Business Finance Options In Canada . How To Assess Commercial Loan And Financing Alternatives In Canada

Making These Mistakes When It Comes To Financing Alternatives?

OVERVIEW – Information on business finance options . What commercial loans or asset monetization strategies work, or don’t work in Canada



Business finance options in Canada. How does the Canadian business owner and financial manger assess commercial loans and other needs for growth and survival? What are the alternatives when it comes to business financing? Let's dig in.

More often than not it always comes down to those two words ' cash flow'. While everyone accepts the importance of that term sometimes it's difficult for the owner/manager to assess the importance as they are wrestling with growing revenues or profit issues.


So how does the business owner ensure that the right type of financing is in place? While traditional bank commercial loans are often perceived as the ' go to ‘in reality all types of business financing, both traditional and alternative can address your needs. Oh and by the way, you don't need to take on more debt all the time, sometimes it’s a case of managing or monetizing your existing assets.

Simple better asset turnover in accounts such as inventory and receivables significantly enhance cash flow. And just using the right financing for the right need makes your firm a better cash flow and working capital manager.

Take the replenishment of assets such as equipment as an example. Using lease financing as an options can provide a multitude of positives around replacing assets to enhance your operations and competitiveness. Using effective lease strategies to their maximum allows you to grow your business. Some of those very basic tools include the effective use of operating leases, matching the term of the lease to cash flows and useful life expectancy of the asset, etc.

While the ' go to' for asset acquisition in Canada is leasing almost 80% of the time as experts tell us, business owners in the SME sector can also acquire equipment via the Government small business loan . It offers big guy corporate benefits to the little guy, and that’s a rare thing in the Canadian business landscape. For example, under this program terms of 5-7 years are available, personal guarantees are limited to 25%, and there is no charge to repay the loan early. Sometimes even the big guys can't negotiate that one!

Many business owners in the Canadian business landscape, certainly in the SME (small to medium enterprise) sector are unfortunately not known for their planning skills. As a result they are not always proactive in addressing financing needs until a crisis. Other challenges they have include the inability to understand what options are in fact available - therefore they spend hours, days, weeks and months chasing financing options that are never meant to be.

Many business owners, again we're talking about the SME sector often do a poor job of separating their personal financial life from their business life. Issues such as business credit cards or using home equity lines to finance their business can backfire in a big way. We encourage owners, whenever possible, to separate business and personal finances. After all, isn’t that one of the main reasons you incorporated anyway?

Business finance options in Canada include:

Receivable financing
Inventory Finance
Supply Chain/ PO financing
Working Capital term loans
Unsecured cash flow loans
Canadian chartered bank term loans and operating lines of Credit
Equipment financing/bridge loans
SR&ED Tax credit financing
Specialized franchise loans


Which one or what combinations of these are right for your firm? Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist your in assessing alternatives that make sense for your business.




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 Finance Options Expertise









Have A Question Or Comment On Our Blog Or Canadian Business Financing Alternatives ?


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

Need A Loan To Buy A Business In Canada. Merger And Acquisition Financing a la ‘ What Would Gandalf Do’

Looking For A Stockpile Of Tools To Purchase A Business In Canada ?




OVERVIEW – Information on merger and acquisition financing in Canada . If you are looking for a loan to buy a business here’s some tips and strategies that work




A loan to buy a business in Canada completed successfully allows you to ' cross the border' so to speak in business success; and that can also include a merger and acquisition type scenario, both of which have major similarities. And by the way, wouldn’t it be great to have the skills of someone like ' GANDALF ' that Tolkien character who seems to have quintessential skills in a wizard style sort of way! Let's dig in.

When the business owner or financial manager is looking to acquire, or merge with another company the expertise of owners and managers must of course be complimentary to the solution needed.

In a perfect world a merger scenario would involve perfectly complimentary size, assets, profit potential and capital structures. Most of us figured out a long time ago in business that it's not a perfect world.

That's when you need the expertise and external advice of a good accountant, lawyer, or Canadian business financing advisor.

Seller reasons to sell their business are varied, and are key to understanding how your deal can be financed and executed properly. They might include crisis type scenarios, the need for current owners and management to ' CASH IN '... and in some cases its might be that growth opportunity simply could not be achieved under the current EQUITY or FINANCING status quo.

