Canadian Business Financing . Learn From These Commercial Credit Mistakes!

Tuition In Business Financing Experience Can Be Very Expensive . Learning from Business Failure !



OVERVIEW – Information on Canadian business financing options . How business can learn from commercial credit failures




It's not always Happy Talk! When it comes to Canadian business financing and commercial credit in Canada we can learn a lot about the mistakes we and others have made in the past, right. We're full of sayings today, but our other favorite is that there is a lot of tuition

to be paid in the school of business experience.

In many cases when it comes to business finance a mistake can be corrected - the worst case is of course business failure, bankruptcy,etc Those experiences make business owners and managers shall we say ... ' resilient '.

Securing financing improperly is one of the worst mistakes your business can make. And that doesn't necessarily mean rate, it means structure and purpose of the financing. And when you don't know how and when to raise capital or monetize assets that just compounds the problem.

From your lenders perspective it’s all about risk and the amount they are willing to take with your business. So you become a winner when you obtain the financing you want and your bank or commercial finance firm feels they have not taken excessive risk. That's a great point to remember.

To make their loans and financing ' less risky ‘banks and other finance firms make ask for personal assets as collateral. While in many cases that can't be avoided the business owner should take great caution to over collateralize their lender. That mistake becomes very costly in the even of a business failure.

Matching the right term to your financing is critical. Remember that a bank or finance company, Lease Company, etc always feels less certain about a longer term. Why? Simply of course because the long term future is uncertain for any business.

Many businesses are forced to give up some for of equity in their early years. That might be from an investor, a lender, a partner/strategic partner etc. When you do that you're of course giving up significant returns at a future point in time.

We probably couldn’t count the number of times we have felt that clients have simply aligned themselves with the wrong firms, people and financing. In a perfect world you want to deal with people who are knowledgeable about your company and industry.

We hear a lot about ' bootstrapping ' these days. Essentially it’s utilizing personal and ' friends and family ' savings as opposed to seeking outside funding. That’s good and bad we think. You do have less or no external debt, but again you've pledge personal assets that ultimately will affect your personal credit history. The best bootstrapping arrangement is one in which you feel very confident about future cash flows.

What is the key take away today ?Simply that Canadian business financing, either via debt or cash flow and commercial credit asset monetization must be taken on in the context of short term, long term, and daily operations financing . There are serious implications to taking ' other people’s money '. You can pay a lot of expensive tuition when you don't understand your needs and potential sources of commercial credit in Canada.

Seek out and speak to a trusted, credible Canadian business financing advisor who can assist you with your commercial credit needs, with the benefits of experience.


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-business-financing-commercial-credit.html

7 PARK AVENUE FINANCIAL = CANADIAN BUSINESS FINANCING EXPERTISE


7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

Looking For User Friendly Debt Capital And Asset Based Financing Choices?

Strategies For Successful Business Financing


OVERVIEW – Information on accessing the right debt capital and asset based financing choices in Canada



When corporate partners and venture capital aren't available, or don't make sense the Canadian business owner / manager turns to debt capital and asset based financing for working capital and asset monetization. Wouldn’t it be great to have some solid choices in that area? The reality is that you do, but just might not know it. Let's explain.

We suppose we can make the case that debt is lower risk than equity, plus we always know what’s going on vis a vis payments of principal and interest. The potential danger is that by virtue of your covenants and the collateralization of assets they may be claimed by your lender who is primarily interested in protecting their capital.

We sometimes thing that the above scenario is how the business owner/manager believes the lender wants to behave. That certainly is not so, as what lender would really want to be repaid from the normal operations and cash flows from your business.

The actual ' assets' of your business are what normally drives most of business financing in Canada. Because these assets have specific values balance sheet accounts such as buildings, inventory, and receivables are in fact the collateral behind your borrowing. No mystery there.

The alternative to hard asset collateral is the cash flow monetization of assets. And , oh yes, you can actually borrow against future cash flows , sometimes even on an unsecured basis if you can prove that historical and future cash flows are real and reasonable and carry a normal element of risk.

How does the lender in Canada measure the risk of cash flow and debt repayment? This is primarily done via two rules of thumb, the cash flow formula known as EBITDA , as well as the ratio ( we call them relationships ) of your total debt to your total shareholder equity . These ratios and calculations are then typically embedded into a loan document that makes them, in essence, a condition of the loan. Bottom line, a healthier business with good cash flow and low or reasonable debt has a great chance of achieving more debt capital. If EBITDA and debt / equity are ' out of whack ' then its safe to say that challenges in obtaining debt capital and asset financing will ensue!

