Stuck In Business Financing Traffic? Raising Sources of Funding For Loans In Canada

Business Finance Options For Canadian Business



Information on sources of business financing for Canadian companies . Raising capital for loans and funding monetization of assets requires solid homework by the business owners.



Sources of business financing in Canada. It's no wonder thousands of Canadian firms, pretty well every day; feel they are in an eternal traffic jam with no green light in sight. Let's examine some of the main funding options in Canadian finding for raising capital via loans and other instruments, predominantly monetization of assets.

Running out of funds is no picnic. It's of course the major reason that a company either declines or even disappears. They become another ' tombstone ' in Canadian business. Not generating profits, or cash flow over a period of time ultimately leads to business demise - again... no secret there!

So who are the saviors... in effect those sources of business financing in Canada ?They come from a wide spectrum , including by the way your suppliers, who can play a key role in your success as they extend credit to your firm on terms .

Other key sources are Canadian chartered banks, asset based lenders, (they are kind of the new kid on the block), factoring firms (aka ' receivable finance ') and equipment leasing companies.

Often many sports analogies lend themselves to business - we don't know why, they just do. So keeping those sources of business finances ' on side’ often becomes the goal of every owner and business manager. If your firm’s financial position weakens then you in effect are abandoned by the assistance you need most, often leading to a financial crisis of some sorts.

How businesses get into short term trouble is again seemingly quite obvious. Suppliers react to potential problems by holding shipments or shortening payment terms, even the ultimate short payment term - C.O.D.! Other creditors tend to pile on when word spreads, or credit reports indicate you firm is trending downward. In some cases it’s absolutely not the fault of management - the industry could be in a temporary decline.

Replacing financing is difficult in the best of times; it’s really difficult for a firm that has financial challenges

Many sources of business financing are not afraid to step up to the table if your firm is temporarily challenged - they include factoring firms, asset based lenders, or financiers of tax credits. Equipment lessors and commercial asset loan firms are equally up for generating new cash flow by engineering a sale leaseback of assets, of simply approving your firm for much needed new equipment.

Canadian business should never be afraid source new asset financing in troubled times - however they should expect that transactions will be structured, perhaps at higher rates, shorter terms, or the need for some additional external collateral.

Nirvana in Canadian business, when it comes to funding loans or raising working capital is often Canadian chartered bank financing. That's certainly the perception by many clients, as these types of facilities are quite inexpensive (even more so in today’s low rate environment) are somewhat flexible. The reality though is that most challenged, start up, or struggling businesses cannot expect to achieve that bank credit Nirvana in Canada that they dream about.

Whether your firm is new, struggling, pre-revenue, or facing a temporary financing challenge never forget that sources of capital do exist. As we have mentioned they included asset based lines of credit, tax credit financing, receivable finance, supply chain financing, and equipment leases and leaseback.

Get out of that traffic jam by speaking to a trusted, credible and experienced Canadian business financing advisor on raising funding for your firm 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/sources_business_financing_raising_funding_loans.html

Financing Tax Pigs . Your SRED ( SR&ED Tax Credits ) Tax Credit Claims Are Still 100% Financeable!

SRED Bridge Loans Still Make Sense And Here’s Why

Information on the financing of the sred tax credit in Canada. SR&ED claims for your tax credits are still 100% financeable – here is why and how!



Ouch! Make that a double ouch! Tax pigs? That was the assessment of one of Canada's leading economics and business professors when it came to Canadian firms who line up (we assume he meant at the trough?!?!) to get their fair share of what he called ' tax preferences' in Canada.

The thrust of the article, which appeared in one of the two leading business newspapers in Canada, was that Canada is losing billions, yes that’s billions with a capital B... to a long list of tax programs from which it derives little benefit.

Those programs include labour funds, the Atlantic tax credit , film tax credits, accelerated deprecation credits ( that’s a new one for us), flow through share credits, GST preferences, and finally SRED ( SR&ED ) tax credit claims .

We won't weigh in on the authors premise, which was pretty well to put these programs on the ' chopping block ‘in order to get government spending in line.

