business loans work we would be .. well, you guessed it.. rich!

Because the players, the mechanics of the SBL loan are widely misunderstood it's worth taking the time to understand how this valuable Canadian business financing vehicle works.

Quite often the criticism and perceived dissatisfaction with the program relate back simply to misinformation about the mechanics of the financing.

If we had to focus in on two issues that come into play time and time again with clients its either their dissatisfaction with the timing it takes to get approved , or , even worse, the fact that they are not approved!

The Canadian government small business loan is formally known as the BIL/CSBF program, and is operated under the auspices of INDUSTRY CANADA, a federal department. Our humble opinion is that the SBL loan is in fact very well managed, but where things fall apart always comes back to clients not knowing, or understanding the very basic qualifications for the program. Winning, via an approval under the program provides you with a great method of securing long term capital for business needs such as equipment, leaseholds, computers, software, and yes... even real estate if you choose.

Not every Canadian business owner knows the cap of the program... i.e. the infamous ' how much can we get ' question! For any non real estate item the loan cap is $ 350,000.00 ( is it just us , but that’s not exactly a small amount relative to ' Small' business loan ) and if you choose to finance real estate only you can actually finance 500k , the program cap under real estate.

Once you start getting in and understanding the program you start to appreciate its true value. Why? Because it becomes readily apparent that normal traditional financing in Canada could never satisfy some of the financing needs of start up businesses, small businesses, new franchises, etc. Those 3 key business segments are by far the most popular users of the SBL loan.

From a Canadian chartered bank or commercial independent finance company it’s all about risk. So the ability to finance your business with as little risk as possible is paramount to a bank or finance firm.

That's why using government small business loans allows you to leverage your business, even if it is a start up or a franchise to 90% leverage.

Understanding of the program essentially comes back to the following point; it's simply that the government is providing a guarantee or an ' enhancement ' we could call it to your loan. So all of a sudden the bank that told you your business might be too risky is in fact able to complete your financing satisfactorily.

When it comes to our two client issues, timing and approval we can only say that if you spend some time in understanding the small handful of criteria you eliminate both of those issues nicely.

Criteria for the program couldn’t be more basic - a permanent equity injection of 10% of the financed amount (that’s the ' down payment) and clean credit history of the busines owner or owners. Other miscellaneous items are the same as any other form of traditional financing, a business plan and cash flow, some supporting background info on the owners, etc. And by the way, don't consider applying for a government guarantee if you haven’t paid or filed your taxes. That's common sense, right.

Oh, and that timing issue. If you do things right it should take a couple days, if you choose to stumble around in misinformation it will take you much longer. Fast track your loan even faster by speaking to a trusted, credible and experienced Canadian business financing advisor on the SBL loan.





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/sbl_government_small_business_loan_loans.html

Floating A Loan? Don’t Float Alone! Funding Your Canadian Franchise Via Franchising Lenders For Funding Success!

Franchisee Funding For Canadian Entrepreneurs


Information on buying a franchise in Canada . How to overcome loan funding in Canada for your new business . Who are the lenders for your Canadian franchising funding strategy.





We recently caught an article on U.S. banking from one of our favorite U.S. websites ' Banking Connects ‘. The essence of the piece was that U.S. banks were awash in funds, but entrepreneurs were somewhat ' floating alone' in help on floating that loan!

So, let's try and ' Canadianize' that comment a bit with respect to a franchise loan in Canada, with emphasis on how to successfully loosen the purse strings of those franchise lenders for your funding needs.

Two critical components of success in franchising funding are your overall ' package ' of information, including a business plan and cash flow document. as well as owner capital .For non financial types those two fairly basic elements are still daunting though. The good news is that for very modest prices a number of solid sources to you can recommend assistance or even complete the package on your behalf. The cost by the way? Reasonable!

And now on to owner capital. If there’s one constant question we get from clients its ' How much money do we have to put into the business '.
Naturally we have the perfect answer that never seems acceptable at the outset: ' It depends ‘.

That's because the amount of money you put into the business is dictated by several areas of planning that must all come together.

