Do You Know How To Raise Cash For Financing A Business Purchase Acquisition?

Hitting a Bull’s Eye In Canadian business acquisition financing!

OVERVIEW – Information on raising cash and debt financing for your business purchase acquisition in Canada.




When financing a business purchase acquisition it kind of comes, fortunately or otherwise, to the fact that ' size counts '! . So the cash you need will directly relate to the size of the business you are financing, as well as the asset quality.

Naturally how the company you are purchasing and raising cash for is doing play a key element, as often less cash is required and the focus is on financing remaining assets. So a solid rule of thumb to keep in mind is simply that the amount of cash and ' finance power ' you need is very directly related to your targets situation on profitability. In other words a lot less real cash is required if a company is not profitable or barely breaking even. That certainly makes the job easier, right?

In talking to clients about financing a business purchase we often feel they are focusing solely on the purchase, and not on the on going capital and cash flow needs of your newly acquired business.

We also have to consider the fact that raising cash for a business might often be more feasible if you have a strategic partner or other equity investor. That unfortunately will dilute your equity position but might be realistically the best course of action. And it does certainly allow you to purchase and fund a business with less ' monetary' contribution to the deal.

In the case of larger transactions Canadian business people might well look to a private equity partner in the deal. Their assistance in helping you complete an equity investment, as well as their experience in any specific industry is of course a valuable consideration. And to sum up the whole issue of getting either a strategic or operating partner or private equity group we can simply say that often times this might well add credibility and realism to your offer in the eyes of the seller.


Bank financing in Canada is available to finance business acquisitions. You or your Canadian business financing partner needs to address the following issues at this point:

A concise overview of how you will run the business - i.e. management depth, experience, etc

You need to ensure the industry your business is in is ' in favor ' when it comes to a bank appetite

Your business plan and projections have to be realistic relative to cash and working capital resources re operations and growth

In a perfect world - and we know it's not! You want to be in a position to demonstrate sales growth, profits, and a balance sheet that hopefully won’t have a debt/ equity ratio of 3:1 as an example. And your assets such as inventory and receivables should demonstrate borrowing power quality.

Other ways to finance your business purchase include asset based lending, bridge loans, use of sale leasebacks, and even the government SBL loan if the business has under 5 Million in revenue.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor when it comes to a capital raise for a business purchase acquisition in Canada.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS PURCHASE ACQUISITION 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 10 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/raising-cash-finance-business-purchase-acquisition.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

Should You Lease Equipment? What Leasing Company Is Your Best Financing Bet ?

Confused About Your Equipment Leasing Decision?

OVERVIEW – Information on the right leasing company to choose when your company is financing assets . A solid lease equipment strategy pays off significant dividends !


The ' lease equipment ' decision can be a complex and / or confusing one when the Canadian business owner or financial manager is ready to choose the right leasing company for the firms asset financing needs . Who should you deal with? What are the differences between lessors? What mistakes can be made... and how can you take advantage of the right benefits of leasing assets? Whew... a lot of questions! Let's provide some solid answers to the lease finance conundrum!

There are numerous financiers of equipment assets in Canada. While some might be ' pure play ' equipment lessors others might be a hybrid, offering loans, bridge loans, etc. Choosing who to use, as we have pointed out carries rewards... and some risk.

At the end of the day there are 3 real, as we call them ' pure play ' lease type firms in Canada. They are independent commercial financing companies, captive finance firms (more about those later), and bank subsidiaries and divisions of our Canadian chartered banks. There is also what we can call a ' hybrid ' provider that might just possible be your best solution, an independent Canadian business financing advisor who has strong relations with all of the above. At the end of the day a little help from an expert never hurts.

When you at least know the different categories of lessors out there it certainly helps to level the playing field!

We would venture to say that independent commercial lease companies in Canada provide the bulk of asset financing to the industry. It's their only job, and they do it well. They aggressively market asset financing to Canadian business and are in a position to use credit and asset expertise to deliver on solid fixed asset financing solutions to your firm. They industry, as we have noted in the past is diverse even on its own - there are micro, small, mid and large ticket lessors, and all of them have different ranges of pricing and credit criteria . Typically commercial independent lease firms offer two types of leases, lease to own ' capital ' leases, and lease to use ' operating’, or ' rental ' leases. Knowing which type of lease you need helps you narrow who to deal with.

Independent lease firms pay your vendor on your behalf and enter into a lease contract with your company. Title remains with the leasing company until you typically have paid all the monthly rentals. These firms make their profit from the finance charge, and on occasion from the residual value of the equipment if you are obligated to return it.

