Financing For Small And Medium Business Enterprises In Canada Hasn’t Disappeared .Good Luck Might Be Around The Corner

What’s The Secret Around The SME When It Comes To Financing?




OVERVIEW – Information on the financing of small and medium enterprises in Canada . Business solutions come from various sources based on needs and qualifications




Financing for small and medium enterprises in Canada is a classic business conundrum. Many clients we talk to believe it simply doesnt exist, in other cases it’s a case of a business life of disappointment. Let's clarify some winning, and well as some losing strategies in the ' SME ' sector in Canada when it comes to raising capital and financing assets for your business. Let's dig in.


Part of the challenge of SME (small medium enterprise) financing is size. Avoiding the obvious ‘is size important’ joke we were reading a column in yesterday’s Canadian business daily. The columnist was touting the benefits of a SMALL CAP (cap = capitalization) company.

Many business owners and financial managers in Canada will be very surprised to know that a small cap stock in Canada is one that has a value of less than several hundred million dollars. Enough said... all of a sudden financing your firm seems even a greater challenge, because it would appear you're not even small cap!

Truth be told though there are thousands, perhaps hundreds of thousands of businesses in Canada in the SME sector with revenues in the 1 - 25 Million dollar range. And guess what? These businesses are growing the Canadian economy, being acquired, and merging with similar firms to get more scale.

Most stats tell us that this is really the backbone of the economy given the big guys don’t seem to be hiring a lot these days, unless you're an outsourcing consultant!

So what are the types of financing that the SME needs, and where can he or she be successful in finding it? Financing needs include term loans, revolving credit facilities, equipment financing, rental solutions, as well as on occasion some equity capital.

The major challenge of SME's in Canada is their ability to access traditional bank financing. Unlike in the U.S. it is extremely difficult for the SME business owner to access the loan products offered to larger established corporations.

The main two traditional financing products offered by banks to the SME sector are the Govt Small Busines Loan which maxes out at 350,000.00$ ( not bad don't you think?) and working capital , term and equipment loans offered by Canada's crown corporation bank.

If there is one bright light in SME Canadian business financing it's the alternatives offered by non bank commercial lenders. Although they are always priced to risk these solutions are varied and include:

Equipment financing
Bridge loans
Sale Leasebacks
Receivables financing
Non bank asset based lines of credit
SR&ED Tax Credit Financing
Franchise finance

The bottom line is that the SME owner doesnt necessarily have to have the external collateral, stellar financial statements, and impeccable personal credit histories that come with traditional financing solutions.

For SME COMMERCIAL FINANCE solutions that make sense for your business seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with the SME conundrum.



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 = SME Commercial Financing Expertise In Canada






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

The Revolving Loan In Canada. Here’s How A Business Line Of Credit REALLY Works!

One You Might Not Have Heard Of When It Comes To Business Credit

OVERVIEW – Information on the business line of credit in Canada. Who offers it ( not just who you think ) , how it works, and how you qualify



The revolving loan for business in Canada. More commonly called the ' business line of credit ' by the Canadian business owner. Are you sure you really understand how they work, and more importantly, is this the only game in town?

(SPOILER ALERT - It's not) Let's dig in.








A good place to start on our subject is to define what business lines of credit are NOT! They are not term loans with defined payments and interest rates, Also they are not covered under the Government SBL loan which only finances equipment, leaseholds and real estate under very favorable terms.

You would never use your business line of credit to purchase capital assets. That typically is done via equipment financing via a lease or loan. The reason for that is simple, but often misunderstood by the Canadian business owner and financial manager. The reason is simply that you want to be able to ' match ' your financing properly. By that we mean you don’t want to you short term credit borrowing to financing long term capital needs. If you do we can guarantee you that your business will run out of working capital and daily cash flow... quickly.

So think of business credit lines as you daily operating facilities, similar to your personal chequing account that we run our consumer lives on.

A credit line in business is of course essentially an ' overdraft ' facility. It allows you to draw funds when your operating capital is tied up in inventory, receivables and prepaid obligations. Simple as that.

