Business Credit In Canada . Knowing When You Need Financing Options And Sources

How’s Your Business When It’s On The Operating Table ?


OVERVIEW – .Information on business credit and financing options for Canadian business. How does the owner / manager assess the need for finance options and sources of capital in Canada




Business credit financing options in Canada. Sources are capital are consistently sought by owners and managers of Canadian firms. One way to assess the type of financing you need is by putting your company on the ' operating table '. Let's examine some basic techniques, strategies and real world solutions that will provide meaningful answers to the eternal question ' Where's the money '. Let's dig in.

Whether you call it an 'art' or a ' science ' the answer to the type of Canadian business financing that you need lies in looking at your companies practical situation and looking for quite easily found ' clues ' your over solvency and liquidity in terms of day to day operations and growth .

A top priority for the business owner / manager is to ensure they understand current and long term solvency of their firm. It's that overall solvency that allows you to get credit from banks and commercial finance firms offering a wide variety of non - bank solutions. Those non bank potential financing solutions include:

A/R Finance
Inventory Financing
Asset based business lines of credit
Sale leasebacks
Equipment financing
Bridge loans
Unsecured Cash flow loans
Tax credit monetization
Supply chain /PO Finance

When your company is on that operating table don't forget to check the patient for ' circulation’. However the circulation we're talking about is how your current assets circulate - typically that’s the flow of your cash to inventories to receivables and back to... you guessed it... cash! Your circulation is excellent if you're collecting your A/R to terms and turning inventories over promptly.

It's another reality that short term cash, liquidity and solvency issues don’t fix your long term capital structure. Always be cognizant of the amount of debt you are carrying relative to owner equity.

Three great ' buzzwords' to keep thinking of as you assess your solvency and financing options are:

Trends
Changes
Movement of cash

Business credit in the short term typically revolves around inventory and A/R turns.

While all business owners we meet consider their firms unique the reality is that you can easily benchmark your balance sheet and operating results against others in your industry.

Ownership of assets such as equipment and real estate requires that you seriously consider your ability to generate profits and cash flow - notwithstanding that the assets themselves are the actual collateral for the debt.

We're always impressed by business owners/managers that maintain on going income and current asset information - aka ' budgets'. These allow you to assess current and seasonal needs. They are great tools to impress and secure bank financing in Canada.

Certain types of financing can help the business owner address unrealistic debt burden. Many businesses in Canada are simply weak because of what we can only call ' inadequate financing '.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in assessing business credit needs and identifying financing options and sources of capital and cash flow.



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 :

7 Park Avenue Financial = Canadian Business Financing Options






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

Accounts Receivables Financing. How The Credit Crunch Popularized Factoring In Canada

Why Is A/R Finance Winning A Lot of Popularity Contests These Days ?



OVERVIEW – .Information on who provides accounts receivable financing in Canada . Factoring continues to replace many previous methods of business financing including bank lines of credit . Here’s why




Accounts receivable financing in Canada . Also known as ' factoring ' or invoice discounting it has gained large popularity in the Canadian business financing marketplace . Why is that , and is it a solid consideration for your company ? Let's dig in ?


Canadian chartered banks clearly aren't the only ones that lend against your business assets these days. In the ' old days' they certainly always played the lead in this role, but these times as our buddy Bob Dylan said ' time's they are a changing' ‘!

Although A/R finance was certainly in place and used in Canada prior to 2008 it is safe to say the global recession/financial meltdown in 2008 exasperated a lot of attempts for businesses to finance their assets. And we're even talking strong companies, sizeable in nature!

Unregulated companies, both U.S. and Canadian started at that time to gain significant traction in the commercial lending marketplace. Simply speaking they had more flexibility and to a certain extent are prepared to take on more risk when it comes to business lending. Factoring simply allows loans to be paid from the liquidation of your receivables. While facilities certainly exist that can be a ' one of ' in nature typically this type of financing is on an ongoing basis - replacing traditional commercial bank lines of credit.

