Don’t Make Mistakes In Sources Of Capital And Financing For A Canadian Business Loan. Debt Or Equity? What’s Best?

Financing Sources And Their Implications in Canadian Business Finance

Information on how the Canadian franchisee entrepreneur can be successful in franchise financing in Canada . Key elements for franchise loan approval .


You're looking for sources of capital and financing for you Canadian business. A Loan? An equity arrangement? A monetization of assets ? What works best is of course the nagging question that continuously faces Canadian business owners and financial managers.

Many Canadian businesses who contemplate equity type arrangements simply aren’t ready, and it’s also the most expensive form of financing when you consider the ownership dilution that comes with that strategy.

There is usually never an easy or obvious method to get rid of financial challenges. In fact if you're looking at bank financing, which is of course ' debt ' you may well find that the bank feels that more equity from yourself is in fact required in order to obtain that debt. That's a bit ironic sometimes!

Are there any tools available to help the Canadian business owner understand both the cost of debt and equity? There are, of course.

Whenever any Canadian firm looks for financing outside the business there is a cost to the owners. Naturally if you borrow in terms of term debt the additional interest financing costs reduce profits. Selling equity of course reduces no profit, but, and it’s a big one, ownership is proportionately reduced.

We are always preaching to clients that many forms of business financing outside of equity in act do not reduce earnings if in fact you're monetizing assets and have a healthy turnover in key areas such as receivables, inventory and fixed assets relative to overall sales. That’s why we're big proponents of strategies such as A/R financing, supply chain financing, asset based lines of credit, etc.

Earnings and cash flow analysis is a solid way of evaluating debt and equity alternatives.

What then are the key areas you should always focus on when it comes to debt vs. equity analysis? Some solid ones are overall risk with respect to your ability to make payments under any debt scenario.

And whether its debt or equity consider what flexibility you have with respect to any covenants the lender or equity partner might insist on. Always watch your leverage, there is only so much debt your firm can manage and handle.

The irony in either borrowing or looking for some equity is that you're usually in one of two positions, success, or failure! That one never escapes us, as we meet clients who are successful and have a need to finance new growth or expansion, of alternatively, they are currently losing money and have some real deficiencies in their company that need to be fixed.

When you are looking for debt you can be sure the lender will focus on working capital coverage, leverage, and operating efficiencies. Equity lenders will focus on management, growth potential, and why your business is unique.

If you want to properly understand available sources of capital when it comes to business financing, a loan, or an equity arrangement consider speaking to a trusted, credible and experienced Canadian business financing advisor.




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_capital_financing_business_loan_equity.html

Good Bye Failure – Hello Success In Franchisee Financing In Canada . It’s All About Who And What In A Franchise Loan

Canadian Franchise Finance . Tips and Insights


Information on how the Canadian franchisee entrepreneur can be successful in franchise financing in Canada . Key elements for franchise loan approval .



Franchisee financing in Canada. It goes nicely hand in hand with our contention; we're often told that it’s now what you know, it’s who you know. However, in the case of a franchise loan we think that both of those count.

It is very easy to see the appeal of franchising in Canada. In many ways it’s one aspect of the entrepreneurial dream, in effect ' no boss'. But the amount of time, effort and knowledge in being successful is of course critical.

The cost of a franchise in Canada from an overall point of view can be anywhere from small to very significant, depending on the type of franchise you purchase and its perceived financial potential.

The reality is that many smaller service type franchises can be purchased for a few thousands dollars, going all the way to some that might require a total investment of debt and equity in the millions. And everything in between!

You can solve a lot of the challenge that come with buying and financing a purchase by simply surrounding yourself with a small expert team. Some of the team might cost you something, other parts of it, like some solid professional and experienced advice is pretty well free.

So who's on first? as the old comedic saying goes. Your team might well consist of mentors and peers in your own business and personal life, or a lawyer, banker, accountant, or business financing advisor. It's safe to say that pretty well all of your team, if they are the right person, will dispense some very solid advice for little or no cost.