A key word in business lines of credit, whether they apply to Canadian chartered bank facilities or non bank facilities (more about those later) is in fact the word ' REVOLVING ‘. Banks like it when facilities revolve. In general if you have a business line of credit in Canada and you are always at the very top of it there is a safe assumption that two things are happening:

Your asset turnover in A/R and inventory is not happening as quickly as it should

You need a higher business credit line to meet your growth and operating needs (We’re assuming your business is growing - if its not there are other issues to be discussed on another day)

Bank credit lines are structured from a collateral perspective as ' DEMAND LOANS'. The simple explanation to that term is that the bank can ask for all the money back at any give time. And we repeat ‘ALL ' the money back. At that point your loan is termed ' called' and the scramble ensues!

Your revolving loans will not be called if your business is performing fairly well and you show solid fluctuations in the facility. When we look at a client’s financials we often ask for 3 months of bank statements to see those inflows and outflows.

We have hinted at another solution to revolving loans in Canada. They exist, and are called ABL'S or asset based lines of credit. They are non bank in nature, and they monetize your A/R, inventory and equipment into one business line of credit that you draw against daily as you need it. While typically ( but not always ) more expensive they provide much more liquidity than commercial bank lines and have easier credit qualification when it comes to ratios, covenants, collateral , and the dreaded personal guarantee.

If you want to ' plug in' to alternatives and solutions around the business line of credit seek out and speak to a trusted, credible and experienced Canadian business financing advisorwho can assist you in your operating 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 = Business Credit Line Expertise



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

Is A Business Advisor The Magic Bullet To Monetizing Assets And Originating Loans For Companies In Canada?

All The Business Financing You Need Today ? You’d Have It Already If You Could Do It Alone


OVERVIEW – Information on the role of the business advisor in Canada. When it comes to loans and financing options how can expert advice help your company



Business Advisor needs? That is the question faced by many business owners in Canada, as well as financial managers when it comes to financing their business through loans, asset monetization, and other strategies.

Although we say it somewhat tongue in cheek, the reality is that if you had all the financing you need you certainly would have it in place already, without any help from an ' expert '. What then is the role, value and cost of advice when it comes to growing (or saving?) your business. Is the right advisor your MAGIC BULLET? Let's dig in.

Many business owners and managers we meet intuitively have a sense of the current state of affairs of their business. They often think they know where they need to be when it comes to growth and financing needs... where things fall apart is their inability to understand which of a multitude of finance options are available. In some cases it’s a lack of knowledge, in others it just time and resources.

Enter the Canadian business financing advisor. The key role here is quickly established - identifying and carefully explaining all options, and then executing on them.

Naturally along the way, whether you are doing it yourself or with professional expertise there is a minefield of turbulence. That comes to a certain degree from the fallout of the 2008 world wide financial implosion/recession, with many Canadian business owners still believing we're not quite out of the woods on that one.

Then there are the issues with your current lenders, as well as your overall relationships with suppliers and vendors, etc.

Financing issues tend to address either your existence or survival, or alternatively growth. The role of an experienced business finance advisor is to understand what resources and assets are in place for your firm, and how they can be maximized based on the future plans of your firm.

Nothing is as important as understanding your current financial position. When you understand the current capital structure of your balance sheet, the quality and size of the assets, your operating cycle (days receivable, days payable, inventory turns) and how these assets either eat up or can be monetized into cash you are immediately ahead of the game.

Some very basic issues need to be addressed by yourself or your expert advisor. They include understanding who you are currently borrowing from, their collateral, and any issues that surround your relationship. In many cases we discuss with clients the company is ' off side ' on ratio, covenants, loan and interest payments, etc. In many cases its time to replace that financing with something else.

The good news about ' growth ' is that it's a bit more fun to address when it comes to traditional and alternative financing solutions. Understanding your gross margins and your working capital needs can 99.99% of the time bring a fix to financing growth.

Don't underestimate the needs of a trusted, credible and experienced Canadian business financing advisor when it comes to originating finances you need to operate and grow your company. After all, if you didn’t need that help, and if you understood every option available you'd be there already, right?!