The other reason A/R finance has taken off is that it is much less prejudicial to certain industries, stage of development, etc. Even a start up with sales growth can easily be financed with factoring in Canada.

Other reasons for popularity include the fact that these facilities grow, pretty well automatically, with your business. Bank lines and other forms of term debt borrowing imply set credit limits, and covenants such as debt to equity and cash flow that must be maintained to satisfy ongoing financings.
Additionally firms that often use factoring solutions have some serious seasonality or bulges in their requirements that a traditional lender just can't always address.

Any lender, certainly banks included, prefers to deal with growth type businesses. However the A/R business financing solution, non bank in nature even allows companies experiencing distress to access cash flow and working capital requirements. In truth though declining sales or firms who are in death spiral mode are not the best type of candidates for any type of finance!

The entire approval process in accounts receivable financing couldn’t be more basic. Initial requirements are simply your year end financials, interim statements, and aged assets lists, including A/R and also A/P. On balance Canadian firms can typically borrow up to 90% of outstanding accounts- which also is significantly better than bank margins for lending. Our preferred solution for clients is
CONFIDENTIAL A/R FINANCE allowing you to bill and collect your own receivables through the entire financing relationship with you’re A/R lender.

What does the Canadian business owner or manager need to know when assessing this new found popular method of financing? The basics are the actual financing or discount fee charged, understanding the actual advance rate ( our previously mentioned 90% is the norm ) and getting a solid grasp on any misc fees including set up, termination, and misc expenses for wire transfers , etc.

If you sales are increasing and you can’t access the cash flow you need , create immediate positive cash flow with a factoring solution. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with working capital finance needs.



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 :


7 Park Avenue Financial = Accounts Receivable Financing Solutions






CONTACT:
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

Bank Financing In Canada. See Business Credit With Different Eyes

Is There A Shortcut To Better Bank Financing In Canada ?


OVERVIEW – .Information on bank financing in Canada . Business credit can be accessed through chartered banks, if you know the criteria . When you can’t meet those criteria alternatives are available



Bank financing in Canada. Business credit is not always viewed the same way by business owners and financial managers. In many cases clients we meet are sometimes even thinking there's some sort of short cuts to quicker assets to bank finance.

Let's take a look at the proper way of addressing and accessing this critical financing for established and growing companies. And by the way, if you’re not established and doing well there are in fact other business financing alternatives to financing your business. Let's dig in.

The key point in achieving bank financing success in Canada is knowing of course how the bank views lending. That's actually the simple part of the puzzle, because, simply speaking, banks are cash flow lenders with a, shall we say ' strong interest ‘in secondary sources of repayment! Those secondary sources include personal guarantees, collateral, etc.

In fact that's one of the key challenges you face if your firm in the opinion of the owner and manager has great prospects - because our Canadian chartered banks focus on how predictable your cash flow and profits were in the past. So having a bad current or past year in a number of areas simply puts you behind the 8 ball quite a bit.

While it’s not the concern of business of the business owner / manager one must not forget our banks, who are among the best rated and highest reputation in the world are highly regulated. As Canadians that’s a good thing when it comes to bank stability, solid capital bases etc. That, however, does little for the business owner looking for some maximum thinking or ' out of the box ' thinking.

Pricing for bank financing for business credit needs is pretty well the best relative to any other comparable finance solution. However, how is that pricing established? In the end it’s a combination of collateral you personally and your firm can provide, shareholder equity, the infamous ' cash flow coverage ‘

An interesting point? Even if your firm has all of those you might find that the bank views your entire industry as unfavorable or high risk, as a result you'll still be significantly challenged when looking for business credit solutions. That's when some of those other alternatives might make sense. Those include:

A/R financing
Asset based lending
Sale leasebacks
Mezzanine financing
Tax Credit financing

Many businesses find themselves in the unfortunate position of being place in SPECIAL LOANS if they default on their bank covenants. We again point out to clients in that position that there are numerous non bank alternatives to being rescued from special loans designation.

