The 3 Commandments Of The FMV Fair Market Value Operating Lease - Myth VS. Reality In Canadian Finance Leases

Why We Love Canadian FMV lease finance options!


Information on the fmv fair market value operating lease in Canada . What are the benefits and issues around this type of financing versus standard finance leases.



The FMV fair market value operating lease. It's not a bad example of, in our case, the 3 commandments of what this type of leasing finance affords Canadian business owners and finance managers. More about those 3 three later.

Leasing is hardly the ' cutting edge ' in Canadian business financing. It's been around almost... well... since the Dead Sea was sick! Business has always benefitted from this type of finance; pretty well every industry in Canada utilizes it.


We have always maintained that lease finance removes something from your business. It removes what we long ago termed as the ' obstacle to innovation ' that your company might be facing. That obstacle is known to you by another term - COST!

Businesses in Canada choose to invest in new assets, whether they are on the shop floor or in the Computer room for a variety of reasons .Quite often the access to new technology does a number of things for your firm. It can reduce your labor costs, allow you to work more efficiently and faster, and generally stay more ahead the of the next guy... i.e. the competition.

We have rarely found a naysayer when it comes to equipment financing in Canada. That's not hard to understand, because in fact over 80% of businesses in Canada utilize either one of the two types of lease finance available in Canada. The simply reality is that the lease decision is most often driven by the cost of the asset and the amount of internal or external capital you must raise to acquire those assets.

Back to our three commandments. They revolve around the focus of one of those two types of equipment lease options accessible to yourself. That is what is known as the FMV operating lease. And those commandments are in fact better termed as ' choices’. The 3 commandments are : Thou shalt return ; Thou shalt purchase ; Thou shalt upgrade/extend .Let's explain.

Entering into an FMV fair market value lease gives you the option of returning, purchasing, or extending/upgrading the lease asset. Exercising any one of those three options puts you in the driver’s seat when it comes to maximum flexibility.

Naturally there are always some challenges - a good example being if your lessor is a great distance away. Our advice then? Ensure you know the cost of returning that asset, and... who bears that cost! You don't want to lock yourself into a provision that makes poor economic sense, diluting one of the key benefits that are a part of the lease.

Another key point for you to consider is simply the expected value of the asset at the end of the lease term. In the case of computers and telecom equipment it might be nominal; in the case of larger costly ' yellow iron' type of assets it might be significant. Utilize some business experience and product intelligence at the start of your transaction to determine what in fact those values might actually turn out to be.

Also, define with your lessor how FMV is determined. An unscrupulous lessor might in fact try and take advantage of the definition of FMV. Simple advice: Watch out for the actual language in the FMV verbiage in your lease. Some lessors might even be flexible enough to define that value of that asset based on their own or industry experience. In technology financing Gartner Group think tank type data estimates useful life of tech assets. And in other asset categories the internet has played a great role in determining auction and residual values of all types of assets.

Operating leases can significantly lower your overall cost, the proverbial ' monthly payment. Even more flexibility comes when you can bundle in other costs to acquire the asset - example: installation, etc.

Trading in or returning the equipment and entering into a new lease can often be a win / win for yourself and the lessor. Your get newer technology, the lessor gets the value of the returned asset, and the Canadian leasing firm retains you as a good, paying client!

The decision to enter into an operating lease should be part of your overall decision to finance assets. In technology it’s a huge driver of equipment and software sales. Your other options is of course to either purchase the asset for cash , or enter into a capital lease to own the equipment at end of term .

Always remember though to consider responsibly the 3 commandments of the FMV operating lease - purchase, return, or upgrade /extend. Maximum benefit for minimum cost.

Speak to a trusted credible and experienced Canadian business financing advisor who can assist you in Canadian lease 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 . 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/fmv_fair_market_value_operating_lease_finance.html

Confessions Of An SBL Government Loans Super Fan . The Canada Small Business Loan

Looking For A Creative Way To Finance Your Start Up Or Small Business In Canada? Here’s How!


Information on small business government loans in Canada. Why the SBL loan is a preferred financing vehicle for thousands of businesses like yours.



SBL government loans. I guess you could call us a fan, even a super fan. The word fan comes from the root word ' fanatic ‘, denoting an ' enthusiastic devotee. So why is the Canada small business loan the recipient of our full support. Let's try and preach to some of the potential unconverted.