We thought that perhaps we should seek an honest politician for some clarity on the issue , but in the interest of time vis a vis the ' honest politician' oxymoron our point is simply that if certain government tax credit programs such as SRED and film exist , and you qualify and file for them .. Then you can finance them.

The financing of these credits brings valuable cash flow and working capital into the thousands of firms who do in fact qualify for the program.

Let's look at the SRED program. This is the Scientific Research and Experimental Development Tax Credit Program which is a federal incentive. It's administered by both CRA and your respective province and has encouraged over the years thousands of Canadian companies to work on r&d. Private , ie non public firms can earn approximately up to 35% on the first 3 Million they spend on projects that qualify, and 20% on amount in excess.

Canadian business currently uses this SRED credit for claims on wages, material, equipment, and certain overhead allocations.

The question has therefore become, is all this SR&ED tax credit work legitimate, as almost 4 Billion per annum is spent annually in non refundable tax credits for Canadian firms. Over 24,000 firms have applied annually for the credits.

Upcoming federal budgets will soon tell the tale of where SRED is going in Canada.

The bottom line is that if you have a SRED (SR&ED) tax credit there is financing available on the credit. Your credit is monetized either at time of filing, or in some cases in an accrual financing plan as you spend. Claims typically are financed at 70% of SRED value, the other 30% is in essence a buffer.

TAX Credit financing can typically be completed in 14-21 days, with the essential collateral behind the financing of course being the SRED itself

Canadian firms who use the program can claim up tot the last two years of R&D, and the claims are typically prepared by professionals simply known as ' SRED CONSULTANTS.

So, is your firm a tax pig? Seems a bit harsh, and we're still looking for that honest politician find out where SRED tax credit is going in Canada. In the meantime, if you have a claim, and want to monetize it consider talking to a trusted, credible and experienced Canadian business financing advisor for funding your claim.





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/sred_tax_credit_claims_financing_credit.html

Pulling The Trigger Successfully On New And Resale Franchise Financing Costs in Canada . Buying And Finance Tips

Financing Restaurants and Other Canadian Franchise Concepts – What You Need To Know



Information on franchise financing in Canada for new and resale franchises. How costs of franchise finance are financed.



Buying a new or resale franchise in Canada? Let's try and show you how you can in effect ' pull the trigger ' successfully on franchise financing those costs.

We read recently that a franchisee/ franchisor relationship is not unlike a marriage between you and the franchise firm that you have selected as your future partner for hopefully... a long time!

Although our focus is on financing it's safe to say that what we refer to as the ' soft issues ' of success in franchising are as exceptionally critical. Typical attributes of a successful franchisee are of course being sales or people oriented, driven to succeed, and are of course committed to working hard and growing their business. Sounds easy, probably isn’t we think!

When it comes to financing you need to be in a position to have thoroughly investigated the financial aspects of the business. That might have included the costs of buying an existing franchise. It might be a company or ' corporate ' store currently held by your franchisor, or simply another franchisee, just like you, who wants to sell their business. Do we even have to mention you probably want to thoroughly investigate why that franchisee is selling, as that decision might be critical to your success!

Various franchisee associations and industry associations exist in Canada, and if you have ever wondered about ' picking someone’s brain ' we'd say that time is now when it comes to exploring the information around the industry itself, its regulation, etc. We would also point out that much of the legislation in the industry seems to significantly favor the franchisee rights, which, if you're a franchisee is a good thing. If you're a franchisor... well... that’s a different story we guess!


Franchise financing costs vary in Canada. You can purchase a small service oriented franchise, or, as many do participate in the Canadian QSR, FSR and Full service restaurant industry. (Quick service, fast service, full service).

In Canada the majority of franchises are financed with a co - signer, in effect the government of Canada! We're hoping these days that they are good for it!!

That's because the government small business loan program, typically called the SBL / BIL or CSBF program finances thousands of franchises.

As we noted in our introduction you can successfully use the program to finance both a new or resale franchise. In the case of buying a resale franchise you want to ensure that you have full financial disclosure from the current owner. That would of course include proper financial statements which would allow you to determine a valuation or proper pricing. This is a great time to enlist the help of an experienced business financing advisor, a lawyer, accountant, banker, etc - simply speaking: Someone to help you make the right decision.