We're often asked by clients if there is a difference between purchasing from a Canadian franchisor or a U.S. firm, given the U.S probably offers hundreds, if not thousands of additional opportunities to purchase.

Most potential franchisees we talk to want to limit financial risk when it comes to a franchise loan and franchisee financing in Canada. How can they do that? A couple of instant suggestions would be to ensure you are incorporated, which just makes common sense also from a tax and financing perspective. You do intend to generate a profit after all!

You also need to seriously consider the right amount of debt and equity you are prepared to commit to. Too much of both is generally not a good thing, not enough of either is pretty well the same story. Your equity contribution has to be based on what you can personally commit and temper that of course with what you could potentially lose in a business failure. But let's stay optimistic for goodness sake, right!

Thousands of franchises in Canada are financed by the SBL government small business loan. Formally it’s known as the BIL/ CSBF program. We recommend it to many clients simply because it also limits your personal guarantee on the loan, and has fantastic, yes fantastic ( in our opinion )rates , terms and structures, including that limited personal covenant that we just mentioned.

So, hopefully you agree. It's a classic case of both who and what you know. Speak to a trusted, credible an experienced Canadian business financing advisor who can assist you in a franchise loan for your franchisee financing needs in Canada.

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_franchisee_financing_canada.html

ABL Asset Based Finance - Recognize These Early Warning Signs For Your Need for The New Paradigm In Revolving Lines Of Credit

Solve A Lot Of Business Finance Challenges With An ABL Facility

Information on ABL asset based finance in Canada . How does this new revolution in business revolving lines of credit work . P.S. It’s not new!


ABL asset based finance can be the solution for business revolving lines of credit when your current finance strategy isn't working. And what are those early warning signs? They include situations where your financing currently just isn’t working due to financial challenges you have experienced in the past. They also include acquisition scenarios, turnarounds, and the proverbial double edged sword, high growth.

The simple reality is that although the ABL credit lines have essentially the same goal they in fact get to that goal line in a very different manner. Both the chartered bank facility as well as the ABL line provide you with a bridge for financing from the time you receive customer payments while all the while generating expenses.

Receivables are often the primary component of an ABL strategy. The ABL facility is not capped, so as your sales grow so can the facility, it’s as simple as that. All of this might seem similar to a bank solution, so whets the real difference. One is in fact margining, in that asset based lines of credit, with respect to the a/r component, are usually margined at 90% - typically the bank is at 75%. Although the reporting is generally stricter with ABL the reality is that the tradeoff is significant, you can borrow more and are not focused on staying within any pre set credit limit.

Many clients we talk to don't understand the daily mechanics of how the asset based lender operates given they are not a bank. (The ABL is generally not a bank, but it actually can be sometimes). The typical way this is handled is via a separate blocked account where all the deposits you receive are handled separately from your operating account. Simply speaking you get money from the ABL via your operating account, and your receipts go into the other account. Naturally both accounts are fluctuating all the time.

While some of these terms and the actual ABL facility itself might seem ' new ' the reality is that this type of financing has been happening for decades in the U.S. and is enjoying more popularity everyday. In effect it has become ' mainstream'.

While we have focused on receivables as one component of the ABL strategy the other parts are inventory, equipment, and even real estate. All of these are neatly combined into one revolving facility, enhancing your overall borrowing power. The fact that they are margined at much higher rates than a chartered bank facility simply becomes a ' win ' for your firm.

While banks focus on profits and cash flow, which sometimes are difficult to achieve! the ABL asset based finance revolving lines of credit focus on Assets! Therefore typical bank requirements such as debt to equity, tangible net worth, cash flow coverage, etc simply don’t apply in ABL finance.