They are as follows: In certain instances some Canadian or U.S. franchisors doing business in Canada might even strongly dictate how much money you have to put down. We suggest that they might be doing this by experience, knowing that past history has told them what an effective owner equity component is to their franchising system.

Funding of your franchise loan might come from a couple different sources, either an independent commercial finance firm that specializes in this type of lending, or, more commonly, the Government Small Business Loan. This requires a permanent capital amount from you in the 10% range.

Clients are always happy to hear from us that, on balance, acquiring a proven franchise is actually a favorable lending practice in Canada, if only for the fact that it removes some of the 'start up ' risk associated with opening any new business.

With the current 2012 economy on the horizon it's safe to say that entrepreneur and self employment options are clearly on the rise, given downsizing in many other aspects of the Canadian economy.

So, floating that loan! Some of the most accessible and competitive rates from Canadian lenders come via the BIL/CSBF program that more often than not perfectly suits a franchise funding need. The program is classically tailored to meet small business needs (isn’t that what a franchise is?) via great rates, limited personal guarantees, and longer amortizations, typically in the 5-7 year range.

We understand that rates for U.S. franchisees that are non bank in nature are often in the low teens these days in the U.S. . The Canadian program we've referenced has rates at least 50% lower if that U.S. comment is true.

Don't feel as a Canadian would be franchisee that you have to ' float alone' to float that (franchise) loan. Funds are available if you have a plan, some good business background in your chosen industry, and a decent measure of your own funds to commit to the venture. Speak to a trusted, credible and experienced Canadian business financing advisor 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 . 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/franchise_loan_lenders_franchising_funding.html

Downside Of Canadian ABL Asset Based Finance ? P.S. There Is No Downside! Business Financing And Lending That Works

Asset Based Lending Works



Information on ABL asset based finance. Explaining the perceived downside of lending via asset base lines of credit financing for Canadian firms.





So, which is it? We're big proponents of ABL asset based finance in Canada. So once in awhile a client pops the question. What's the question? It's ' Is there any downside to asset based financing for a Canadian firm?" Fair enough. ABL lending seems to have only good things attached to it in terms of the benefits. So about that downside...

We often hear the term perception versus reality. In the mind of the perceiver the perception is of course reality.

The world of ABL financing in Canada is in some ways fairly new. It's used by wholesalers, distributors, retailers, and manufacturers as an alternative to the commonly known ' bank operating line of credit '. One guesses that to be able to ' pan ' something and express concerns about the downside that you have to know what you're talking about.

In simple terms ABL lending in the context we're talking about it is a revolving line of credit secured by the assets of your company. Those assets are most commonly A/R, inventories, and in some cases we can throw unencumbered fixed assets and real estate into the mix. Again, simply speaking you borrow on a daily basis against the total value of all those assets once the asset value is agreed upon between yourself and the ABL lender.

So, on to that perceived downside! Many business owners and financial managers make the assumption that their firm must have the same credit quality that Canadian chartered banks require - that being profits, clean balance sheets, owner guarantees, the necessity for outside collateral on occasion, etc.

So the perception is that the downside here is that approval for ABL asset based finance is challenging. That clearly is not the case, if your firm has assets that can be financed you are in fact the best candidate for asset based lending.

Pricing. That clearly is perceived by many clients as the downside to this newer method of financing Canadian business. So, again, perception, or reality?! The reality is as follows: larger asset based lines of credit; particularly those in excess of 3 Million dollars are priced ultra competitively with Canadian banks. In some cases they might be lower!

How's that for a perception breaker?! For facilities between 250k and the, say 3 Million range pricing is done based on credit quality. In general these facilities are in fact priced higher, but in fact become the only alternative for firms that can't access any form of traditional financing at all.

‘Our company is public ' says a CFO. So we assume we can't access ABL revolver facilities?' Nothing can be further from the truth, as our ABL financing solution serves both private and publicly controlled companies, either on the TSX or Venture exchange in Canada. Even subsidiaries of U.S. companies by the way could qualify for asset based lines of credit. And in fact we think shareholders of public companies would like the idea that asset based facilities tend to grow and provide ongoing capital as the firm grows.