One other conundrum of the business owner seeking bank capital in Canada is ' GROWTH ‘. Growth is a good think right? Not so fast mister... or Mrs! That because when it comes to financing growth means using cash, not generating cash, and banks historically wrestle with that issue. Again, that’s where some of those non bank solutions work best!

There is no real short cut to bank financing and business credit in Canada. You have to see it through the banks eyes, not your entrepreneurial ' special vision ' glasses!

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with bank needs and alternatives sources of capital.



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 :

7 Park Avenue Financial = Bank Financing Business Credit And Alternative Solutions


CONTACT:
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

Small Business Government Financing . 6 Things You Might Not Know About Canadian SBL Loans

You Might Have It Wrong On Government SBL/BIL Loans






OVERVIEW – .Information on small business government financing loans in Canada. The SBL Loan works for thousands of companies just like yours with Canadian finance needs



Canadian small business government financing . There isn’t a day when we don't meet clients who are looking for information on the SBL loan in Canada. What's worse, in many cases what they do know... well suffice to say... they've got it wrong. We think we can fix that in pretty short order, so let's dig in!

There are several methods of financing a start up in the start up and SME sector in Canada. Knowing what they are and preparing to address them is what the business owner/manager needs to deal with.

In many cases our clients often focus on their bank that they have always dealt with - that comes from the convenience of a past and current relationship more often than not. Just remember though that convenience and a short walking distance are not always guarantors of successful Canadian business financing!

No Canadian chartered bank is going to bend rules or get involved in marginal situations, so it’s important to focus on a bank and banker that will deliver - many do, but not all. While things like fees, access to on line services, etc are important they ultimately depend on getting your company the kind of credit and working capital you need.

Common sources of business financing in Canada also include unsecured business lines of credit, business credit cards, supplier financing, equipment and receivable financing.

But is that all? Definitely not, because today we're focusing on the Govt SBL loan and why it just might make sense for your firm.

So, here's 6 things you might not know about the BIL (that’s the formal name of the program) loan in Canada.

1. The loan has limited personal guarantees (for some reason our clients like that one!)

2. Pricing is very competitive given that many businesses that apply are in start up or very early years of growing their business

3. There are only 3 asset categories that can be financed - they are equipment assets (including trucks, etc), Leasehold improvements, and real estate.

4. The term ' government ' is a bit of a misnomer - while the government runs the program and guarantees the loan to banks in actuality all loans are delivered through the chartered banking system. So as much as the Canadian business owner dreams about having a strong day to day relationship with the government and its business the reality is that its business as usual with no direct contact with the government!

5. Many clients imagine the application is cumbersome and involved. It isn’t. You need a business plan, some very normal info on your business - i.e. articles of incorporation, premises lease, etc - Voila... you're off to the races. Oh and by the way, while many business people choose to be incorporated you in fact can be a proprietorship or partnership.

6. Even firms that are start up in nature can be financed under the program which provides a maximum loan of 350,000.00. That covers off a lot of business financing needs.

So, did you have it wrong? Many do... so seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your finance needs via small business government financing - aka the ' SBL '.






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 :

7 Park Avenue Financial = Canadian Small Business SBL Loan Financing






CONTACT:
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

Business Franchise Loan ? The Before And After Of Franchising Finance In Canada

When You Finance Your Franchise It Doesn’t Have To Be Gut Wrenching !

OVERVIEW – Information on the business franchise loan in Canada . Franchising finance offers different challenges in Canada prior to and on approval of your business purchase




Business franchise loan challenges. When it comes to financing a franchise in Canada there's some critical ' before and after ' issues that need to be address. When they aren’t addressed properly the situations becomes... shall we say ' gut wrenching'! We'll examine some of those key points. Let's dig in!

Your initial decision to purchase a franchise should always be tempered with the amount of funds that you can personally invest in the business. These day's those funds come from savings, equity lines of credit, and in some cases corporate severances.