When accessing both debt capital and asset financing its important to determine what category or time frame you are looking to address. By that we mean short term financing of one year or less, long term financing that typically might be 3-5 years, and finally ongoing line of credit financing for your daily ongoing operations

While debt capital in Canada primarily comes from banks, insurance companies and pension funds for medium sized to larger corporations there are numerous independent commercial finance companies that address the start up and SME sector in Canada. It' all about knowing who to turn to and when.

The key point to remember? It's a simple one. Assets can be financed!

Bottom line today. Pretty simple - simply that asset financing and cash flow financing for debt capital are available through collateralizing your receivables, inventory, equipment, real estate, etc. The trick is knowing who, what, when, and where! Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in your debt capital and asset finance needs.

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.com/debt-capital-asset-based-financing-choices.html





7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

Leasing Assets ? Got What It Takes For Financing Equipment With Your Lease Company . You Do Now!

Managing Your Equipt. Leasing Relationship?

OVERVIEW – Information on leasing assets in Canada . Financing Equipment Via A Lease Company requires this fundamental knowledge


Leasing assets in Canada. Quite frankly it’s a relationship you're in when you’re financing equipment, and a lot of Canadian business owners and financial managers could do better when financing equipment and assets if they managed and partook in that relationship with their leasing company. Let's explain!

Selecting assets for your business is tough enough these days when it comes to technology, pricing, cost, etc. The business owner or financial manager doesn't need to have that same level of concern around the financing though. It's a simple case of being a bit more proactive in the relationship. We're told a relationship is a ' connection or involvement ' -

so we're saying it's about time to get involved with that lease company.

Knowing the bottom line and the actual financing cost and benefits of asset acquisition is what it is all about.

In every lease transaction it's important to understand the inflows and outflows of cash flow in your company as it relates to assets. Two key points here - one is that the rate and type of lease will determine your monthly payment or cash flow - but the business owner/ manager often doesn't consider the cash inflows or benefits that come from acquiring many revenue producing assets . It’s important to look at the total picture, especially, as we said, if you have got a revenue producing asset on your hands.

Part of every concern the business owner/ manager shares around acquiring assets is the lease versus buy decision. So do spend some time on determining if your asset decision makes good common sense re benefits, costs, and cash flows.

In lease finance it's all about ' cash flow ' and monthly payments. True of false? Well we can offer up for sure that most clients seem to place the most emphasis on those two points. While it’s fairly simply to determine monthly payments and total interest costs etc don't forget also that the type of lease you enter into also has some effects on your rights and obligations in your equipment financing transactions.

The ability to terminate a lease, return the asset, or even extend the lease simply makes it critical to having a solid relationship with the right lessor.

Lease companies use several strategies to maximize income, and of course no one denies or should deny their right to make a reasonable profit. But just proactively managing your relationship with your finance firm allows you to understand key lease company profit components of your transaction. For instance, have you ever asked your company if they have calculated that great rate you just got ' in advance ‘, or ' in arrears '. You just might be surprised at the answer, and the cash flow outcome.

Our bottom line today - take the initiative in managing and understanding the relationship between you, the asset in question, and your lease company partner. Seek out and speak to a trusted, credible and experienced Canadian business financing professional when it comes to leasing assets in Canada.

7 PARK AVENUE FINANCIAL
CANADIAN LEASE 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/leasing_assets_financing_equipment_lease_company.html

AR Business Funding In Canada . Going Insane Trying To Understand Accounts Receivable Financing ?

Avoiding The Wrong Type Of A/R Financing ? Here’s How!


OVERVIEW – Information on accounts receivable ( ar ) business funding in Canada . Costs and benefits explained





Canadian business owners and financial managers hear a lot about the business funding known as accounts receivable A/R financing. But occasionally when they try and understand how this financing works, what it costs, and what the benefits are they sometimes feel like they are going a bit ... crazy !

Is there a way to uncomplicate what frankly is a pretty simple method of funding your business? We think there is... all you need is some basic clarity!

In fact one way to look at how this whole solution works is to sometimes put yourself into the position of the finance firm offering you this solution. At the essence of your transaction is the very simply concept of selling your sales, aka your ' a/r ' as you generate revenue to monetize that asset into immediate cash flow. Simple as that.

So where do business owners and managers feel themselves going a bit ' crazy ' in trying to understand the process and interpret how this affects, and benefits their firm.