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 = TRUSTED CREDIBLE AND EXPERIENCED CANADIAN BUSINESS FINANCING EXPERTISE




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 Loan Interest Rates In Canada . You Can Quote Us On This – 3%.

What Is Your ‘ FUD’ Regarding Business Financing Costs?

OVERVIEW – Information on business loan interest rates in Canada. What determines financing costs and who offers what and why?




Business loan interest rates in Canada are a constant discussion point with clients when we're discussing financing options for loans and asset monetization strategies. And it's safe to say there is a huge ' FUD ' factor when it comes to that discussion. FUD is of course Fear, Uncertainty and Doubt, and the costs and different financing alternatives certainly create that FUD factor in the mind of the Canadian business owner and financial manager. Let's dig in.

Different types of funding for your business brings the issue of costs and the sources of that capital. The Canadian business owner and financial manager sometimes forgets to address the fact that there’s a difference in where that capital comes from and the rates that come with that financing instrument.

The reality is that the sources of capital you choose already have defined their required rates of return, whether that be a Canadian commercial bank. A commercial finance company or an alternative lender of sorts. Their business models dictate how that financing is to be priced and there's very little ' wiggle room' once you're inside the 'credit box.'

What then are key factors that determine your interest rates and cost of financing? They include key areas such as:

Financial strength in your balance sheet and income statement

Where your company is on the maturity cycle - i.e. Start up, pre revenue, fast growing, mature, etc

Industry issues and concerns - industries are always in or out of favor - the stock market is a great example of companies that are in their halcyon days or alternatively in a death spiral

Management credibility and reputation

Risk assessment by underwriters associated with your lender - this will shock you but some of them have a bias!

As a general rule we can say that depending on the type of financing you require or choose the rates in Canada are generally 3%. The challenge is that it's either 3% per annum or 3% per month, depending on the financing vehicle you choose. And in some cases that 3% per month makes a ton of sense and is justified...and works!

It's also important to understand who the players are and who offers what, when it comes to debt financing, and of course equity financing, which is not the focus of today’s discussion.

Who then makes up the Canadian business landscape? Key players include:

Canadian chartered banks
Commercial Finance Companies
Insurance Companies
Equipment finance companies
Private Equity/VC types


Their solutions are priced, as we said to risk and the overall business model of your lender. Solutions include:

Commercial bank lines of credit
Receivable Financing
Equipment Finance
Mezzanine/cash flow financing
Asset Based lines of credit - non bank
Bridge Loans
Royalty financing
Traditional Factoring
Confidential Receivable financing
Inventory finance
Term loans
Buyout /merger financing

When the business owner/manager understands their own firms risk profile, and what the benefits are of any type of business financing they can better eliminate the FUD factor when it comes to business loan interest rates and financing costs in Canada.

Seek out and speak to a trusted, credible and experienced CANADIAN BUSINESS FINANCING ADVISOR with a track record of assisting firms who require the right financing, right now!





Stan Prokop - founder of 7 Park Avenue Financial

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 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/business-loan-interest-rates-in-canada.html





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

Factor Financing . Can A Factoring Company In Canada Be Your New 8 HR A Day Cash Flow Generater?

Don’t Be HirooOnoda’d When It Comes To This Method Of Business Financing




Information on how a factoring company in Canada works . It’s time the Canadian business owner/manager understood the ‘factor’ concept and why and when it works for your firm








The factor finance solution in Canada. When it comes to this method of financing a Canadian business a few of the clients we meet these days admit they have done a HIROO ONODA in avoiding understanding receivable financing as a cash flow method.

HIROO ONODA? He was a soldier in the Japanese army that had heard the war ended on his remote island station. The result? He spent 30 YEARS doing things the same old way, not knowing the world had changed around him. So bottom line, it just might be time to surrender to the new alternatives in Canadian business financing. Let's dig in.

How then has one single method of financing your firm changed the landscape so much? Some might make the case that banking in the SME sector is somewhat 'down for the count ' these days - it’s simply hard to achieve in the amount that you need.