In the case of a resale franchise you need to have a proper valuation done on any hard assets in the business. This can easily be accomplished by using a proper appraiser that can give you a sense of the actual value of the assets you're buying.

In the case of purchasing a resale franchise your transaction must be completed as an asset sale, not a share sale, which is typically difficult to finance if the seller insists on a ' share sale ' of the franchise.

Proper equity from yourself, plus a solid business plan and cash flows, plus some miscellaneous related busines financing application info will allow you to successfully complete franchise financing in Canada. In certain cases, with certain franchisors, you might qualify for financing from a highly specialized franchise finance firm. General financial criteria remain the same when it comes to financing from a non-regulated commercial financing firm such as a leasing company, etc.

At the end of the day successfully ' pulling the trigger' on financing costs for your new business come down to homework by yourself, working with a solid advisor or advisors, and presenting a strong business plan highlighting your experience and business growth potential.

Speak to a trusted, credible and experienced Canadian business financing advisor if you are interested in pursuing financing for a new or resale franchise in the Canadian market.







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_new_costs_buying_resale.html

Early Warning Signs You Need A Canadian ABL Asset Based Finance Facility Line Of Credit

A Canadian Business Line Of Credit To Meet Your Needs


Information on the ABL asset based financed facility . Why this business line of credit outperforms for Canadian business .





As a business owner or financial manager you want to be able to ensure that a business line of credit has the ability to assist your firm before, during and after serious financial challenges occur. That's where the ABL asset based finance facility comes in.

In a perfect world (we know it's not) you want to be able to detect financial challenges, understand why they happen, and then implement a solution to avoid them. Understanding the problem (or problems) allows you to make the difficult decisions to continue your business successfully.

So what kind of problems can in fact your business run into. From our experience some are obvious and others not so obvious. And more importantly is there one specific business strategy; in our case today the ABL asset based line of credit that can in fact help you execute the turnaround.

There are probably 5 major early warning signs that your firm might need an alternative financing solution.

So what are some of those early warning signals? They are as follows:

1. Too much short term debt

2. You're trapped in a vicious cash flow cycle

3. You've accumulated current assets that have little or no value (example: obsolete inventories, poor receivables)

4. Your investment in fixed assets has put a major strain on your liquidity

5. Your firm is trying to find itself as it struggles to makes sales projections without the proper assets and financing to back up that growth

So whether your company has purposely created some of these challenges or whether external market forces have the good news in fact is there is a solution, and the one we are recommending today is the ABL facility. It's a busines line of credit like no other.

The ABL business line of credit differs from a bank facility in that you have the ability to margin, at very solid levels your current and fixed assets, all in the form of a revolving business line of credit.

Typically the liquidity provided by this facility gives you access to much more cash flow and working capital, and at the same time isn't punishing your firm by forcing you to totally focus on meeting ratios, covenants, and even provide outside collateral.

That is to say the ABL revolver facility allows you to continue to operate, probably with much more liquidity in spit of your capital structure, your historical challenges or financial losses, etc.

In Canada ABL facilities are typically provided by non regulated commercial finance firms. The ultimate irony we've observed over the years is that the Canada's chartered banks themselves, recognizing limitations of traditional facilities, have themselves even ventured into this ' non- bank ' financing idea. Now that's business irony.

If you want a solid insight into some of the early warning signs that your current financing strategies arent working speak to a trusted, credible and experienced Canadian business financing advisor about the possible solution to those upcoming or existing challenges.







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_assest_based_finance_facility_line_of_credit.html

2,450 Ways To Pinpoint Cash Flow Problems Via Working Capital Solutions In Canada

Do You Think You Understand Solutions To Canadian Cash Flow Problems – But Perhaps Don’t ?!


Information on how Canadian business can pinpoint cash flow problems and implement working capital solutions for greater cash flow success



Cash flow problems and working capital solutions to those challenges that are faced by Canadian business. Are we really saying there are 2,450 ways to pinpoint the problem? In a way yes. Let's explain.

Although cash flow challenges are more than ' intuitive ' in the real world (that’s where we ourselves work) Canadian business owners and financial managers often fear or just simply don't understand how to quantify those problems. The reality is that the actual problem can be quite clear if you go to your financial statements, preferably on an ongoing basis.

