Business Financing Challenges At The Fiscal Cliff ? Navigating Loan Interest Rates And Finance Capital Solutions

Business Funding .. When You Need It

Information on business financing in Canada . How to assess interest rates on finance capital based on asset and cash flow financing strategies .



It's actually pretty easy today for Canadian busines owners and financial managers to feel that business financing is hardly easy anymore. To put it in the context of recent events in the U.S. the business owners in Canada actually often feel they are at the edge of the ' fiscal cliff '.

And boy does that cliff seem steep sometimes as we see competition in our businesses closing in on us every day. But if your new or emerging competitors are raising financing capital and accessing finance solutions and interest rates commensurate with their credit quality... why can't you?

The answer of course is... you can... if you know how, who to talk to, and are focused on a realistic solution that makes sense for your company.

One of the big mistakes that some business owners / managers make when it comes to financing is that they focus on only one solution ( unfortunately they also might be focusing on the wrong one !) when in fact there are a number of capital and finance solutions that are quite complimentary to each other . As an example we often get calls from existing or potential clients looking for ' inventory financing ‘. While this can in fact be achieved (it’s not easy by the way) the reality is that this type of solution is often best achieved in the context of a ' comprehensive ‘ asset based business line of credit by a non bank finance firm.

We're also assuming that your business is past the ' friends and family' stage which has business entrepreneurs accessing capital via family loans and gifts, credit cards, collapsing of savings, personal lines of credit, etc ... While interest rates on those might be great they typically can only get your business so far - so if you're in it for the long haul, or established already its time to move on - to real business financing!


So... getting ' fully funded ' to operate or grow. What can you as the owner /manager do to achieve that? A good start is understanding the difference between debt and equity. While most people understand that equity means new partners and dilution of ownership they often don't understand that their business is not ready for angel investors and VC’s. So debt financing is the option, but we're talking about debt financing... done right!

Having a solid business plan or executive summary is key to financial funding success. At its most basic it covers off a very simple concept - how you will use the funds and how will financing be paid.

Another key take away for your navigation of debt financing? Simply that a lot of financing solutions bring debt to your balance sheet ; when in many circumstances you can simply monetize assets without bring debt to your financials . Those solutions include:

Non bank lines of credit
Sale Leasebacks
Bridge Loans
Receivable Financing/ Factoring
Tax Credit Monetization
Securitization of A/R portfolios.
Unsecured cash flow loans

Etc! Bottom line - a lot of new capital commensurate with interest rates that makes sense for your firm, and no long term debt on the balance sheet. That's a good thing!

Flexibility is key to proper business financing. Many finance solutions come with higher rates, at least for an interim period. But if they are sustainable and can allow you to take the business to the next level then they just might make a lot of sense. And boy is that better than giving up equity or going down the road of searching for ' investors ' when that solution simply isn’t attainable or doesnt make sense.

Seek out and speak to a trusted credible and experienced Canadian business financing advisor on how you can access finance capital for your firm.


Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

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

Leasing Assets ? Don’t Plead ‘ The Fifth ‘ When It Comes To Asset Financing And Using The Finance Lease !

Here’s Your ‘ Cheat Sheet ‘ On Canadian Lease Financing



Information on leasing assets in Canada . Asset Financing knowledge is key to a success finance lease strategy for acquisition of assets .




When it comes to leasing assets in Canada is it your turn to ' take the fifth '? We're talking about lease financing using such vehicles as the finance lease or operating lease to run and grow your business.

And oh yes, about ' taking the fifth '!

That's of course the U.S. term which invokes your right against self incrimination. When you do that you're simply saying you’re kind of guilty, don’t you think? But it doesn't have to be that way. Just spending some time in understanding some key lease finance basics will put you way ahead of the game. And here are some of those basics.

As a business owner or financial manager in Canada you have basically got three choices when acquiring a business asset - they are:

Purchasing the asset
Leasing the asset
Taking out a term or bridge loan on the asset

Typically our clients most often used excuse for considering lease financing is simply they would like to match cash outflows with the use of the asset over a specific period of time. In Canada lease terms tend to be from 3 to 5 years, but they can be shorter... or longer...depending on the asset and type of lease you enter into.

There are always some key accounting issues to consider when it comes to asset financing; most of those are quite positive when it comes to leasing - they include being able to depreciate the equipment and expense the interest.

Lease rates; unfortunately tend to be ' top of mind ' when it comes to client decisions to lease assets. The irony is that even when some owners/mangers don't even know how the lessor calculates those rates they still seem to be top of mind. We cringe every time we hear ' what’s my rate?' if only because there are so many other factors which determine a great lease. We sometimes think instead of asking ' what’s my rate ' the owner/manager should take ' I plead the fifth' because I am not 100% sure what I am talking about! But that’s a subject for another day.