Captive lease firms are typically associated with a specific manufacturer. They are the ' in house ' arms of large computer and auto and construction equipment firms as an example. They are usually great to deal with because, no surprise here, they are incented to finance the product their parent company sells your firm. Credit is sometimes more flexible and in many cases return and upgrade options are plentiful.

Many of Canada's chartered banks have re - entered the equipment leasing market. While credit criteria and standards are very high it’s no surprise that rates and terms are great. Typically banks will only do lease to own type transactions. Don't expect your bank to offer a computer upgrade option on your technology financing needs!

Using an experienced Canadian business financing advisor for your needs might often be the perfect solution to size up the entire market at once - with no financial or time investment by yourself. Talk about a win / win! Working with a respected and credible party can add value, reduce pricing, and enhance terms and benefits to your lease equipment needs when you need a leasing company 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 10 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-equipment-leasing-company-financing.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

Franchise Loans In Canada . Don’t Let A Franchisee Financing Loan Be A Disaster To Your Success !

Avoiding a Franchise Finance Disaster


OVERVIEW – Information on franchise loans in Canada . What is the secret to proper franchisee financing loan approval and success for the Canadian entrepreneur?



Franchise loans in Canada. Either not getting the one you want or need just might be a disaster

when it comes to your entrepreneurial dream, which all of a sudden appears to have gone up in smoke!

When all of your plans go awry when it comes to your franchisee financing loan almost everything is at risk, including your planning, potential franchisee fees or down payments you have made, deposits on a premises, etc. Let's examine some key elements of Canadian franchise finance success.

Financing success in the franchise industry will come from both you and one or a combination of several franchising lenders. A common belief which we can dispel pretty quickly for you is that your franchisor is not going to be the one that plays a major role in the financing of your business - We guess you can say they are with your morally and spiritually, but not financially! Any form of assistance your franchisor might provide will typically be indirect in nature, sometimes in the form of a referral to a lending institution or a Canadian business financing advisor.

All business require start up capital from the owners, so don't think that franchising in Canada is any different. That is your owner contribution when it comes to financing the key elements of your new business - items such as construction, leaseholds, equipment, the franchise fee, opening inventory, and potentially even real estate.

Right about here is where many franchises make a huge mistake. And that mistake? It's not focusing or planning for working capital for items such as salaries, wages, lease and loan payments, franchise royalties, etc. When working with clients we are always focusing on the ' working capital ' component of your business plan, not just the start up financing, which often seems to be the sole focus of the franchisee. We could even take that one step further and say that you might want to even start considering at this point an expansion plan if you choose, down the road, to acquire multiple franchise locations, in the same or another industry.

That brings us to the key point of ' experience '. When we apply for jobs and positions in the corporate world our potential employer is focusing on our EXPERIENCE. So that's why its important also to ensure your franchisee financing loan is adjudicated with the idea that you as a business owner have relevant experience in your industry . A solid example is the restaurant and hospitality industry, where long hours and people and operational expertise are critical.

In Canada your franchise loan are not necessarily going to come from a conventional lender. In fact it almost always will not. Your financing will come from:

Specialty franchise lenders
The BIL/CSBF program - (Our preferred choice!)
Leasing companies
Private investors

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in ensuring your franchise finance needs become not a disaster, but a success!

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 10 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-loans-franchisee-financing-loan.html



EMAIL - INFO@7parkavenuefinancial.com
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



















Stan Prokop

Cash Flow Financing ! Problems And Oh Yes Business Solutions !

Two Great Tips On The Cash Flow Conundrum!

Information on cash flow financing solutions and techniques for the Canadian business owner and manager . Problems can be solved via internal techniques and real world working capital tools.




Cash flow financing for your business. We're sharing some solid solutions and tips for business finance problems and challenges .. i.e. Solving The Conundrum!

Whether your financing challenges are temporary, or seem to be occurring all the time the Canadian business owner and financial manager is always looking for a fix to that dilemma. So our focus on strategies and straightforward business financing methods that... you got it... fix the problem.

Tip # 1 - Don't pay anyone! Well we're kidding of course, but a better way of saying what we intended to mean is that you can manage a lot of your cash by using an internal solution... payables management. The trick of course is having key vendors and supplies that value your business and want to work with you to keep your business - somewhat of a classic win / in scenario, don't you think.

The ability to turn your stated 30 day terms into 60 and 90 days with your vendors allows many companies to actually become self financing. That's almost cash flow nirvana - not borrowing and growing your business. It's no secret that some of the largest companies in the world pay firms such as yours slowly just to optimize their corporate cash flow. The nerve of those guys.