ABL can cost more (it can also cost less by the way), and as we noted it require more reporting to your ABL partner. However, if it can provide solutions to growth, turnaround, acquisition, and survival we think it certainly merits your investigation. Often times the higher price of the facility can easily be offset by proper usage of funds to generate profits and savings.

Speak to a trusted, credible and experienced Canadian business financing advisor if you with to look at the new paradigm in business lines of credit.

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_revolving_lines_of_credit.html

Who’s The Boss? Are Cash Flow Financing Challenges Managing You? Business Working Capital Management

Cash Flow – Canadian Business Style!

Information on cash flow financing in Canada . How business owners can achieve business working capital success via proper solutions and management


Valid question, right? When it comes to your business working capital and cash flow financing who's running the show, you, or are those two culprits seemingly running your company?

We're remind of one of Yogi Berra's (many) great lines - ' when you come to a fork in the road, take it ‘! That's probably where you are now in many cases. Determining who will win the ongoing cash flow battle for supremacy.

The reality is that you can probably be forgiven for feeling ' Who's the boss ' as statistics show that 82% of business owner don't feel in control or comfortable about their cash flows. So how in fact do you regain that feeling of control that every business owner treasures.

A good start is to know what you're talking about. We've repeatedly said that cash flow is such an over used and misunderstood concept or term. We can get really technical (net income plus deprecation plus or minus changes in working capital components) but unless we're at an accounting trade show/convention that's not really what we're looking for here!

To make things more complex we can make a case that your ' cash flow ' has to do with historical, present, and future needs, making it even tougher to get a handle on.


There are some great tools and also solutions to manage your cash flow financing needs. And again, we're talking about real cash, not income statement profits. That frankly though is a good place to make a very important comment - if your cash flow statement ( it's component # 3 of every financial statement ) differs significantly from your income statement over time you probably will never really regain cash flow control/supremacy.

So lets examine some solid ways to make sure you feel good about that ' WHO'S THE BOSS' question we posed earlier.

First of all, keep your financials up to date and understand them. A small handful of key ratios or relationships you can easily, and we mean very easily monitor over time will allow you to feel ' in control ‘. Simple things like receivable days turnover, inventory turns, sales to fixed assets, etc.

It sure doesn’t hurt to do some methodical cash flow planning. Also, take a look at your overall capital structure from a viewpoint of debt and equity. This allows you to properly take advantage of market growth opportunities, even an acquisition perhaps.

We know we sound like a broken record sometimes, but understand your operating cycle; it’s the amount of time it takes for a dollar to flow thru your company. Match a financing solution to that selling cycle.

Hottest tip today on cash flow generation? It's don't pay anyone! But seriously, managing your payables and disbursements is critical, but we're the first to recognize the importance of supplier relationships. If you have a sales force you might consider paying them commissions when sales are paid, not made. Talk about incenting the collection focus!

If your assets aren’t turning over quickly focus on that. You can also monetize your current assets via bank lines, asset based lines of credit, working capital lines, receivable financing, inventory financing, and supply chain finance.

Who's the Boss when it comes to cash flow? Hopefully you. Speak to a trusted, credible and experienced Canadian business financing advisor on cash flow financing and business working capital analytics and 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/cash_flow_financing_business_working_capital.html

Guilty As Charged ! It’s OK To Be Accused Of Exploiting Commercial Equipment Lease Companies In Canadian Business Financing

This Is Why You Should Lease Equipment !

Information on why Canadian business should use commercial equipment lease companies as the most popular method of asset acquisition .



Guilty as charged? You should be. We’re recommending it! We're talking about exploiting commercial equipment lease companies in Canada for your financing needs.

We're told that exploitation is ' utilization, especially for profit'. That’s what we think you should be doing when it comes to considering lease financing in the Canadian marketplace. Let's explain why and how.

Naturally when we talk about ' exploiting ' we think it’s fair to say it has to be to a mutual advantage, i.e. the lessor and you the lessee should be in a win win scenario. It’s all about maximizing the benefits.