More and more businesses in Canada, new, and established, are seeking loans backed by the government. Talk about a great co-signer! And remember that we are talking about a loan, not a grant. We're always being asked about ' grant money’... free money in essence. We're sure it's out there somewhere, we just haven't found it, and we're equally believers in the ' there is no free lunch ' concept!

The SBL loan is a great choice for business when you're in a touch economy; it’s all about choosing the right lender under the program and ensuring you are aware of some basic rules and regulations that allow you to qualify for the program. We feel quite strongly that every Canadian business owner can actually do a great job of pre-qualifying themselves in advance.

Let's recap some of those basic qualifications. They include being a Canadian citizen or being eligible to legally borrow in Canada. That's just common sense. Although you only have to only guarantee 25% of the loan personally that comes with the understanding that you have a reasonable personal credit history. In Canada the credit bureaus work on a ‘scoring ' basis, and for purposes of SBL government loans you should at least have a score of 650.

The questions of rates and structures always comes up in connection with questions from clients. Interest rates are ultra competitive given that you business is either completely new, or has under 5 Million dollars in revenue (That’s the revenue cap under the program). Rates on the SBL small business loans are in the 3% over prime range and a small government fee can usually actually be added into the financing of the loan.

Any business financing application has strong elements of one thing - and that’s common sense questions. You should therefore be prepared to address some very basics, including a resume or bio on yourself, a description of your business, a cash flow repayment plan (that’s critical). Additionally some supporting documents are required, all of which in our opinion are again. very ' common sense ' oriented. They include a copy of your tax return, your incorporation data, a premises lease, etc.

It's a great idea to also have a clear idea of the financing you are requesting. The three categories of assets that can be financed under the program are equipment, leaseholds, and real estate. Unfortunately it’s not a cash loan per se, so there are no working capital or cash flow borrowings under the program. And by the way that’s a popular misconception.

We should also add that you need to inject a minimum of permanent equity, in effect your ' down payment ' of 10% of your total borrowing.

It’s strongly recommended that you investigate the power of the Canada small business SBL loan. You just might find you will become a super fan also! Speak to a trusted, credible and experienced Canadian business financing advisor for help with this great program.






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/government_loans_sbl_canada_small_business.html

Who Else Wants A Franchise Financing Loan ? Franchisee Info On Canadian Franchising Loans

Secrets of Success In Canadian Franchising Finance


Information on securing a franchise financing loan in Canada . Franchisee Success is about franchising loans that suit your project.




A franchise financing loan. It’s one of two things you need to successfully gain your entry intro entrepreneurship - the other is of course selecting the right franchise and being approved for it!

Franchising finance in Canada requires a focused commitment by yourself as a franchisee. It is a combination of positioning yourself as ' finance worthy ' and at the same time ensuring you create the perception that you can successfully run and grow a business in the Canadian franchising environment.

Getting that franchise loan can be a challenge and a journey if you don't have some proper preparation done in advance. And don't despair, it doesnt have to be a solo journey. You can easily amass a core team of solid help - they might include your franchise lawyer, a banker or accountant, or a Canadian business financing advisor. Their advice and experience alone can take you over the top, which in your case is.. you guessed it.. Approval.

There still exists the odd would be entrepreneur out there that thinks that 100% OPM might actually work in Canadian franchisee finance. OPM is of course ' Other People Money ' and we can categorically say that 99.999999 % (have we made out point?!) of franchise loans in Canada require an equity contribution from you, the owner.

Don't even ask your next question; we know it already: ' How much do I as an owner have to put into the business to make the financing work?". For a starter that’s partly a wrong question or assumption already because you should be thinking in terms of financing the franchise so that is has a proper combination of debt and equity... and also the ability to grow via having some working capital for operations.

The majority of franchises in Canada probably don't necessarily have an accounts receivable component... but you certainly need cash flow for inventory, operations, payroll, your salary, etc!

In Canada some very popular and established financing programs can accomplish financing your new business with only a 10% equity component - however to both qualify and be successful at the same time additional equity is often needed to make certain financial rations work.

In certain cases your franchisor might be able to steer you towards some financing success - either through a referral or relationships they have established sources. The mistake here is that franchisees sometimes assume this either guarantees approval, or that the franchisor in some manner will support or guarantee the financing. A word of advice from experience - this is not the case!

Actually though the best co-signer in Canada has stated they are willing to guarantee the majority of your financing. What? We can see the expression on our clients faces as we make that statement. However in reality it's true, because the government of Canada in fact guarantees the financing they make under the Canadian BIL / CSBF program. And the majority of franchises in Canada are in fact financed in this manner. Talk about some great help!