One final point about the rate though and it’s simply that your credit quality is pretty well pre determined when it comes to credit approval for the asset in questions. Smaller ticket items in Canada, often up to 50k don’t even require financial statement disclosure, but you should be expected to provide full financial disclosure for the asset you are financing.

Because the industry is so competitive in Canada even if your firm’s credit quality has some issues the benefit of leasing is that your deal can be ' structured ' to ensure approval. Structuring simply might be a higher rate, a down payment, additional supplementary collateral, etc. The one downside of leasing is that it generally is not repayable without penalty, and the best you can hope to achieve here is some sort of negotiated lower buyout amount at the mercy of the lessor. So if you are entering into a 3 or 5 year lease... caveat emptor!

So, is the lease option for your firm when it comes to asset financing. Top experts in the field indicate that over 80% of all North American businesses utilize this method of asset acquisition. Spend some time understanding your options, and seek the services of a trusted, credible and experienced Canadian business financing advisor who can assist you with your ' lease vs. buy ' decision.

7 PARK AVENUE FINANCIAL
CANADIAN LEASE FINANCING EXPERTISE

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_assets_asset_financing_finance_lease.html

3 Things You Need To Know About AR Finance. Fun Facts On Receivable Financing And Factoring In Canada

Why A/R Financing Isn’t a Bad Bet ! Demystifying Factoring


OVERVIEW – Information on AR Finance and factoring in Canada . If you know the true cost you can make receivable financing work for a business cash flow solution



When the Canadian business owner or financial manager wants to be more effective with their AR Finance strategy experts will tell you that it comes down to understanding 3 basic concepts .

What are they? They are not as complicated as you might think. Let's recap them and show you how this method of business financing, aka ' receivable financing / factoring allows you to leapfrog financial challenges that seemed like huge barriers in the past.

So back to those three critical concepts - they are as follows:

1. All borrowing under this facility is based on the value of your receivables, and typical borrowing limits are 90% of all A/R under 90 days old

2. Factoring finance is not debt and it’s not managed in the way that a Canadian chartered bank would monetize its receivables

3. The way to win when you have a finance facility such as this is to understand that relationship between all 3 parties to the transaction - your firm, your client and your finance factor partner. Putting the right type of facility in place is what allows you to increase cash flow.

It's also critical to understand what amount of your sales is eligible when you consider this method of financing. We've previously referenced that you typically can borrow up to 90% of your total A/R - and we remind clients that typically a Canadian chartered bank would margin your facility at only 75% - so you are already ahead of the game!

If you are working with the right partner firm you should be in a position to finance all North American receivables. The challenge of non North American A/R, i.e. foreign sales typically can be solved by putting a credit insurance policy in place. There are a solid handful of credit insurance firms in Canada that will assist you in insuring your sales, thereby making them easier to finance.

On occasion it may be more difficult to finance government sales due to the governments position around recognizing this type of financing.

When you enter into a factoring facility its critical that your finance firm understands your day to day operations, specifically s they related to your historical bad debt experience, customer returns, etc .This entire area is viewed as ' dilution ' by your finance firm, and they want to simply understand the true value and quality of your a/r .. so they can finance the maximum for your company.

Cost is always critical when it comes to entering into any business financing facility - whether that be term debt, loans, or, in our case today, monetization of assets. While factoring has a reputation for being expensive financing this is not necessarily true. At the end of the day costs involved in A/R finance must be viewed as your trade off to more liquidity, generating more sales more often, and rationalizing that you might not be able to get the same amount of capital elsewhere.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in ensuring you’ve got our 3 concepts nailed down properly!

7 PARK AVENUE FINANCIAL
CANADIAN FACTORING / RECEIVABLE FINANCE EXPERTISE




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_factoring_receivable_finance.html

How Do Small Business Government Loans Work For Financing A Company In Canada?

Here’s some essential info on Canadian SBL loans


OVERVIEW – Information on small business government loans in Canada . How does this financing work and who qualifies?


If you're a start up business in Canada, or, if you're already in business and need additional financing one alternative, and it’s a great one, is Small Business Government Loans. But how do they work and what exactly are the benefits? And the government? Let's explain!

If there is one government solution and program we can believe in we've always thought that the BIL/CSBF program (aka ' the SBL Loan ‘) is the one. Whether you're a start up or a small business already in motion financing assistance is available through these loans. Stat's show that over 8000 businesses a year apply for and qualify for this business finance, and there isn't really a reason why you shouldn’t be one of them .

In fact you can even be a proprietorship, not a legal company to qualify, which many find surprising. In the U.S. this program is commonly called the SBA program and it has a lot more breadth. But we're not complaining because low rate financing with flexible rates, terms and structures and limited personal guarantees is nothing you'll find us complaining about.