Buyers buy a company for typically other reasons - they might be the perception that the company being purchased or acquired is simply too good a deal (sometimes things aren't as they appear!). Or it might be another way to deploy cash and financing resources. And, related to the current owner’s inability to exploit growth the new owner and management team find themselves in a position to enhance growth and long term return on investment.

In some cases the new firm might be able to take advantage of significant research opportunities, perhaps being able to partake in the Canadian governments ' SR&ED program.

Financing a loan to buy a business, or a merger and acquisition type scenario can come from numerous sources. They include:

GOV'T SMALL BUSINESS LOAN - aka ' SBL'

CANADIAN CHARTERED BANK COMMERCIAL TERM LOAN AND OPERATING FACILITIES

VENDOR TAKE BACK PARTICIPATION

ASSET BASED LENDING

BRIDGE LOANS

Careful appraisal of assets, people, and cash flow are keys to a success in buying a business in Canada. Past profits and future profits and cash flow must be weighed in on in a major way. Your lenders aren't equity partners, they simply want to see how they will be repaid.

There's a stockpile of business valuation and assessment tools available from our advisors that will allow you to successfully find, price and finance a business acquisition in Canada. Seek out and speak to a trusted , credible and experienced Canadian business financing advisor who can assist you with your financing need... its just like advice from our pal Gandalf!





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 Acquisition 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

Demand Letter En Route ? Anyone For ( Bank ) Takeout Via Alternative Financing Procurement ?

Received A Dear John Letter From The Bank . In Special Loans ? Here's our solution. Order Takeout!

OVERVIEW – Information on alternative financing procurement when a bank demand letter for business loans or credit lines is received




Is a demand letter en route from your bank in Canada? Perhaps you have already received it. It's what we could call a very unwanted ' DEAR JOHN ' letter, and it’s time for Alternative financing procurement for your business survival.

In effect you need to ' take out the bank ' via their current secured lending arrangement with you. It's our version of ordering takeout! Let's dig in.


When we talk to clients who are formally or informally out of their favor the challenge for the business owner and financial manager is to secure alternative finance solutions for business lines of credit, term loans, and asset monetization and acquisition.

Key to this whole exercise is understood how your firm got here in the first place. Although it’s a simple fact of ' not paying on time’, in other instances it’s a breach of loan covenants or ratios, or perhaps it’s the banks view that collateral supplied for your financing, either personal or corporate, no longer has value.

The security your firm has provided, and the collateralization paperwork around it ( General security agreements / asset registrations, etc ) obviously gives the bank the right to enforce their actions. If all parties were in agreement assets would be sold or monetized in favor of the bank.

This would include, as per the categories we have noted:

Real estate - if applicable
Equipment / Fixed assets
Accounts receivable
Inventory

However, that's generally not desired by the business owner!


What then are the alternatives to banK demand letters when your loan has been called and you are in the bank category of ' underperforming special loans’. One of them is alternative financing procurement via Asset based lending. And typically they are found via NON BANK ASSET LENDERS who specialize in just this form of financing. They are the solution when it comes to your ability to save jobs for employees, keep your business assets, and in fact resurrect and grow your business.

Almost all businesses of any significance these days are of course incorporated. If a business is not legally incorporated it’s in effect a personal consumer situation which is an entirely different kettle of fish.

Refinancing your company via an alternative non bank lender allows you to maintain credit lines, acquire more assets if needed, and keeps cash flow flowing.

Generally speaking in our experience it is highly unlikely that another bank will provide the financing you need when you are in foreclosure proceedings with your current bank. Our logic is simple; people don’t typically like to purchase other peoples problems. So starting fresh with new business relationships and financing is often the key to success. Naturally if you can anticipate loan default and correct that scenario that is the optimal, however less typical, solution.

We would also add from our experience that many firms are able to stay in the bank SPECIAL LOANS category and find they being allowed to go back to traditional arrangements with that same bank. However because relationships and promises have somewhat broken down that is absolutely a much more rare case.

Asset based loans, sale leasebacks, bridge loans are solid ways to fix the bank takeout. If your company has received, or thinks it will receive the DEAR JOHN demand letter seek out and speak to a trusted, credible and experienced Canadian business financing advisor
for practical advice and takeout strategies. Takeout will have never tasted so good.




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 = Alternative Financing Procurement And Special Loans Takeout 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

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