Knowing the amount that you can comfortably commit to the business will play a key role in both the size of franchise you buy, as well as the financing you can arrange in this somewhat specialized field. Frankly, in Canada franchise funding comes from the smallest handful of resources - a specialized franchise finance firm, a bank loan, and some ancillary financing services such as equipment finance, leasehold finance, and merchant advances when it comes to working capital needs.

We reference banks, but by far the amount of financing that the Canadian banks deliver is through a vehicle known as the BIL/CSBF loan program. It's the government program that over time has become the de facto vehicle to finance many of the franchises in Canada. Challenge arise when you are purchasing a service franchise as the BIL program is tailored more specifically to assets and leaseholds and real estate on some occasions.

Can the size and quality of the franchisor you are working with affect your business franchise financing success? To a certain degree the jury is always out on that one - suffice to say that some franchises are viewed as a bit more risk or somewhat more or less successful than others .

Also, as a point, when a franchising loan is under consideration in Canada it in fact does not make a real difference if your franchisor is Canadian, U.S. based, or in some cases you might simply be working with a Master Franchisee who has purchased the rights to your overall territory.

Your business plan and cash flow document are critical to finance success. In fact while the business plan is needed before you start your franchising process it can become a key valuable document in benchmarking your success down the road as compared to your original aspirations /projections.

Personal finances are a key part of the overall franchise finance process. You will need good reasonable credit history for your borrowing , and you will want to ensure that in your financial due diligence you assess the fact that your business will generate cash flow and profits that will allow you to draw a decent income based upon your needs .

When it comes to the franchising loan you want to ensure that your finance package addresses both the needs of the lender (i.e. repayment of your loan) as well as your ongoing working capital needs. Financial projections we see from clients are often not realistic, which can create some serious ' start up ' problems when it comes to financing on going operations.

At the end of the day the whole business franchise loan process requires both a ' before and after ' approach. Careful planning and utilizing guidance from your franchisors experience will get you to the goal line.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with franchising finance needs in the Canadian marketplace.



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 :

7 PARK AVENUE FINANCIAL = BUSINESS FRANCHISE LOAN FINANCING



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

Business Credit Line ? ABL Revolving Credit Facilities Turn Bank Lines On It’s Side

Attended Business Credit Line School Yet ? Here’s Your Agenda !

OVERVIEW – Information on bank credit facilities in Canada . The ABL revolving line of credit is one alternative to working capital financing for Canadian businesses . Here’s why and how !





Bank credit facilities ? Have you been to business credit line school yet? After talking to clients about their financing challenges it's safe to say they are hoping to attend, and one of those reasons is the revolving ABL line.

Did you know there's an alternative to the commercial bank business line of credit? It is known by various terms, the simpler being the ABL, or asset based line. An old mentor of ours advises that ‘ tuition is very high in the school of experience ‘, so let’s share some key facts and knowledge in this critical area of business finance in Canada.

This borrowing facility, non bank in nature is a solid alternative to those flexible and low cost commercial lines of credit offered by our Canadian banks. The two major differences - they are more expensive but easier to get. In many cases borrowing power can be increased anywhere from 50-100%.

Clients we talk to always focus on the basics - they are ok with an initial explanation to get them started on a business borrowing facility that in most cases they have never even heard of . So the short explanation is that the non bank ABL lender focuses on your assets in the business, versus your cash flow coverage and equity ratios that are of prime importance to lenders in the banking system.

The main similarity in Canadian bank and ABL lines of credit is that they are typically secured by receivables and inventory. The asset based credit revolver often also adds in fixed assets which are treated in a manner similar to A/R and inventories - ie you can borrow against them on an ongoing basis.

Both banks and the ABL lender use standard borrowing base information to determine how much you can borrow at any given time. It's really a function of your balance sheet assets at the end of the month. Very typical ABL advances are 90% on receivables, and anywhere from 30-70% on inventories. Borrowing for working capital for liquidity on equipment, under the ABL scenario, requires an agreed upon valuation of the assets in question.