To put it simple lease companies solve financial challenges you may be facing in acquiring assets.

We constantly preach that to get into the ' exploitation' mode that we're talking about here you have to know the lay of the land.

Therefore it’s important to understand who the players are in the industry and how they differentiate themselves from each other. That could be a full time job in some cases, and apparently you've got one already! ... so it makes sense you want to attach yourself to a lease financing expert who can clearly differentiate the players with respect to their financial offering , their deal size, credit criteria, and types of equipment lease offered.

So in what ways can you exploit lease financing to your advantage. There are several, and if we had to summarize them they would come under the categories of economics, working capital preservation, balance sheet and income statement benefits, as well as just ease of acquisition.

When it comes to economics its all about cost of ownership, and the lease versus buy decision. You have to do some basic analysis around why you want to lease finance and that often boils down to the actual use of the equipment at the end of the lease, not at the beginning as most think!

We constantly see business owners and financial managers in Canada doing a not too bad job of finalizing a lease transaction at inception, but they often fail to consider mid term and end of term economic implications .

One of the great economics with commercial equipment lease companies in Canadian busines is the sale leaseback - it’s a strategy that replenishes your working capital and maximizes your owned, unencumbered assets.

Issues such as taxes and depreciation often fail to excite the business owner as lessee. And count us in that group also! But we do caution clients to discuss accounting, tax and deprecation benefits around business lease financing and how they might positively impact your financial statements.

If you’re an astute lessee you can save hundreds, and often thousands of dollars based on some simple understanding of lease rates, why they are important and why they might not be.

Clients don't always believe us but a low monthly payment or interest rate doesnt mean anything when it comes to other aspects of your transaction such as down payment, skip payments, end of term obligations, calculation of a buyout, etc.

There's an old joke among lessors who maintain they will give you any interest rate you want as long as you sign ' their ' lease contract!


Exploit commercial equipment lease companies to your advantage. Maximize benefits; minimize the downside by some careful analysis. Not feeling qualified? No problem. Speak to a trusted, credible and experienced Canadian business financing advisor. Let’s get exploiting!

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/commercial_equipment_lease_companies_business.html

Canadian Receivable Financing - Answers To These 2 Questions Are Why You Need Invoice Factoring In Canada

Looking At A/R Finance As A Working Capital Solution?


Information on receivable financing in Canada . Why does Canadian business consider invoice factoring in Canada for a cash flow solution


Considering Receivable Financing in Canada? If you are your thoughts and answers on two questions should help you out quite a bi t.

One of our favorite business writers recently focused on cash flow management and asked the following 2 questions -


Does your firm need cash right now?

Do you know what your cash balance needs will be a half year from now?

The fact that you are even considering invoice factoring in Canada suggest your business might be facing cash flow challenges, or perhaps that you're smart enough to address a future problem now!

A/R finance allows you to address whets going on with your firm’s working capital in an immediate manner. And by the way, it puts you in control, which you might not be feeling now when it comes to your firms overall cash/ business cycle. When we meet and talk to clients quite often it’s clear they don't necessarily feel in control of their finances.

When you are able to exert control over you cash with a receivable financing strategy all of a sudden the uses of cash seem a lot clearer. You're now able to make or take on new lease payments, or perhaps reduce debt in other areas such as account payable. Keeping those suppliers and preferred vendors on side is important, pretty well all the time!

Let's cover off some basics when it comes to invoice factoring in Canada, also known as invoice discounting. First of all, it’s a business to business financial strategy, so it doesnt really work in a Business to Consumer environment. (By the way, if you are selling into a retail environment then a merchant cash strategy which finances future retail sales just might work for your firm, but we digress ...!)

The costs of receivable financing in Canada vary greatly, and it’s probably our largest discussion point when we [re explaining to clients the benefits and cost of an A/R finance strategy. What is important here is that you understand that the cost factor around receivable finance in fact is costs you are bearing now, except that now you're now winning, and use of this financial solution allows you to win.