Our final point on this technique is simply that you don't want to end up ruining a key supplier / vendor relationship, so a proper sharing of the facts keeping in mind the value of the relationship is critical.

Tip # 2- Accelerate collections, finance receivables, and better yet... do both! When we talk to clients about their cash flow financing challenges it’s often about their customers owing them money and not paying. The internal things you can do to fix this problem are of course to be more firm with collections and enforce your terms. Big companies hold shipments to their clients, so you should not be afraid to also. We'd also consider raising prices to clients that don't pay. Just keeping a constant watch on your days sales outstanding or collection period is going to make you a true ' Master' of business solutions and solving those working capital problems .

You might also want to offer a discount for prompt payment.

One key point here is that you need to have some decent gross margins when it comes to offering a typical 2% discount for prompt payment. But don't forget also that you can take those same funds you receive and take discounts with your own suppliers. Another key concept here is to understand your borrowing rates and bench mark them against discounts you might offer for prompt payment

Solutions for cash flow abound in Canada. It's all about picking the right one for your firm. They include:

Receivable finance
Working capital term loans
Asset based lines of credit
Business commercial bank facilities
Tax Credit Monetization
Supply Chain Finance
Securitizing your receivables or contracts

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your business problems via real world solutions.

7 PARK AVENUE FINANCIAL
CASH FLOW 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 10 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-problems-solutions-business.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






















Stan Prokop

Equipment Lease Rates . How Your Leasing Company Prices Your Transaction

Get Rid Of That Clear As Mud Feeling Around Leasing Companies In Canada


OVERVIEW – Information on equipment lease rates in Canada . Knowing how the leasing company prices your asset financing transaction is a critical aspect of equipment finance success.


Equipment lease rates in Canada via a leasing company sometimes seem to provide clarity that is... well... clear as mud!

So let’s examine some key issues that allow the business owner and financial manger to achieve solid lease pricing based on the asset type and credit quality of their company. And trust us... there is a leasing solution for every type of credit quality from blue chip to ' bad credit ' scenarios.

While most business people associate the lease pricing ' only ' with the actual interest rate on the transaction

numerous other issues need to be covered off.

As a starter you need to have a good handle on what is known as ticket size in the industry. Three types of asset or ticket size dominate the Canadian industry. They are small, mid and large - no real secret there. But each of the companies that service that industry has different credit profiles that dominate how they price your transaction. Small transactions under $50,000.00 can be approved and priced within hours, rarely more than a day. Larger transactions are subject to a lot more analysis and documentation as we can imagine.

The actual documentation of each of our three ticket sizes varies and has price implications. Pricing can sometimes be affected by usage, maintenance requirements, and return language. All of these are key elements of the leasing company might price your transaction, many time with no discussion with yourself, as it affects your transaction.

Higher rates actually are many times associated with small deals, which may seem like a mystery to the business owner and financial manager. One simple reason is that while these small deals are approved quickly they have less credit due diligence associated with them - as such the lease companies have higher losses in this area - which of course affects overall pricing . If we are making one point it's simply that you need to understand which companies service which ticket size - because that is what reflects your final pricing.

Generally shorter term lease arrangements are never less than two years. That is because your lease company has also borrowed their funds, probably from a bank or insurance company, and they are striving to get a reasonable yield and profit.

Part of the whole exercise in lease pricing revolves around the ' lease vs. buy' scenario. That’s where you the business owner/manager should spend some time evaluating leasing as an alternative. If you're uncomfortable or experienced with that process your accountant or a Canadian business financing advisor can assist you in wading through cash flows, term loans as an alternate option, etc

As we said previously the business person tends to only associate the implied interest rate on the deal as the pricing determinant. But other issues to consider are:

Tax / Accounting implications
Down payments
Upgrade formulas that change the rate
Excess usage charges
Operating lease price implications

So, is it always about the ' low monthly payment '? Definitely not! Seek out and speak to a trusted, credible and experienced Canadian business financing advisor as to how equipment lease rates via your leasing company work... against you... and for you!

7 PARK AVENUE FINANCIAL
CANADIAN LEASE FINANCING SOLUTIONS AND 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 10 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/equipment-lease-rates-leasing-company.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









Stan Prokop

Mastering Factor Rates and AR Finance Pricing For Canadian Receivables Financing Strategies

We rarely meet a client who is comfortable enough to say they are a ' Master ' of AR financing pricing when it comes to receivables financing in Canada. Let's see if we can help you achieve some ' Master ' status

in this often confusing (but shouldn’t be) area of business financing in Canada.

