Business Loans In Canada. Here’s Some Intelligence For Commercial Loans Approvals

Want An ‘ Out Of The Box ‘ Path To Business Loan Success In Canada?


OVERVIEW – Information on successfully securing business loans in Canada. What are the ingredients to successful commercial loans approvals



Business loans in Canada , unfortunately, don’t come in an ' out of the box ' path to instant approval. So lets explore some real world ' market intelligence' around commercial loans in Canada. Let's dig in.

The reality around preparing for a business loan financing involves considering who the submission is for. In some cases it might be for a bank, in other cases a commercial finance firm. The far end of the spectrum of a private equity or VC type financing definitely requires a business plan. However, that’s ' equity '... and we’re talking debt!

So a key point out of the gate is to focus business loan submissions around cash flow and repayment. We'll let our VC/Private equity friends worry about the economy, your industry, market potential, etc... we're focusing on getting approved for a business loan and repayment.

So if we had to emphasize the key points around business loan success in Canada they would categorically be:

Quality of collateral
The ability to meet ratios and covenants that might be required
Cash flow analysis -historical and future
Personal financial info/credit of the business owners

When it comes to business loans from banks it's important for the business owner/financial manager to understand that ' branch banking' isn’t really what it used to be! That's because the majority, if not all business credit decisions are made by underwriters at head office. That's why it's critical to get a strong recommendation on your submission from your branch banker.

There's an old joke that goes as follows: ' It's technically impossible to give a banker too much information '. We're not sure we agree 100% with that, but it's pretty close we would say, so your ability to answer 'negative issues' and ' questions' with quality financial and business information is key.

Loans are always going to be repaid from cash flow, so if you're not bringing new or more personal equity into your company be prepared to demonstrate the cash flows and collateral quality of your financials.

If you’re applying for a Govt SBL loan through your bank the challenge for this type of commercial loan is very straightforward. You need to simply understand the very clear criteria around this program and fulfill the application needs with that info. Those criteria are fundamental - a business plan, personal credit info, cash flow forecast, a premises lease, and business owner info/experience.

There's not ' out of the box' instant solution for business loans in Canada. But some homework and common sense will go far. Seek out and speak to a trusted , credible and experienced Canadian business financing advisor with a track record of Success ; providing you with that business loan intelligence you need.



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 Loan Expertise


Have A Question /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


Email = sprokop@7parkavenuefinancial.com























Stan Prokop

A Business Finance Strategy Doesn’t Have To Be A Long List : Growth Strategies For The SME Sector In Canada

How To Design Growth Financing Strategies


OVERVIEW – Information on achieving the right business finance strategy for Canadian business owners/managers. Planning for growth strategies

might not be as complicated as you think





A business finance strategy doesn't necessarily have to be the long list of technicalities when it comes to financing the SME (small to medium enterprise) in Canada. Designing growth strategy can be a simple plan or process around getting the financing you need. Let's dig in.

While a business plan and formal cash flow forecast of needs aren't critical to your planning finance for your business they will go along way to understanding your needs, particularly the cash flow estimates which will dictate how much financing is required, and when.

Remember also that Canadian business financing comes from various sources - that includes Canada's chartered banks, commercial credit unions, insurance companies, and independent commercial finance companies - Canadian and subsidiaries of U.S. firms.

Remember also to consider some sources of financing that never make it to the top of the obvious list when the business owner of financial manager is planning financing. They include suppliers, and even the government, primarily through the BIL/CSBF program, commonly known as the SBL loan.

Don't forget also that if your firm has a research component you can file SR&ED claims, and, more importantly finance them as soon as you have filed, recovering valuable cash flow for ongoing growth and development of your products or services.

Also we are in a never ending discussion with clients on asset turnover and sales when it comes to business finance. Why? Simply because better asset utilization will increase profits and cash flow, and those profits, kept in the business, are... you guessed it... a source of financing!

When thinking about your finance needs it's important to ' bucket' those needs into the category of either debt or equity - two very different kettles o fish! How you arrange you’re financing via debt or equity dramatically affects the returns and risk to owners and other stakeholders, i.e. your lenders.

Top experts in finance always tell us that the proper use of debt in your overall capital structure is a great way to fund your operations and provide better return to owners. At the far end of the spectrum though is the fact that too much debt brings risk and potential bankruptcy when cash flow cannot repay those arrangements.

We're huge fans of asset monetization as an alternative to debt. A growing business will always have receivables, inventories, contracts, etc. Those can be financed via the bank or a non bank lender, providing you with ongoing cash flow but without taking on long term debt with fixed repayments.