Let's assume you can identify 2 data points in your financials - the number of simple relationships you can look at with those 2 numbers is of course 2.
3 different numbers or data points in your business numbers would allow you to calculate 6 relationships, 10 for example would allow you to calculate 90 relationships. Finally, if you identified 50 numbers in your balance sheet, income statement, or cash flow statement you would, you guessed it, be able to formulate 2,450 calculations. It's of course a geometrical solution we have just laid out.

So, your next question is of course ' what the heck is your point?! )

It’s simple actually; the relationships we are talking about are in fact more commonly called ' ratios' by financial types. Naturally you don't have to calculate 2,450 ratios to in fact get some meaningful data from your financials; a small handful will do nicely!

Let's examine quick examples to show you how you can very quickly pinpoint cash flow problems in your firm. Let's take 3 data points, your sales and your working capital. The working capital calculation is current assets over current liabilities on your balance sheet. Isolate those three data points and do the calculation. The actual calculation is Sales / Working capital.

Congratulations, you have just completed your working capital turnover calculation! It measures how your company is in fact managing your cash flow, because as sales go up inventories, receivables and payables rise also. All of those have been captured in our final calculation! In effect you have just mastered a simple way to compute the very complex relationship within your firm on a daily basis as you sell and collect.

Important to note that the number in and of itself is not meaningful. When you track it over time, say monthly, it becomes VERY meaningful. And for the purposes of this ratio a lower number is a better number.

It's also important to note that each industry in Canada will have a different number as a result, ranging anywhere from 2 to even 18. Each industry is different.


We're not accountants but what we have hopefully demonstrated is that any business owner or manager can use any number of data points in their financial results to pinpoint cash flow problems and performance.

It's all about asset management; in our example it’s those current assets that pay bill and allow you to make loan payments. Your goal is to manage the ' cash on hand ' account in your business well enough to put you in constant survival mode - and it's a jungle out there!

In Canada various solutions exist for cash flow problems. They include receivable financing, bank lines of credit, asset based lines of credit, monetization of tax credits, and supply chain finance. Each of these works in a different way, but all provide you with working capital solutions.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with score carding and solving your cash flow challenges.






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_problems_working_capital_solutions.html

The Evolution Of The Sale Leaseback Transaction In Canada . Get The Most From Your Lease Finance Company

Considered This Re- Financing Method?

Information on the Sale Leaseback transaction in Canada and how business owners and mangers can maximize the benefits of a lease finance company .



The sale leaseback transaction in Canada. It's back. Let's examine the resurgence of this unique financing transaction via a lease finance company or other financial firm.

Canadian business owners and financial managers, as owners of certain asset classes, have the ability to enter into a sale lease back scenario. It couldn't be more basic - you sell the asset to a buyer, typical a finance firm and that firm immediately becomes the lender or lessor of your transaction. And that asset is of course still there!

The two key elements that are happening should be quite clear - you have received cash flow and working capital for your firm on an asset that was unencumbered, and at the same time you are still ( hopefully !) using the asset to generate profit and operational capabilities for your firm .

In essence you're getting capital and cash flow from an asset that was otherwise non-performing. It's important to point out that your balance sheet still stays intact from a viewpoint of leverage, and in certain cases can actually improve.

It should go without saying that the financing can be a combination of one asset, or even different asset classes. For instance you could do a sale leaseback on your premises and the equipment if you are a manufacturing firm in Canada.

We referenced earlier the ' evolution' of the sale leaseback. In recent years a lease finance company was somewhat more reluctant to enter into such a transaction; if we could be blunt and straightforward (that’s our style!) transactions of this type were viewed as a ' cash grab' by firms who had some significant challenges. Bottom line it wasn't readily apparent the transaction made sense... for the lease finance company or other lender!

We like to view the transaction as simply one additional tool kit in the business owner’s pouch of financing or re-financing alternatives. If your firm is expanding, or is in a position of having to repay or arrange some other business debt then the transaction might make significant sense. Other times the new capital simply can make your business either grow or be more efficient.