So why is there a combination of mystery and clarity around using just your accounts receivable for cash flow and working capital financing. It's key to remember that when you look at this type of financing it's important to understand what is happening, shall we say ' beneath the transaction'. Because factoring/receivable financing in Canada is essentially the sale of you receivable and that's how it must be both recorded in your book keeping and accounting.

Let's get some of that ' boring' accounting out of the way quickly.

The entry is pretty basic - it’s a ' CREDIT ' to your receivables and a DEBIT (that’s an increase in your cash by the way) to your cash account. Mission accomplished!

Since your factor company / financing partner takes a discount fee for purchasing your receivables, either once, or on an ongoing basis you also have to take into account the financing charge, so that’s an additional entry as a DEBIT to your interest account .

One final entry, and we promise, it’s the last one, but when complete you will have now understood the actual mechanics of AR finance pricing. That entry involves the ' hold back ' since typically you receive only 90% of your invoices as cash as you generate them. The 10% is a hold back; - you receive that when your client pays, so you need to set up one final entry as ‘DUE FROM FINANCE FIRM '.

If we had to be honest (that’s our preference always!) we would have to say that our favorite/ recommended method of financing receivables is a Confidential Receivable Financing ‘arrangement - that is one in which your firm bills and collects your own receivables, with how you finance your business being your own business!

That type of arrangement still allows you to receive all the benefits of receivables finance:

Immediate cash on your sales generations
Balance sheet strength
Ability to take supplier discounts and achieve better vendor pricing

Etc!

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you simplify Canadian receivable financing.

7 PARK AVENUE FINANCIAL
CANADIAN RECEIVABLE FACTORING 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 10 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/factor-rates-ar-finance-pricing-receivables.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


















Stan Prokop

Debt Financing . What Factors Determine The Type Of Business Funding

Financing Via Debt


OVERVIEW – Information on the advantages and potential risk of debt financing in Canada . Factors that determine business funding when non equity solutions are required to fund Canadian firms.



Debt financing. When it comes to business funding that is ' non equity ' in nature the business owner and manager can benefit from a number of business financing solutions. A good solid way to begin is to ensure which solutions are available and to ensure you understand the pros and cons of each.

When it comes to debt finance solutions it's paramount to remember that the lender, finance firm, bank etc is not sharing profits and is at risk - as such pretty well their only focus is getting paid!

In a way that’s the benefit, i.e. one of our ‘pros’ of taking on debt - You know exactly what conditions and rates come with the loan ( hopefully!) - It's just up to you to ensure you have the cash flow to repay. So broadly speaking, you're very much in control, unlike being at the whims of an equity investor.

Let's recap some of the key sources of debt financing in Canada - they include:

Bank loans
Government Small business loans
Leasing
Mortgages

Also included in our list are:

Inventory financing
Receivables factoring
Asset based credit lines
Tax Credit Monetization
Supply Chain /PO Finance

These latter 5 monetize current assets so they are in fact a bit of a hybrid.

Most companies very quickly discover that no firm can be properly financed with 100% debt, so it’s important to keep in mind the relationship between debt and equity. That equity in fact becomes the business owners risk and that’s why it's probably also prudent to manage your debt load.

What factors affect a company's ability to get debt financing? In smaller to medium sized firms the actual credit status and history of the owners is very important.

Is size important in debt financing? It sure is! Many firms constantly struggle to acquire more debt based on their growth needs. We can pretty well guarantee to clients that if the proper cash flow projections aren't available, realistic and accurate that not a lot of debt financing is going to take place.

Rates are of course critical in debt financing, and are typically commensurate with the risk profile of your firm, as well as the nature of the firm or bank you are dealing with. The same pretty well goes for collateral, whether that is personal or corporate as a ' back up ' to the debt financing facility.

It's critical to exercise diligence and caution when taking on debt for your firm. Just the actual ratio of debt to equity is a good number to always monitor ... 2 times debt to equity is a commonly respected ratio. When it’s higher than that you're force to generate extra cash just to pay and service that debt.

We're pretty sure that we make debt sound like somewhat of a burden. That is not the case though, as the right amount of debt and overall leverage can make your company more successful, and if there is one guarantee in life it’s that debt is cheaper than equity. And remember also that there are a number of non bank firms that can supply the debt you need if you are rejected by our Canadian banking system.


In many cases rates and size of the loan or loans you seek might be appropriate but the overall conditions the loan demands may not be suitable. That's when you might well seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your debt financing and funding needs.

7 PARK AVENUE FINANCIAL
CANADIAN DEBT 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 10 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-funding.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








Stan Prokop