In talking to clients here are the basic issues that typically need some good old fashioned clarity. They include:

Understanding who in fact is using AR Finance and how long it’s been around

What is the pricing and how does that affect profits?


What facility size makes the most sense?

Are there any risks involved?

Are some firms not able to use this financing?

Who should I deal with to ensure this type of funding makes sense to my firm?


Most of our clients probably don't want to be guinea pigs when it comes to finding out they are the first to try something - with all the risks that come with that. So the good news is that Accounts receivable finance has been around for ... hundreds of years! Starting in Europe and moving to North America. Many simply call the industry ' factoring ' and in Latin that word means ' business doer ‘. Many early settlers to North America actually had their trips and early businesses financed by these ' factors '. So... bottom line, don't feel like you're being ' leading edge ' when it comes to new methods of financing your business - everyones doing it!

You only need to understand 3 simple concepts when it comes to cost of AR finance - they are:

The discount percentage you are being offered
The amount that is advanced against your receivables (typically 90%)
The time it takes your client to pay


Once you understand those basics you're close to being an expert in receivable business funding.

The reality is that even one small sale could in fact be financed using this method, on a one time basis. But the closer reality is that typical facilities tend to be in the 100k per month range or higher. And the upper limit? Frankly Scarlett - there isn't one!

We can make the statement that no additional risks in using this method of financing exist - any risk you currently take in extending credit to clients and monitoring their payments essentially stays the same. Customers that don't in fact like ' risk ' can opt to insure receivables.

Any business that generates sales and sells on credit can in fact utilize factoring. The type of facility that we recommend most to clients is a confidential facility, which allows them to bill and collect their own sales - retaining full control and client contact.

Still going crazy trying to understand factoring in Canada. Hopefully not! Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can clear the air. Quickly!

7 PARK AVENUE FINANCIAL
CANADIAN A/R 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/business_funding_accounts_receivable_ar_finance.html


7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

Is There A Perfect Debt Financing ? Achieving Business Loans And Rates And Structures That Make Sense For Your Company

Looking For An Answer To The Right Business Loan Question?

OVERVIEW – Information on debt financing and business loans in Canada . What rates and structures work best for your firm ?




Not getting debt financing right in Canadian business finance can destroy a lot of prospects your company might have - we suppose it could also destroy your firm... period! So the right amount of debt, and business loans and rates your firm can manage is critical to long term success.

When credit is of course available it’s both easy and tempting to take on more debt. In fact if you have done that in 2008 right around the time the global economy imploded we are pretty sure there was some sledding at that time.

Of course it’s all about having the right objective in mind when your firm contemplates more capital. In some cases thought its not necessarily additional debt on the balance sheet that is going to get you more cash flow - you might also find that simply monetizing assets without taking on debt gets to the goal line just as fast... and in better shape!

Part of the temptation of debt is that your firm will miss opportunities along the way if you don't ' bulk up ' on capital. So that’s when some pretty basic questions come into play. They are as follows -

What in fact is the right amount of debt for your company to take on and manage?

Do you need to totally change your outlook on your capital structure - i.e. the right amount of debt and equity?

Can your projected cash flows sustain debt?


It is safe to say that if your firm has a lower debt level then you're probably more comfortable in managing through challenges. The more sophisticated finance folks tell us that the amount of carefully managed debt simply increases your overall returns - that’s a good thing. But when your debt levels are too high via business loans and rates that severely affect your cash flow the perception can easily arise, from customers and suppliers, that you are... well ' in trouble '.
It also is safe to say with the wrong amount of debt your firm is more prone not to be able to make new investments in capital, research, and marketing. Once suppliers start cutting you off that forces you to react with a new behavior to inventories you are carrying, thereby affecting sales and revenues. The finance books tell us tor most firms that a 2:1 ratio, o relationship of debt to equity is the right mix. That varies of course between different industry segments.
A good way of looking at new business loans, rates, and other debt alternatives is for the Canadian business owner and financial manager to simply as ' what could go wrong '?

Many clients are pleasantly surprised to hear they can monetize assets to increase cash flow and business opportunities. This can be done by:

Receivable financing
Asset based credit lines
Sale leasebacks
Financing Tax Credits
Supply chain / PO Finance


So... a bottom line? Simply that debt financing comes with risks and rewards, a classic case of Caveat Emptor. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in maximizing the right debt finance and asset monetization strategies

7 PARK AVENUE FINANCIAL
CANADIAN DEBT FINANCING AND ASSET MONETIZATION 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/debt-financing-business-loans-rates.html


7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

The Scuttlebutt On Financing A Franchise In Canada . Buying Franchises Requires The Right Type Of Loan

Canadian Franchise Financing Strategies


OVERVIEW – Information on financing a franchise . What type of loan and finance is required when buying franchises in Canada


Looking for some good Scuttlebutt on franchise financing in Canada? And who doesnt love the word ' SCUTTLEBUTT ' - It was the drinking fountain on ships... sailors hung around and shared rumors and gossip, ie Scuttlebutt!