Another way of looking at it is from the viewpoint of your core competencies - do you in effect necessarily want or need to be an owner of certain assets. just for the sake of ownership.

Naturally it's critical to determine the amount of capital you can extract from such a transaction. Business owners should ensure, either on their own or through an advisor, that they have a solid understanding of the current market value of the asset. However, if truth were to be told (again, that’s our style!) You will probably be required to get an appraisal done at your own cost at the request of the lease finance company or other lender.

Appraisals themselves have many nuances, and this is simply one more solid reason to ensure you have some solid advice in this area. Lenders or lessors focus on the liquidation value of the asset in a ' worst case' scenario. Business owners tend to view the asset in terms of its value today and in the business in the future. There is often a large difference between those two points of view!

The sale leaseback can also often enhance your operating ratios such as debt to equity, etc You definitely want to be in a position to understand the effect of the transaction from an accounting viewpoint, as well as ensuring you have the permission from any other ' secured lender' to complete the transaction properly .

When working capital, cash flow, growth, or balance sheet issues force you to consider alternative methods of raising capital don't forget those ' treasures in the barn ' - i.e. the assets you have in your firm that you own already.

Speak to a trusted, credible and experienced Canadian business financing advisor on how the sale lease back transaction has evolved into a solid business financing tool your firm can use 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/lease_finance_company_sale_leaseback.html

Don’t Let Your Company Collapse For Lack Of Cash Flow Financing . Canadian AR Finance For Receivables .

Misconceptions and Truths in Canadian A/R Financing


Information on ar finance in Canada . Why Cash flow financing of receivables works and how your firm can qualify today .




AR Finance, i.e. cash flow financing has the ability to save your company when it fact your firm is faced with survival challenges. Let's examine when a receivables strategy works, and what you need to do to facilitate a financing that makes sense. In essence, ' how it works' and ' why '.

Canadian business owners and finance managers that face challenges of raising cash for their firm can utilize an A/R finance strategy, which is in effect the sale and monetization of your receivables to generate working capital. Our comments are focused on your firm being potentially in ' survival ' mode, but of course they apply to daily operations and growth, or even 'hyper growth ' which is a double edge sword.

If you do in fact require an A/R cash flow strategy are you in fact eligible? Let's examine some key requirements around getting a proper facility in place. We say ' proper' because in our opinion there are certain receivables structures that certainly aren't optimal for your company.

Getting back to those qualifications! As a general rule only commercial, i.e. ' Business to Business' a/r is eligible for financing . (While there are financing mechanisms for consumer A/R in Canada - securitization / merchant advance etc. Invoice financing in Canada general pertains to commercial business receivables)

And by the way, your clients can be in Canada, in the U.S. or foreign - cash flow A/R financing has the ability to capture and fund all of these!

Naturally your firm also has to be selling on credit, as a cash sale environment just does not work!

Size more or less counts when in comes to your ability to set up a proper receivables facility. Although very small facilities can be set up a good rule of thumb is that monthly A/R in the 100k+ range is a recommended size. And by the way, there is NO upper limit on the size of your facility in Canada, as facilities exist for tens of millions of dollars if that is in fact required.

The issue of ‘concentration’ of comes up. As a rule of thumb it’s preferable to have your A/R base spread over a number of clients, with no one client becoming a huge part of your overall sales. That issue is certainly able to be resolved if in fact that's the case with your firm, but widespread A/R clients is in fact the preferred business model.

While in almost all cases Canadian business financing vehicles work best with established companies we do point out to clients that a start up firm can in fact set up a proper facility and benefit in the same manner.

While very small invoice transactions can be financed typically larger invoice amounts lend themselves best to this method of finance.

So those are some of the points that define your eligibility for a cash flow financing facility. To originate a facility you must be able to produce aged receivable reports, financial statements, and basic info around your business model.

Our recommended facility is confidential AR FINANCE, which allows you to bill and collect your own receivables. Generally this type of facility has a higher level of due diligence involved, but your firms reaps all the benefits of cash flow financing and remains in full control of all aspects of the day to day routine.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in setting a proper facility that puts you in full survival, and hopefully growth mode for future sales and profits.






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/ar_finance_cash_flow_financing_receivables_.html