Fees. That’s the other common complaint we occasionally here about asset based finance. Here's where we will give in a little bit to those naysayers, as yes, there are some miscellaneous fees associated with ABL lending. But those fees only are a bit larger when we're talking about those very large revolving facilities, and in that case the pricing and access to more credit and working capital tend to offset any cost such as an appraisal fee, commitment fee, etc.

Finally, time to get approved and closed. Clients perceive ABL financing, perhaps because it’s different, as taking long to close. If you have solid reporting, can talk intelligently about your business and are prepared to commit to a new lending relationship we don't think there is any more time involved versus a bank line of credit.

So, perceptions. Realities. You decide, but be open to accessing this new method of financing. Speak to a trusted credible and experienced Canadian business financing advisor for assistance in your reality check!







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/abl_asset_based_finance_lending_financing.html

Say Yes To Canadian Working Capital Solutions - Say No To Financing Cash Flow Obstacles !

Overcoming and Winning The Cash Flow Obstacle Game In Canadian Business


Information on financing cash flow in Canada. Understanding the root of your financing needs leads to effective working capital solutions .


Today the goal is fairly simple. We'll identify some of the obstacles encountered by Canadian business when it comes to financing cash flow, and, as importantly we'll demonstrate some traditional as well as new forms of working capital solutions for the Canadian business owner and financial manager.

One of the reasons we like talking to clients on this subject is simply for the fact that certain terms in financing, i.e. ' working capital' and 'cash flow' are often overworked and not properly understood.

Let's look at working capital as an example. Your accountant or your text will talk about that being the difference between current assets and current liabilities. We think a more clear way to understand that concept, and certainly a more ' real world ' one is to think of your business having hundreds of daily, weekly , or monthly ' incidents .

Incidents? Yes, incidents such as making a sale, recording a receivable, buying inventory, shipping inventory, finally collecting that receivable, etc. Those tens, hundreds or thousands of incidents change your balance sheet accounts every time, and their year end summary of activity reflects ' sources' and ' uses ' of cash flow - i.e. where it came, where it went!

Your ability to understand the ' turnover ' in your accounts will ultimately reflect your ability to address, and understand cash flow challenges, and our proposed ' fix’ re: solutions.

For a manufacturing company the process is, for example, well defined. Buy inventory... make products, sell and invoice those products, and collect your funds. It's a simple three step process right?

But what happens when your cycle of operations is long, or complicated. That's when financing challenges occur. Canadian business owners must be in a position to understand where profits went, why A/R and inventory might be done but not profits up, and where funds will be found to purchase new assets.

Misunderstanding of cash flow is rampant we feel. We read about it being a ' yardstick measure of success ' in investments. We note our financials have a ' cash flow ' statement. Our accountant gave us a ' discounted cash flow ' analysis, and we're working on a ' cash flow budget. Talk about a very convenient catch phrase!

So once we finally get a handle on understanding and addressing working capital solutions the financing of cash flow becomes a lot easier.

So what about those working capital solutions we spoke of, traditional, and otherwise. Options to enhance your cash flow needs are available to the Canadian business owner.

They include bank lines of credit, government SBL loans for new assets, which in turn save cash outflows for new assets. And don't forget equipment leasing as a solid asset finance vehicle.

Receivables and inventory can be financed via one working capital or asset based lending facility, or separately via boutique offerings through specialized commercial finance firms. More esoteric financing, yet 100% viable and effective are the monetizing of SR&ED claims, as well as purchase order financing.

So what’s our bottom line? Simply that there are achievable goals in addressing working capital expectations - but those goals must be appropriate to the specific cash flow challenge, in terms of structure and rates. Make a commitment to address financing cash flow, and speak to a trusted, credible and experienced Canadian business financing advisor on those very solutions.





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/financing_cash_flow_working_capital_solutions.html

Canadian Accounts Receivable Finance ! Avoid The ‘ Fat Smoker ‘ Crisis Via Confidential Invoice Factoring

Invoice Discounting Fixes Future Cash Flow Challenges – Today!

Information on accounts receivable finance strategies in Canada . Let confidential invoice factoring take you out of crisis mode in cash flow and working capital management.