Probably one of the first questions we get from clients, perhaps its more of a concern is their concern as to government red tape, etc. That concern is one that needn't exist, because the government, via Industry Canada charters’ our local banks to facilitate the program for them. And because they like you so much, the good folks in Ottawa actually guarantee most of your loan to the banks. Well, maybe that's over personalizing it a bit! But the reality is that the loan is guaranteed to the banks, which for you is a good thing!

What can you use the funds for? That's where clients are looking for some real clarity. And here, unfortunately is where misinformation abounds!

Small business government loans can be used for real estate, equipment, leaseholds, computers, software, and fixed assets for your company or business. They can not be used for working capital, inventory, goodwill, franchisee fees, etc. We say ' franchise fees' because thousands of franchises in Canada are financed by this program. And you company qualifies if you are a start up or have revenues under 5 Million dollars.

We would never be accused of saying the SBL is ' easy money ‘. It's not, but its available, flexible, and the application process is as straight forward, maybe even more so than any other business financing . All you have to do is ensure you have a proper loan submission that includes a business plan and cash flow forecast along with the other back up info that you would associate with other business loan applications.

So, SBL loans. Here's one case where ' Small ‘ is good , and by the way the 350k cap is hardly an amount of financing that can be considered that small ! Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can put you on the fast track to some major financing for your small or new business.

7 PARK AVENUE FINANCIAL
CANADIAN 'SBL' LOAN EXPERTISE


Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

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

Business Finance Problems ? Here’s Some Canadian Capital Financing Solutions !

Uncovering Secrets in Business Finance Success


OVERVIEW – Information on techniques to recognize business financing problems and information on financing solutions for Canadian business.



If there is one benefit of meeting and speaking to numerous companies with business finance problems its that one quickly gets a sense of what financing solutions are needed... and when!

In fact a lot of what we could call early warning signs in business challenges emerge pretty clearly - even though those same signs are often ignored or misinterpreted by the Canadian business owner and financial manager. Let's look at some of these business warning signals and how you can nip them... in the bud as they say!

Experienced business owners know that access to capital tends to come and go... its those good times, bad times and boom and bust that makes the journey somewhat... exciting.

Most owners / managers are simply happy to ensure they have access to the right financial solutions for their company. Even more important is ensuring those solutions come with terms, rates and structure that suit those present situations.

Your ability to have access to up to date information at any time is critical to both managing your business and having access to solutions. So when we meet a client that can't produce regular monthly balance sheets and income statements that has always been a warning sign of bad things to come.

Mismanagement of current assets is the real killer in working capital and cash flow problems. If there is any good news in that it’s that there are some great finance vehicles to help you both manage those current assets and address the cash flow challenges that come with any business that's both surviving, and growing.

Let's take a look at some of those current asset warning signals. Key in that category is the double whammy of growth and slowdown in accounts receivable. Not knowing your day’s sales outstanding and the ongoing relationship of sales and receivables is a business killer. Financing receivables in Canada can come in a number of different ways - they include”

Receivable financing / factoring
Comprehensive asset based credit lines that margin A/R at 90%
Bank credit facilities

All of the above solutions come with different rates and structures - some will work for your firms overall credit quality, some might not. What these solutions do provide though is an immediate increase to your ' cash on hand ‘... and that’s a good thing.

Inventory deterioration, or even inventory build up are also key warning signals to a business finance problem. It's important to know your inventory turns, and, similar to receivables monitor those inventories so they aren't continually representing more and more a percentage of your total assets.

We've been talking ' current assets' but at the same time fixed asset concentrations can be a killer also. Here is where proper use of term debt and lease financing are critical.

In summary, knowing what financing you need, and when it critical to the fix for some of those early warning signals we've talked about.

Speak to a trusted, credible and experienced Canadian business financing advisor on ' realistic ' financing vehicles for your firms operations, challenges, and growth.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS FINANCING EXPERTISE





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.webpage66.com/business_finance_problems_financing_solutions.html

Franchising Loan? What’s the Difference Between Franchise Finance And Other Business Loans?

Looking for The Complete Story On Franchise Loans?


OVERVIEW – Information on franchise financing in Canada . Exploring the differences between business loans in general and a franchising loan for the would be franchisee.



It's a great client question: What in fact is the difference between a franchising loan and a regular business loan

when it comes to arranging franchise finance in Canada?

The answer? There are some differences, but you just might be surprised at the similarities when it comes to comparing the two. Let's explain.

When it comes to the ' players ' in your finance loan, it’s pretty simple. Contributions are required from you, and your lender / lenders! In Canada those lenders are specialized franchise financing firms, banks, and third party commercial finance companies. While it is extremely difficult in Canada to obtain full financing for your franchise via a Canadian chartered bank the good news is that thousands of franchises are financed via the Government Small Business Loan which can provide funding up to $ $350,000. That's not chump change! . And when you hear what rates and terms and structures are required you'll be even more pleasantly surprised.