We view getting a successful franchise financing loan as the ' hard aspect' of getting your franchising dream in place. Their is a ' soft' component to all this of course ; for example presenting yourself professionally, demonstrating your experience, and ensuring you have a crisp and complete proposal in place.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with franchisee financing in this exciting industry component of the Canadian economy.





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_financing_loan_franchising_franchisee.html

Is ABL Everything You Need And More In Canadian Business Financing ? The Asset Based Line Of Credit Facility Works Hard!

Business Financing Come Apart? Investigate ABL Today.

Information on the ABL asset based line of credit facility . This business financing mechanism is the solution to full business lines of credit via a/r, inventory and equipment margining.


Could an ABL asset based line of credit in fact be all the business financing your Canadian company needs? It's rare that one form of business finance in Canada meets everything you are looking for in a finance solution - quite often there needs to be a combination of solutions that make the final package work for yourself.

We can make the case the ABL facility in fact just might be the perfect solution for you - everything you are looking for in a revolving credit facility.

The revolving business line of credit... revolves... it’s as simple as that. The facility is an all encompassing umbrella around your key business assets - 99% of the time that includes the current and fixed asset triad - receivables, inventory, and equipment. Truth is told real estate can often be factored into the same facility.

The security that your firm provides for those assets becomes what the lender calls the ' borrowing base ' for you facility. A true asset based facility will have no form of notification to your clients, suppliers, etc. That's an important differentiator when it comes to benchmarking other types of financing.


Up to now we can forgive the majority of first time clients exploring an ABL for asking ' so what in fact is the difference between this type of finance and a Canadian chartered bank line of credit?

One key difference exists and emerges very quickly for the Canadian business owner or financial manager. It's simply that ' more ' in our case is better, and ' more ' in this case means more liquidity and cash flow. Another not so subtle difference is that the majority of firms utilizing an ABL asset based line of credit in fact qualify for financing when in fact they would never be a candidate for traditional bank financing.

That’s why a broad spectrum of Canadian business utilizes business financing of this manner. Does your company find itself in one of these industries: wholesale distribution, retail, and manufacturing? The bottom line is that pretty well every industry in Canada is serviced by ABL finance.

So why would your firm in fact consider a major all encompassing change in its working capital requirements. The unfortunate reason is that we would venture to say that the majority (but not all) of Canadian ABL users either doesn’t qualify for bank financing or they in fact qualify but simply can't get the amount of liquidity they need. They are in fact ' capped '.

With reference to our ' not all' comment above, it may come as a surprise to many but some of the largest and most successful corporations in Canada, firms with revenues in the billions have forsaken traditional bank lines and focused on an ABL facility . In the ABL environment your firm can be public, private, small, large... it's one size fits all.

Facility sizes for an entry level ABL tend to be in the 250k range, but it's important to note that there is no upper limit from there - facilities in the tens of millions of dollars can be arranged.

Your new business line of credit works because the ongoing monitoring and margining of collateral (via your reporting) maximizes liquidity. Typical advances are 90% of A/R, 30-70% on inventory, and market values of equipment and real estate.

It doesnt take long for the busines owner to realize that with those margins that in some cases there overall cash flow access can be improved anywhere from 50-100% , and we've seen that time and time again.

So is ABL a one size fits all? You can certainly make that case when you consider the facts above. Speak to a trusted credible and experienced Canadian business financing advisor who can assist you with your asset based line of credit needs.






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_line_credit_business_financing.html

Cash Flow Financing For Canadian Working Capital Solutions.It’s Like A Knife Fight In A Phone Booth Out There!

Avoiding the ‘ Closed For Business’ Sign!

Information on cash flow financing and working capital solutions for Canadian businesses . Viable traditional and alternative financing exists for your firm .



Cash flow financing challenges and working capital solutions for Canadian business. Keeping your firm solvent / liquid can almost seem like a crisis sometime. We were talking to two of our favorite business marketing guru's the other day and one of them made the comment ' it's like a knife fight in a phone booth ..!’. Wow, we thought, could there be any more a propos comment than that when it comes to business competition and business survival

Naturally it's important to be in a position to ensure you understand the nature of those challenges, why they occur, how to measure or track them, and finally ... put financing in place that ensures business liquidity.