We’re the first to admit we’re always on the lookout for a solid business analogy. Enter the ‘fat smoker’ crisis as it relates to accounts receivable finance and confidential invoice factoring in Canada.

A U.S. publication entitled ‘Strategy & The Fat Smoker ‘ talks about how either in our personal or business lives we wait until we are in crisis mode before taking action. So why do business people, especially business owners or those in charge of finances wait until that critical time when it comes to addressing cash flow challenges. Can we address the problems of an overweight smoker immediately ? Rarely .

We know we will never really know why, but we can offer some solid pre – emptive strategies around monetizing your A/R into real world cash flow, the moment you generate that sale and invoice.

It’s the build up of accounts receivable and inventories which in fact cause that crisis – it might come from strong sales growth - not the worst problem in the world to have in business , right ?However when a cash flow crisis comes from a slow down in sales, that’s often a different story .

The very quick way to address the build up of A/R as it relates to accounts receivable finance is to do a very simple calculation, that being your days sales outstanding. Let’s use a quick example, and in our example we’ll focus on a quarterly number. (You can use any timeframe you wish). So we’ll take our accounts receivable level in total dollars at the end of a quarter and we’ll multiply that by 90 days, and then we will divide that number by your sales for those 90 days. Voila! You now have your DSO or days sales outstanding.

Now what? You have to benchmark that number on your selling terms, and also measure it against your days payable to suppliers and other lenders. Simply speaking if your terms to clients are 30 days, but your DSO is 88 days, and your terms with suppliers are 30 days… well… we think you see the problem!

Many Canadian business owners and financial managers see the problem, however many in fact combine the challenge of making money and having money. Again, simply speaking, sales don’t pay your suppliers, cash does!

So, if curing the ‘ fat smoker’, or in our cash our cash flow problem is the challenge, how can that be done? Invoice factoring, or its better cousin, confidential accounts receivable finance is in many cases the solution. It is a solid cure for the financial side of your cash flow and financing challenges.

Many clients we meet are forced into A/R financing – either via losing their bank lender or being unable to meet criteria for any other ‘ traditional financing ‘.

Invoice financing monetizes your A/R into instant cash flow. That heavy investment of A/R on the left hand side of your balance sheet now shows ‘ cash on hand ‘. When you qualify for confidential invoice factoring you have raised the success bar even higher, you are in a position to bill, and collect your own invoices outside the regular process of invoice factoring.

Be proactive, don’t be thrown into the fixing the ‘ fat smoker’ crisis of cash flow shortages on an emergency basis . It’s tough ! Understand your DSO and speak to a trusted, credible and experienced Canadian business financing advisor on ways to monetize what is quite often the largest asset on your balance sheet.











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/accounts_receivable_finance_invoice_factoring.html

Interested In Why Equipment Lease Rates And Low Leasing Payments Might Not Be Important ? !

Wouldn’t You Like To Understand The Pricing Game In Asset Leasing?



Information on the key factors regarding equipment lease rates. Are low leasing payments the most important factor in asset financing . Maybe. Maybe not.





You tell us, because we sure don't know. We're talking about equipment lease rates, and why clients are almost always under the distinct impression that the concept of a ' low payment ‘ or a ' great rate ' via leasing finance in Canada is their sole focus .

We recently came across some great information on that very subject, so let's try and put that in perspective from the viewpoint of the Canadian lessee and in the context of lease finance in Canada. (It differs considerably from the U.S.! via types of leases, market players, etc.!)

If there is one major point we're trying to make its simply that many Canadian business owners and financial managers don't quite understand the difference between pricing, the proverbial ' low monthly payment ‘, and the element of ' structure ' in an equipment finance transaction.

One key factor in the concept of lease rates and pricing , and we can forgive clients for not addressing this, is the fact that many borrowers don't address the end of the lease term with the same focus as all the due diligence and effort they put into getting a lease transaction in place.

The end of term option is critical when assessing equipment lease rates, and never moreso if you are focusing on an operating lease as opposed to the alternative, the capital lease, aka ' lease to own.