We forgive the business client looking to understand ABL for always trying to figure out how their normal day to day banking fits in. The simple answer? It's that you keep you regular bank account set up - funds are deposited as you need them under ABL borrowing. Receipts are placed into a separate account that is created at the bank for your business - this account with your receipts offsets your borrowing.


Remember also that neither bank borrowing or monetizing assets via ABL credit lines add debt to your balance sheet. Your firm is simply cash flowing current assets. It is critical to focus on the fact that both bank and ABL lending simply provide you with a quicker access to cash. We can say the Abl facility, as opposed to the bank has no real upside limit - as you grow sales and assets such as A/R your business line of credit grows with you. Banks by their nature and history and practice tend to run these facilities on set limits with annual reviews.

Pricing on bank and ABL lines is always a key topic of focus for the Canadian borrower. While the majority of asset based lines of credit are more expensive it’s important to remember that you use this liquidity from ABL to grow. You are no longer banking your clients - you're using your receivables to achieve a higher return on investment via better asset turnover. And at the risk of being too obvious you are not always going to be approved for the amount you require under a commercial Canadian chartered bank facility - your odds of approval, for liquidity needs, are much better in an asset based line of credit.

Has the ABL credit line turned traditional bank borrowing on its side? There's certainly a case to be made for that. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in differentiating the difference and benefits of various business credit line options.



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 :

7 PARK AVENUE FINANCIAL – BANK CREDIT AND ABL FACILITIES




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

Business Cash Flow Financing In Canada . Making The Case For Financing Options

Where’s the Safety Patrol When It Comes To Business Financing In Canada ?


OVERVIEW – .Information on business cash flow and financing options for the Canadian business owner/manager . Timing is … everything!



Business Cash Flow . Confusing sometimes ? It shouldn’t be . The term ' cash flow ' is widely used …. And somewhat widely misinterpreted ! Where’s our safety patrol when we really need one ?!

Its a specialized term in business and has often confusing definitions. The most pure form is the cash flow statement for any firm. At its simplest its a ' cash in' and ' cash out' analysis. Key to this analysis though is the timing of the receipt of funds. Any good business cash flow statement or projection will show projected inflows and outflows over a period of time - usually annually.


We mentioned wide misinterpretation. That is because it is often confused with other accounting terms such as 'profits ', ' income ', and 'revenue'. Naturally real cash is the life blood of an business. We don't pay our bills with ' revenue'!.


So, yes, our firm makes things, we sell them, and eventually we receive payment. During that time we are paying out cash to employees, suppliers, and also waiting to get paid ourselves. We are only able to pay our bills as a business with real cash!
When businesses prepare a cash flow statement they list their monthly expenses, both fixed and estimated, and then focus on anticipating when customers will pay invoices, thereby generating cash.

Naturally there has to be some solid work around any assumptions in that whole process - for example:

Are the projected sales going to be realized?

Will the payments from those sales be made on time?

How much can be drawn out of the business in the meantime?

As most business owners who have borrowed already know this type of document is probably the most important one that the bank or finance company wants to see.
Business owners therefore need to properly understand the total ' cash flow cyccle ' That cycle consists of purchasing inventory, booking receivables around the sales that are made, and then collecting hose receivables. Simply right? Not really, the true challenge is in the following: ' TIMING'!

Many textbooks in finance have been written around the mis-timing of the cash flow cycle - where large and once great companies went bankrupt by misunderstanding the subject of our article.

Most lay people find it very difficult to comprehend that a company that is profitable can go bankrupt. As we have discovered that can absolutely happen as financial managers confuse profits from a sale from receipt of cash from a sale. If the cash pipe is ' blocked ' problems will occur!

In summary, any business owners or financial managers understanding of the business cycle and proper cash flow will add value to the success of the business from a financial perspective.

To seek financing options for the business cash flow challenge seek a trusted, credible and experienced Canadian business financing advisor who can assist your with your working capital needs.


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 :

7 PARK AVENUE FINANCIAL = CANADIAN BUSINESS FINANCNG



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