There is a lot of statistics out there that say that a majority of business in the SME sector fail in their first 5 years in business. They simply didn’t have the access to capital they needed to survive. Ever since the 2008 recession/financial debacle cash flow and working capital have become ' job 1' for Canadian business owners and financial managers.

Having observed Canadian business for over 40 years now the one thing that never surprises us is the fact that when a business is enjoying strong success there often exists a general sense of complacency exists within the company. Cash flow seems kind of ok... and if it isn't we've got the bank to support us, right ?The bottom line on that one - fast growth and sales can hide a lot of problems .. for awhile .

The need for working capital for your company arises out of some basic needs - pay suppliers, finance, growth, ensure banks and other creditors are happy .

One term used in business is ' technically solvent ' - the basics on that one are that you have more assets than debts. That's the key to our message today - simply that that is just a calculation, and calculations don't pay bills.

Your ability to finance and monetize those assets is what liquidity is all about. Oh and by the way, if your balance sheet shows more liabilities than assets you're technically bankrupt!

As we have said, you need financing solutions to properly fund those assets, and that growth over time. It also helps that you are focusing on asset turnover - collecting receivables on time, turning inventory within your industry norms, and not mismatching short term cash outflows with long term obligations.

Canadian businesses tend to, on balance, not have a lot of cash on the balance sheet. That's ok if they have the credit facilities to draw on.

How can the business owner or finance manager monitor just how good, or bad the overall situation is? Some very simple calculations such as your days sales outstanding, inventory turns, and debt to equity calculations can provide tremendous insights. Monitoring these over time can provide very relevant information on an approaching crisis.

When your bank no longer seems to support you in a manner that you require we would offer up that they have also been benchmarking those same calculations on your financials. By then it is often too late to mend and repair that bank relationship.

Managing your assets, measuring that performance, and using debt in manner that suits for firm is key for cash flow financing survival.

In Canada the re are a number of working capital solutions for that ' knife fight in the phone booth ' that proverbial battle for cash flow survival.

Those tools include bank facilities for those that qualify. Other solutions include receivable financing, inventory financing, leasing assets or sale leaseback scenarios, or a true asset based line of credit that margins A/R, inventory and equipment all under on revolving facility. Two other relatively unheard of solutions are monetizing your tax credits and supply chain financing.
Why should you consider these working capital solutions?
Several reasons, including finally have a handle on accurate and timely information. Also, you prefer to manage growth, not fail from it. Managing day to day cash flow crisis is not … fun!

Speak to a trusted, credible and experienced Canadian business financing advisor on how your firm can successfully win the cash flow challenges you face everyday.





YOUR COMPANY IS LOOKING FOR CASH FLOW FINANCING !

You've arrived at the right address ! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the biggest issues facing business today

ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - INFO@7parkavenuefinancial.com






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/cash_flow_financing_working_capital_solutions.html

Making Sound Choices With Your Leasing Finance Company? Canadian Operating And Capital Lease Solutions

Cover Your Assets With The Right Lease Finance Strategy!


Information on choosing the right leasing finance company for your capital and operating lease solutions . Know Your Common Types of Choices!




The right leasing finance company. Sounds like a simple choice, right? But the reality is that when it comes to selecting the right capital and operating lease solutions for your firm can you really say you feel 100% prepared.

Abe Maslow was a famous U.S. professor, widely published and studied. He once wrote ' when the only tool you have is a hammer every problem resembles a nail'! No pun intended, but talk about hitting it on the head ! Most Canadian business owners and financial managers know they need a finance solution ; they know lease finance works, but quite often are very unclear on some basic selection criteria you need to have under your business belt when it comes to signing on the dotted line.

There are several major categories of leases and one, probably not all, is the right one for any particular equipment financing you enters into. When you win at the asset finance game you no doubt have one step on your competition. So it’s a question of knowing which benefits might accrue most logically to your firm.

Unlike the U.S. where things are a bit more complex, the leasing finance company in Canada has two major products, the lease to own solution, aka ' capital ', and the lease to use option, aka ' operating '. The operating lease is also often referred to as a fair market value lease or ‘true lease' , and we hasten to add the capital lease is also known as a finance lease .

Each of these two products exists to serve some basic needs of your company. A key point that is often overlooked by the lessee is the fact that either of these two leases can in effect be ' bundled ' to include other of your supplier’s deliverables, including shipping, installation, warranty, maintenance, etc.