Remember also that the stage your business is in actually will in many ways dictate to you what type of financing is achievable and through whom. That financing is going to come from:


Receivable finance
Inventory financing
Lease back of assets
Equipment finance
Bank lines of credit and term loans
Govt SBL loans
Working capital term loans
Mezzanine cash flow financing


The name of the game always in growth financing is to determine the amount of cash/capital you need before the crunch arrives. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with a business finance strategy and provide alternatives 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 :


7 Park Avenue Financial = Growth Financing Expertise






Have A Question /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



Email = sprokop@7parkavenuefinancial.com
























Stan Prokop

Buying A Business ? Survival Tips In Canada For Financing Your Business Purchase

Take Error And Controversy Out Of Business Acquisition Financing

OVERVIEW – Information on financing a purchase when buying a business in Canada . Key issues in financial success in a merger/acquisition



Buying a business in Canada is the alternative to growing your existing company ' organically ‘, or starting a business from scratch. But how does the business owner/ entrepreneur avoid some of the mistakes and controversy than can arise out of the purchase in business acquisition financing? Let's dig in.

The attraction to buying a company has probably never been greater - whether it's finding a company that is (supposedly?) a great bargain or simply fulfilling the dream of entrepreneurial independence it’s all about potential success, and profits.

Financing the purchase of a business is the place where the error, challenge and controversy we have hinted at must be avoided. The reality is that not every bank or commercial finance entity (we’re speaking of debt financing or asset monetization, not ' EQUITY ‘) can always meet all the finance needs you require to complete a purchase successfully. And that’s talking about capital to acquire, as well as ' working capital/cash flow' to operate and grow.

So what are the sources for business acquisition loans? In Canada they might include Canadian chartered banks, commercial credit unions, and commercial finance companies via ASSET BASED LENDERS, equipment lessors, and the government of Canada via a SBL /CSBF loan or a working capital term loan via its Crown corporation lending entity.

A very solid route for the SME sector when it comes to acquisition finance is the above mentioned SBL loan. If the business you're acquiring has less than 5 Million in revenues and has real assets it’s a great way to buy a business.

While our focus is on loans and asset monetization for your business purchase don't also forget that there has to be some sort of buy equity , in effect your ' down payment ' for the purchase . While 100% financing might be possible in very unique circumstances never forget that banks and other lenders will want to see some of your personal funds into the transaction. That varies from anywhere between 10-50% depending on the quality and structure of the transaction.

Equity capital is also risk capital and the purchaser should understand that; i.e. mortgaging the home might not be the optimal strategy! Suffice to say though that the amount you contribute to the transaction clearly is a strong measure of your commitment to the venture, and lenders respect that.

Vendor take backs, aka ' Seller financing' can be a solid way to make a transaction happen. It allows you to put a final piece of the puzzle in place one you have lined up your other capital. The seller may wish to help you out in that manner not out of the goodness of their heart, but to realize some tax benefits as well as allow a purchase to happen that otherwise may not have. Naturally large per centage seller financing is optimal... for you... but not the seller!

When you are looking at a vendor take back in structuring a deal remember that there has to be some finance terms around the VTB. Quite often we see interest rates payable by the purchaser, on the VTB portion at or near current bank type rates.

Critical to understand is your ability to convince your lender that the Seller financing part of the deal not be considered debt. That could throw certain ratios and covenants out of the whack which may not allow your lender or lenders to complete a deal.

Remember also 'share ' sales are not really financeable in the SME sector, so a total focus must be around an ' asset' based purchase, even if some of those assets are intangible! By the way, that goes for existing franchises also in the booming Canadian franchise industry.

Putting the right financing in place when you're buying and financing a business in Canada is a key element of your future success. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with purchase financing that makes sense for your individual deal.



Stan Prokop - founder of 7 Park Avenue Financial

http://www.7parkavenuefinancial.com

Have A Question /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

Email = sprokop@7parkavenuefinancial.com

Stan Prokop

Business Financing Options In Canada Can Be Crafted For Your Funding Needs

Looking For An SME Commercial Finance Playbook?

OVERVIEW – Information on business financing options in Canada. Funding your business needs is all about ensuring you understand all the alternatives







Business financing options in Canada require a ' crafting' of your specific needs to your firm and your industry. While all entrepreneurs can be forgiven for thinking their company is special the reality is that many of the needs of any industry are in fact quite similar as they relate to capital needs, cash flow dynamics, etc. Let's dig in.

How does the Canadian business owner and financial manager ' tap into ' the right finance options? Ultimately it comes down to 3 sources of long term or operating capital - Canadian chartered banks, the government, or independent commercial finance and leasing companies .

In some cases the financing you undertake will be temporary, other times it will be long term in nature. Temporary financing are very valuable in that they are often more accessible, solve urgent needs, but of course come with a higher borrowing cost. The goal of every owner/ finance manager, particularly in the SME sector is to ensure that over a long period of time you have the operating capital you need... to survive.. and grow.

One positive aspect in government’s role in business is the programs they underwrite for some very ' niche ' financings. One of these is the SBL - The Government small business loan program. Providing financing up to 350k for firms with less than 5 Million in actual or projected revenue is what this program is all about. And coupled with very generous rates, terms, and loan structures that satisfy even start ups or franchisee borrowers we can heartily recommend that program to any client.

The banks of course are the govt ' operating partner' in the SBL loan program. If we have to state one thing we personally have never liked its how each bank has it’s over version of how they administer the program - trust us that some banks are better than others in this regard.