Naturally the asset at the end of the lease term has value, and structuring your lease properly will significantly enhance the value of that asset to either yourself, or the lessor. (We’re on your side, ie the lessee, by the way!).

The majority of lease leasing of assets in Canada is under and unregulated financial services. So it’s up to you to determine what amount of information you need to achieve your asset financing goal.

Here’s the $ 64,000.00 question. Do lessors in Canada tell you what your options are at the end of a lease term in a proper manner, allowing you to plan in advance on asset disposition, re-financing, return of equipment, etc? We assure clients (because we've been there) that major corporations spend a lot of time on their leased assets portfolio, reporting, etc. It's in that management of the equipment lease that thousands of dollars are saved, or lost.

We talked before about how equipment lease rates and the concept of a ' low payments ' is often intermingled with other issues forgotten or not known by the lessee. What are some of those other issues?

Naturally the actual interest or borrowing rate drives a significant part of the transaction, but other factors include any payments you make in advance, including security deposits. Also, they way you structure your payments or cash flows ultimately affects the lessors yield and your overall pricing. We're spoken of the residual value at the end of the lease, particularly when it comes to operating leases, as well as other structures such as a bargain purchase option.

So, complicated? It could be if you let it. But our key take away today is simply that you should consider leasing and that ' low monthly payment ' in the context of many other factors that drive a lessors profit on your borrowing via a lease financing transaction. Speak to a trusted, credible and experienced Canadian business financing advisor about why that ' low rate ' you're looking for might not be the most important factor in asset 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 . 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/equipment_lease_rates_low_payments_leasing.html

Canadian Commercial Business Bank Financing - What’s Right ( And Wrong ) With Your Banking Strategy

Business Lines Of Credit In Canada



Information on Canadian bank financing . Commercial business banking strategies vary with your needs and current situation and required needs for growth or survival.



Canadian business owners and financial managers assess their commercial business banking and financing needs at different times in their company's life.

As in many other facets of business it's a little difficult to develop a solution and fix a problem if you don't understand the fundamental problem.

The need to grow your business and be profitable usually drives a bank financing need. A growing business consumes, and needs more cash, if only for the fact that you’re building up receivables and inventories.

In Canada business operating lines of credit are offered by our chartered banks. These facilities finance your A/R and inventory via specific margin calculations.

Most Canadian firms that have this type of credit facility submit monthly financials and aged receivables, which in turn create a new borrowing base under which you can draw funds. Companies that are having challenges ( i.e. they are in special loans ) or who are in breach of covenants may in fact be required to submit almost daily cash flow and receivable reports .

Although the basic arithmetic around bank financing and commercial banking is simple in reality there are a lot of other factors that might end up affecting your bank facility.

What are some of these? In the continuum of time certain industries fall in and out of favor. No better example of this is offered up than the auto industry. Other factors that you as a business owner might not like that affect your bank financing are issues such as your profits ( or lack thereof!) , they quality of business and outside collateral, and your banks insistence on personal guarantees.

Bank financing works best under the following condition - your company is expanding, but at a reasonable rate. One of the greatest ironies of Canadian business financing is that a hyper growth business, even if its generating profits, is often viewed as financing challenged by a Chartered bank.

Business banking utilizes a very basic concept that is often misunderstood by the Canadian business owner. That's simply the fact that with a commercial bank line of credit you're drawing on assets of your growing business to pay older items. But wow, when your business ceases to grow, or profit your ability to draw cash flow out of your A/R and inventory business line of credit stops. But you still have operating and fixed term payment obligations and it now becomes difficult to pay suppliers.

Companies that have a solid handle on cash flow needs and their historical working capital inflows and outflows are in the best position to manage their firms and access bank financing.

Time and time again we meet with clients that tell a very similar story - business grew, expansion plans were put in place, fixed and operating costs grew, and .. you guessed it .. sales started flattening or going down. The result - a recipe for financial disaster!

The ability to manage your cash flow, or, alternatively, slow down your business is key. Speak to a trusted, credible and experienced Canadian business financing advisor for commercial bank financing that makes sense from where your firm is now.






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/bank_financing_commercial_business_banking.html