Clearly franchising fits into the area of the SME sector of Canada, and for that reason a lot of the challenges that the franchisee faces revolve around the same issues faced by any other start up. Yes , we agree that you're acquiring ( hopefully ) a proven business model but the early stage financing required to get you to a turnkey ' in business ' stage is still viewed as placing a heavy onus on the entrepreneur to come up with a decent portion of the capital yourself .

Franchising, as well as any other type of business requires two key components for initial capital... a ' plan ' and ‘management expertise ". And that plan by the way is known as the ' business plan ' - which is simply your well thought out road map to financial and operational success.

The type of financing that you obtain when you finance a franchise revolves specifically around ' use of funds ‘, another common term for any other business financing. In your case that might be real estate, construction, equipment and fixtures, leaseholds, and some opening inventory if you have a product as opposed to a service franchise.

We mentioned the Govt business loan previously as a great conduit to get you approved for your new business. But we point to out clients that that loan program only covers equipment and leaseholds, so items such as the franchisee fee and opening inventory are not financeable. We wish they were... but they're not!

We have referenced the fact that while Canadian banks provide millions every year for entrepreneurs in the franchise sector via the specialized BIL loan, they in general are reluctant to finance the business outside the Govt program. So discussions around bank financing quickly gravitate to personal collateral, home equity collateralization, etc. It's simply not the optimal way to go if you want to separate your business life from your personal life.

Another strong similarity in franchise finance when

compared to other business financing is the fact that a strong emphasis is placed on your personal financial history. This is typically documented by your credit report and a solid amount of emphasis is placed on this report. In Canada this report is in effect a scoring system and a good score of ' 650’ is required.
Simply speaking, the bank or any other commercial lender wants to know you will run your own business in the same manner as you have arranged and run your personal finances, and that of course makes sense - especially if you're the lender!

So as we have seen many of the concepts and lender views around any business finance loan or proposal pertain to franchise finance, with some nuances / differences. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor for franchise finance assistance.

7 PARK AVENUE FINANCIAL
CANADIAN FRANCHISE FINANCING EXPERTISE



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/franchising_loan_business_loans_franchise_finance.html

Business Financing Change? Let Asset Based Credit Change Your Outlook On The Business Credit Line

Asset Based Lending . Upgrade from an 8 Track Mindset

to IPOD Mindset Via Changing Times In Canadian Business!

OVERVIEW – Information on the asset based credit line as an alternative to traditional business financing and operating borrowing facilities



When it comes to business financing in Canada what would the you do if you could take one of your finance alternatives and take it from the days of 8 track players into the world of IPODS and all the other technology we have access today . Talk about a change in speed and features and ease of doing business, not to mention more for your buck!

That's the analogy we're using today for the Asset based credit line, which is a non bank business finance alternative that provides your company with cash flow and working capital in a manner similar to a Chartered bank business line of credit. But there are significant differences in how these facilities are obtained and how they work. Let's examine some of those key differences.

When we compare how facilities such as this operate it's all about ' revolving ‘. The analogy to your personal lines of credit in your own life isn’t far off here. So if the bank facility and the ABL (asset based line) fluctuate in the same manner, what’s the difference our clients can be forgiven for asking?

One of those key differences simply boils down to availability of funds, because you are in effect borrowing against the whole asset base of your company. To be clearer, most bank facilities focus on conservative margins of 75% of A/R and an even more conservative margining of your inventory. The asset based business facility typically lends at 90% of your receivable, and anywhere from 25-60% of inventory and other assets such as equipment.

How then does the asset based lender take comfort in offering your firm so much more liquidity?

They do that buy utilizing two techniques that are typically ignored by the Canadian chartered bank credit facility. Those two lending techniques are due diligence on the valuation of your assets, and more extensive monthly reporting. But those two techniques deliver because we have often seen clients go anywhere from 50-100% in total additional borrowing power. Talk about a potential liquidity explosion in your firm.

So why isn't ever business borrower in Canada utilizing this method of business finance? We wonder about that one a lot also! but the reality is that this method of revolving business credit is , on balance relatively new in Canada , having come to us from our good friends in the U.S. . Some estimates in the U.S. place asset based lending at 30-40% of all borrowing activity if you can believe that.

Is the Asset Based Credit Line for your firm? It certainly covers all categories, including firms who are in the following phases of their existence:

Start up's
Fast Growth
Special Situations
Firms currently in Special Loans
Companies with solid credit but who are unable to access the full amount of financing they need from our Chartered banks

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you determine the benefits of the ABL credit facility as they relate to your firms cash flow needs. Let this facility, as in our analogy; take you from 8 Track to IPOD...quickly.

7 PARK AVENUE FINANCIAL
CANADIAN ASSET BASED BUSINESS CREDIT LINE EXPERTISE



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/business_financing_asset_based_credit_line.html