Part of the challenge around understanding what the factoring company in Canada does is being able to wade successfully through the different terms and offering of this finance mechanism. So it’s very easy to miss the big picture, or even worse, miss out on the right type of receivable financing that works best for your business.

Our own most recommended solution is CONFIDENTIAL RECEIVABLE FINANCING which allows you to retain full control of the billing, collecting, and financing function of your sales, while the entire time still generating the cash flow you need for operations. So pretty well everyone uses that these days right. Wrong, we would guess that only a small majority of firms who utilize A/R finance in fact are even aware of confidential factoring.

Why is the case then? We can probably chalk that up to a lot of factors - companies who don't take the time to investigate how A/R finance works, or industry players who don’t offer this method of financing and therefore have very little inclination to explain it to you. And by the way, pretty well all the banks in Canada don't offer a stand alone ' factoring ' solution unless it's a subset of much larger transactions in the millions. That certainly eliminates most of the SME sector when it comes to receivable portfolio size.

We're often amazed at how clients seem to stumble on the factor finance solution in Canada. They are looking for alternatives, start talking to people, and suddenly realize, just like our friend HIROO ONODA that there's a whole new world of financing alternatives out there.

While factor financing is frankly available in all sizes for every firm it tends to work best and make sense when your receivables are in the 250k range and above. In many cases, as we have alluded to, its a subset of a total asset based lending facility that includes your inventory and equipment, but stand alone factor financing - i.e. just for your receivable works quite well on a stand alone basis.

So what then should the business owner and financial manager do when they seek alternative non bank financing? A good choice might well be to speak to a trusted, credible and experienced Canadian business financing advisor who can help you ensure the cash flow achieved via a factoring company in Canada works to the max for your firm. That will allow you to bring on that full time new employee, working 8 hrs a day and generating the cash flow you need – aka the Factor finance solution.



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 = A/R Factor Financing Solutions In Canada



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 Valuation Methods . They Work Whether You’re Buying Or Selling A Company In Canada

A Surprising Thing About Business Valuations

Information on how Canadian business owners and managers can understand business valuation methods when they are buying or selling a company






Business valuation methods in Canada. This should NOT be a shocker to you, but whether you're buying or selling a company in Canada the ways in which you look at the business are basically the same whether you're ' buyer ' or ' seller'.. , or even in a merger scenario. Let's dig in.

When we sit down with clients looking to buy or sell a business, or perhaps even acquire a franchise the proverbial question arises pretty quickly. That question? ‘HOW MUCH IS THIS BUSINESS WORTH'!

It's somewhat of an old saying, but the reality is that the best transactions when consummated revolve around a fair price for both parties. We love the old saying that the best deals are done when both buyer and seller feel like they didn’t get the best deal! Think about it.

So how does that whole valuation process work? And lest we forget, the tax man tends to sometimes, if not always have a vote in your deal.

The simple way to look at a valuation in the small to medium size private company business sector in Canada is to look at it in two ways:

Assets

Going Concern/Cash Flows

When it comes down to the assets in a business the value of those assets is key of course. And since assets are financed by banks, asset based lenders, leasing companies, commercial finance companies, etc your ability to pin down ' true values ' is critical to an asset based deal.

In some cases appraisals might be required. They are needed for both financing and valuation purposes. Appraisals come in three forms -

Fair market value

Orderly liquidation value

Salvage value

Naturally some assets are much more liquid than others. We can make the case the receivables and inventories are of course much more liquid than physical plant assets or rolling stock, aka ' trucks'.

While the business seller tends to focus more on fair market value because they know and believe in their business assets the seller, if prudent should establish the minimum price by focusing on liquidation value of the assets.

Accountants tend to focus on the net book value based on the seller’s presentation of financial statements. It gets a bit tricky though when you try and blend in the fact that recently profits might be down and future prospects, for a variety of reasons, might be at risk.

The whole area of GOING CONCERN VALUATION is the other method that presents opportunities and challenges. It focuses on a lot of time being spent on future earning power. The challenge here, as most business owners know, is that the past doesn't always represent the future! Here methods such as average earnings over a number of years are used to help in the overall bottom line valuation.