Although an operating lease could in fact include a bundled component more logically that is undertaken for clients who wish the lease to use, or capital lease option. In an operating lease these items would be fully priced out, and would probably increase the total ' all in ' rate you are paying.

The world of operating leases is diminishing a bit with the inception of new standardized accounting rules that are coming into effect on a global basis. Although many of the benefits of leasing in general come together in both capital and operating leases the whole operating lease scenario becomes a bit more of an accounting exercise .

In an operating lease there is no interest per se - that might seem confusing to many. But the lease is structured as a payment only scenario, with your choices, or obligations being the ability to return, upgrde, or purchase at the end of term fair market value.

You will not always see, or get clear explanations from a leasing finance company on the type of lease, capital or operating, that you are entering into .That because the Canadian marketplace has lessors with either small, mid, or large ticket focuses. It's up to you to know who is offering what, what they are calling it, and if things are as they appear and promised.

Speak to a trusted, credible and experienced Canadian equipment financing advisor who can assist you in separating the promise and the deliverable for your firms benefit.








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/leasing_finance_company_lease_operating_capital.html

Riddle Me This. Why Is The Cost And Mechanics Of An Accounts Receivable Financing Loan And Receivables Discounting So Misunderstood?

A Campfire Discussion on Invoice Discounting and Financing In Canada !


Information on the accounts receivable financing loan and why invoice discounting in Canada is often misunderstood and confusing to Canadian business owners .



An accounts receivable financing loan? We think we have just answered our own question on the strategy known as invoice discounting or invoice finance... namely, the part about ' misunderstanding'. Why is that? Simply because technically it's not even a loan... so no debt, no interest paid, etc. Let's explain.

Thousands of Canadian businesses sell to other businesses on credit - hopefully they are creditworthy clients. That's the essence of the accounts receivable discounting solution - you no longer have to wait to get paid, thereby solving the problem of working capital and cash flow shortages for your business.

It couldn’t be any simpler, so why is there so much misinformation about this method of Canadian business financing. We think it boils down to some of the terminology, and the fact that the many firms that offer this type of finance each come at it from a different focus, direction, and daily mechanics .

Under the traditional way of accounts receivable financing you submit your invoice, or invoices to your finance firm partner. Hopefully you have chosen the right partner... more about that later. After you have submitted that invoice you get immediate funding - typically in terms of a wire transfer into your bank account. The neat news here is that you can do this daily, weekly, monthly, basically whenever you like. And by the way, you are no obligated to do this all the time; it’s your call to implement only the financing you need, when you need it.

The fee. Here's where misinformation abounds! The concept of ' financing' that A/R is in fact a sale of the receivable, not a collateralization. What do we mean by that ?Well, typically if you had a bank facility in place for your receivables they take a security agreement that covers off the collateralization of your assets, including of course a/r. So the bank is actually ‘‘lending “against that a/r, and charging you an interest rate on a per annum basis. Those bank interest rates are very attractive... if you of course qualify, which is a discussion for another day!

When an accounts receivable financing firm implements the same strategy their documentation states they are ' buying’ your invoice sales, not collateralizing them. They buy those at a discount, hence the term ' a/r discounting.

So whets the price on that sale. In Canada it's generally 2% if you are selling on a 30 day term. In effect it’s a reduction of 2% of your business margins. Where misinformation comes in is that fact that most Canadian business owners and financial managers don't understand the fact that they are already absorbing similar costs by in effect being the bank for their own clients. It's an expensive cost of capital. If you have the cash flow out of that sale you could... well... start the process all over, ie make another sale, buy more product... and generate additional profits. Instead of waiting 2-3 months for clients to pay, which seems to be happening a lot these days?

If you are financing your receivables via a bank they of course wish you the best of luck in collecting them - as little due diligence is done on who you are selling to and on what terms . In accounts receivable financing its incumbent on you and your finance partner firm to focus on a solid turnover of that A/R - it reduces the cost and generates cash flow more quickly.

Other key advantages or differences of accounts receivable discounting include the fact that facilities are generally unlimited - if you are generating sales you have constant, daily access to cash flow.

Picking the right partner is critical in A/R finance. Simple documentation and no hidden fees or terms are critical to your success when you use this financing. Our recommended facility is in fact confidential invoice financing, allowing you to bill and collect your own receivables.

Speak to a trusted, credible and experienced Canadian financing advisor. Clear up the misinformation on this unique method of 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 . 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_financing_loan_discounting.html