While we are big fans of the term itself what’s more important is to dispel rumors and gossip around the reality of getting a franchise loan in Canada. The one thing we can assure clients is they need a solid business plan and financing package prior to starting the financing process.
While a lot of that information might come from your franchisor you’re basically preparing a financial overview of your new business. And from the lenders perspective they simply want to know how loans they make to franchises will be repaid. Fair enough, right!?

So what amount of funding is in fact required to purchase a franchise in Canada? There are several components to the project - they include the franchise fee, working capital, a loan for leaseholds and equipment or rolling stock, etc.

While all banks in Canada seem to have a lot of content on their websites about financing franchises directly the reality is that this is rarely done on the strength of your proposal alone. So when considering approaching a bank , either alone or with an experienced advisor you might just find that really only two avenues of success for your franchise loan :

External collateral
The Government SBL Loan


While the franchisee certainly has a right to offer up personal collateral, i.e. homes, savings, etc that is not the optimal way to finance a business. That is why thousands of business owners over the years have chosen the Government BIL loan to facilitate the financing of their new business. For financing needs fewer than 350k it’s a solid mechanism for getting you to the franchise goal line!

While specialty franchise financing does in fact exist in Canada it typically requires your franchisor to be part of a larger program which might not necessarily be the case. Oh and by the way lots of third party commercial finance firms such as equipment finance companies can also assist you in portions of your financing.

If we had to summarize a short road map of success in franchise loans in Canada it would be pretty simple:
Have a strong business plan / loan package
Be prepared to demonstrate good personal credit history and business experience
Be able t demonstrate that you can come up with a solid portion of equity in the business - no one is going to finance 100% of the project.

So, if you want to plough through all the scuttlebutt around a franchise financing loan in Canada seek out and speak 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/financing-franchise-loan-buying-franchises.html



7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

Afraid Of Debt Factoring? Business Factor Companies Actually Offer You A Lifeline On Cash Flow And Working Capital !

Something Different in Cash Flow Financing ?


OVERVIEW – Information on debt factoring in Canada . How business factor companies work . Which one is best for your firm?




Debt factoring is a bit of a misnomer here because when you deal with a business factor company you are actually not incurring any debt... but we can't stop clients from calling things what they want to!


Business factor companies in Canada often maintain they offer your firm a ‘lifeline '

when it comes to cash flow generation. Does debt factoring, aka ' receivable financing ' really work, and if so... how!

Any company that sells on credit and has receivables can generation faster cash flow via factoring. The actual process could not be simpler - it's either a one time or ongoing sale of your A/R as you generate sales. Some advantages are that you can finance what you what, and when you want. If you have signed up for the right facility you are under no obligation to finance all your sales, just the amounts you need under your facility.

As we said, factoring is not a ' loan ' per se. That's where the misnomer lies, in that you are not creating or adding any debt to the balance sheet, you are simply monetizing sales, as you make them!

In general most facilities of this type in Canada are on a recourse basis, simply meaning that your firm is still responsible for the overall risks in collecting the receivable, and collecting it in a timely fashion. Since the main component of factoring pricing is ' time ' you benefit significantly by financing and then focusing on collecting those receivables. Large corporations maintain that focus... you should also.

Factoring pricing is widely misunderstood in Canada. The three parts of the pricing of receivable finance are as follows -

The advance rate
The fee
Time

If you're dealing with the right firm you usually are able to obtain 90% advances on your receivables. The ten per cent becomes a hold back that is remitted to you promptly after your client pays. Discount rates are 1.5-2% on financing. That means that the finance firm will deduct that fee as their profit on every invoice based on a typical 30 day collection period.

And as we said that final component is simply how long the receivable is outstanding? So focus on collecting those sales!

Do we have a recommended type of facility? In general the best suited facility for your firm is a confidential A/R finance facility. Here you are financing your sales and at the same time maintaining the right to bill and collect our own A/R.

Speak to a trusted, credible and experienced Canadian business financing advisor who can ensure you are getting proper debt factoring 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/debt-factoring-business_factor_companies.html



7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com