What are some of the factors that affect your decision process in a going concern valuation financing?

They might include:

Growth potential under new owners, management, additional financing

Current management positive attributes

Companies that aren't as subject to the economy

Service businesses that require smarts, not capital

Use a common sense approach to business valuation methods whether you're buying or selling a company. Also, assess which factors might affect your ability to finance the company. Financing a purchase might include solutions such as:

GOVT BUSINESS LOANS

ASSET BASED LENDERS

CASH FLOW LINES OF CREDIT

COMMERCIAL BANK TERM LOANS

MEZZANINE FINANCING

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor when it comes to business valuation and financing that makes sense for your deal.




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 Valuation And Financing Expertise



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 Financing Options . Ready For A Really Good Year When It Comes To Loans And Borrowing?

Business Finance Options Aren’t The Light Years Away You Think

OVERVIEW – Information on various alternative and transitional finance options that simply become loans and asset monetization that gets your company where it needs to be



Business financing options in Canada . Is your firm having a ' good year' when it comes to loans, business borrowing, asset monetization, etc? Unfortunately many firms can’t make that positive statement when it comes to capital solutions for their company. So are financing options really seeming ' light years' away? It certainly doesn't have to be the case, so let's dig in.


Many forms of financing these days carry the word ' alternative ' with them - in reality a better description for them is temporary, interim or conditional. That is to say they are mechanisms to either give you a good financing start, or in some cases, get you back to where you want to be.

One such method is receivable financing. When your firm has sales revenues but can't qualify for traditional commercial bank lines of credit then A/R finance steps up to the plate really quickly... Very typical timelines for a firm to have and carry such a facility tend to be 1 to two years. More often than not the company regains banking status (lower cost) and then continues to grow and thrive in a positive manner.

One often misunderstood point about AR finance is that it includes only companies that sell real products. However if you firm provides a service, or perhaps software , or even has progress billings related to the delivery of your services your business can still be financed in this manner.

Another major misconception is that when you are working with a commercial receivable financing company they tend to take full control of your A/R function, including billing and collections and client notifications. That certainly DOES NOT work for many of our clients, which is why we propose CONFIDENTIAL A/R FINANCING as a solution. The bottom line on that one? You bill and collect your own receivables and maintain full control of the client interaction.

One other form of solid financing solution that’s often ' interim' in nature is the ABL loan. It is a comprehensive business line of credit that combines your asset of receivables , inventory, equipment, and real estate ( the latter if applicable) into one business credit line that revolves on a daily basis as your borrowing needs dictate relative to sales and collections going up and down, as they do in any business.

Companies often need new assets when it comes to growing or maintaining their competitive posture. Enter equipment financing, allowing you to finance assets. Although everything from a new photo copier or a laptop up grade for your employees can be lease financed the solution makes most sense when it comes to larger ticket items. That is a proven fact - using our friends in the U.S. as an example over 85% of larger ticket items in business are in fact acquired through a lease financing solution.

One of the most popular methods in the past of acquiring assets under a lease strategy was using the ' operating lease'. This financial ' trick' if we could call it that , allowed you to move asset debt off the balance sheet ... the arrangement being that you were ' using ' the asset, , not ' owning ' it with the debt that comes with that type of transaction. Over the years bankers, analysts, and investors in companies have more or less figured out that it's still a debt though, they just have to dig harder in the financials to figure it out!

Although operating leases ' seem' less in vogue today they still make solid sense when it comes to technology solutions for computer hardware, software, telecom equipment, etc.

There a many reasons why you might be looking for a transitional finance solution. They might include:

Meteoric growth (typically not understood by banks)
Cash flow and debt ratios that is temporarily out of whack
Repayment required to investors/partners
CRA issues that need to be resolved ( asap!)

Etc


Seek out and speak to a trusted, credible and experienced Canadian business financing advisor , who will show you the financing you need isn’t in fact ' light years ' away, its here today with interim solutions that make sense.


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/business-financing-loans-options.html




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