What do we mean by that? asks the Canadian business owner. Well the cost of receivable financing has to be benchmarked against two or three critical points you might not be considering. One is that you are already in the banking business, whether you like it or not, because you are carrying your customers 30, 50, or 90 days already. Congratulations on doing a great job in growing your clients cash flow - although that’s probably not your goal right?

Secondly you are potentially missing the opportunity grow your business because of the cash flow constraint that invoice factoring in Canada solves.

If you want to learn more about receivable finance , how it works, what it costs, and what is the best facility out there when it comes to being ' in control ' then seek and speak to a trusted credible and experienced Canadian business financing advisor today .

You'll then be able to see clear answers to those two nagging questions: Do you have enough cash today and will you be able to address you cash needs a half year from 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/invoice_factoring_in_canada_receivable_financing.html

Film And Animation Project Finance - It’s A Mad Mad World Without Canadian Film Tax Credits

Finance Your Production tax credits for film, tv and animation in Canada . Here’s why!


Information on Canadian film tax credits. Utilize your film, animation and television tax credit to finance your projects successfully .




Film and Animation finance in Canada. What producer/project owner wouldn’t agree that it's a ' mad world ' when it comes to financing a project. That's exact where Canadian film tax credits enter from stage left - they play a key component in our overall financing strategy. Let's examine that a bit.

It's rarely a perfect world, but when on exists in film financing it’s a case of equity investors making a reasonable (or great?!) return on their original investment, and those mezzanine and gap type folks also achieving a solid return on principal and interest.

Does that always happen? Of course it doesnt. Sometimes things go awry or a final component to the film financing success puzzle is required. Quite often that final component consists of Canadian film tax credits, as well as those same credits that apply to the digital animation world - the newest and probably fastest rising kid on the block .

So how can the film tax credit and the financing of same become the OSCAR of film finance? We’re still waiting for the day when the film industry acknowledges an award for most creative use of a film tax credit - we do know though there are a lot of nominees out there.

When it comes to film and animation (and television) finance in Canada the tax credit is known as a ' soft dollar 'component of your financing package. Canada current has one of the most robust and easily accessible film/animation tax credits environments in the world, and is widely recognized for that.

Simply speaking anywhere from 30-50% of your overall budget can in fact be recovered by the tax credit. And the financing of those tax credits can play a starring role in your project. Why? Because they can cash flow the actual project itself, they can play a key role in the return on equity in your project, and finally, those dollars could in fact be used to help bankroll your next project. Talk about a triple whammy.

So how in fact to tax credits accomplish those key goals for the producer.? It's not as complicated as you think, they are not refundable government monies that come from the government jurisdictions that you chose to film, produce, and post produce in. When your tax credit certificate is accepted based on your budget and spend criteria that credit becomes cash for your project - and it can be monetized as you spend or at the end of the project.

So you can choose to simply wait to get your cheque from the government (it’s a combined federal and provincial amount) after your ' spend ' is verified and audited.

In the U.S. and elsewhere it’s a battlefield out there when it comes to ongoing availability of tax credit film incentives. However, in Canada there's a sense of ‘ business as usual ' normalcy when it comes to film tax credits for movies, TV, and animation projects .

Want to examine next steps ?Its all about discussing your overall financing plan and budget with a Canadian film tax financing expert in conjunction with your tax credit budget which is usually prepared by a qualified film tax credit accountant , thereby maximizing your return in any one of the Canadian provinces .

So yes, its a ' mad world ' when it comes to film finance - use your Canadian film tax credits to assist you in your overall plan of equity, debt, print and advertising, and gap financing . You just might find the Oscar goes to film tax credits for best supporting role. Speak to a trusted, credible and experienced Canadian business financing advisor when it comes to film 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/canadian_film_tax_credits_finance_animation.html