We're the last to be fond of heavy govt involvement in business - but we're the first to have a strong respect for

SR&ED credits for research, as well as the film/TV and animation credits that populate the Transmedia industries in Canada. And the better news is that both of these tax credits can be financed either when filed or in some cases before. Your ability to ' cash flow' the government promise to pay you is... quite frankly... a good thing.

Credit unions in Canada have never been major lenders to Canadian business - that is changing a bit... some seem more interested than others, but their localized approach and limited funding has some challenges for Canadian business borrowers.

What then are some of the other alternatives that can be crafted into providing your firm with all your business financing needs? They include cash advance programs for retailers, asset based non bank lines of credit for revolving credit facilities, and equipment finance firms. All of these tend to be the domain on non bank commercial finance firms.

While non bank solutions are always available, they tend to be more expensive, so the business owner/manager must be prudent around cost and benefits of non bank capital.

We're talking mostly about debt financing and asset monetization, not equity business funding. So it’s all about ensuring you're able to match the benefits of any funding with the cost of that capital. While capital might be high because of your firms particular circumstances it can still help you grow revenues and turn profits.

We're reminded about Warren Buffett’s

great line ‘PRICE IS WHAT YOU PAY, VALUE IS WHAT YOU GET '. His bottom line was simple... business financing options might be considered expensive but never let them overtake ultimate value when it comes to choosing business funding, particularly non bank in nature.

If you’re looking for the right ‘ playbook’ or script on proper business funding seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your business funding 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 Funding Options






Have A Question /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

Email = sprokop@7parkavenuefinancial.com

Stan Prokop

The ABL Asset Based Revolving Credit Line: The APP You’re Looking For In Business Borrowing

Behind The Scenes In Asset Based Credit Facilities

OVERVIEW – Information on the asset based revolving credit line in Canada. ‘ABL’ borrowing is a solid way for any company to achieve business lending success




The ABL asset based revolving credit line in Canada just might be the ' APP ' you're looking for when you require business financing and liquidity in a total solution sense. These days it’s all about ' APPS' we hear - they are handy, do the job more quickly, and are unique. That's why it occurred to us that Asset based credit facilities are our version of a business financing ' APP; let’s dig in.

There's not a lot of argument these days around the factor that business owners in all sectors, particularly SME (small to medium enterprise) at least feel that the prospects of business financing solutions are limited. That’s where the 'old ways' don’t work, and the 'new ways' are being searched out. Asset credit lines are the new way.

This type of credit facility embodies practicality. And truth be told while we are positioning it as a solid alternative to commercial bank credit lines the reality is that it can be used to acquire business, or even help a company rise from the ashes when it's been in somewhat dire straits. The only requirement? Assets!

So what is the facility and how does it work.

Think of it as borrowing power against your total pool of business assets. It allows you to borrow, at all times, against the collateralized value of your business assets - and that's the usual suspects: INVENTORY, A/R, EQUIPMENT, and REAL ESTATE.

While the business owner and manager might view this as a bit more of a specialized financing the reality is that it provides the same working capital and cash flow that you would get from a Canadian chartered bank. The only difference - more borrowing power!

It's been clear to us for quite awhile now that the ABL borrowing line has appeal to a broad brush of Canadian business. Those categories:

Companies who don’t qualify for bank credit
Companies who don't qualify for enough bank credit!
Refinancing of a business
Acquiring another company
Start ups
High growth scenarios
Management buyouts

While we speak typically of the asset based revolving credit line in terms of the ' total solution' encompassing all your business assets there are a number of, let us call them ' subsets' of this method of financing. These subsets include:

A/R Financing
Inventory finance
PO/Contract financing

The above niche type of financings are available at all times to business borrowers depending on your unique need and industry specifics.

ABL credit lines on a day to day basis work the same way as commercial bank credit lines. The ABL lender though imposes more reporting and in some cases funds coming in (not going out) may be directed to a blocked account that repays your ABL lender on a revolving basis.

If you want to get behind the scenes on that business ' APP' called ABL seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you make that work.




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 Asset Based Business Credit Line Expertise





Have A Question /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

Email = sprokop@7parkavenuefinancial.com

Stan Prokop

Financing The Research And Development SR ED Credit : A 360 Degree View Including Film, Tv And Animation Credits

Don’t Worry : It’s Normal To Finance Sr&ed Tax Credits Or Your Film TV And Animation Credits

OVERVIEW – Information on the financing of the SR&ED ( SR ED) Research & Development Tax Credit . SRED and Film credits credits can be financed to help ‘ cash flow’ your expenses and provide valuable working capital





The Research and Development SR&ED tax credit , along with film financing credits can be maximized in another way. That way? You can finance both of these credits for cash flow needs. While not everyone in Canada these days agrees with these two very generous programs, it's safe to say those firms that use them do in fact appreciate them and often also don't recognize they can be financed. Let's dig in.

To be clear, we're talking about 2 specific programs in two VERY different industries - The SRED program in the industrial/tech economy, and the various film, animation, and TV tax credits that are available to the entertainment / Transmedia industry.

Billions is given out in SR&ED each year, and hundreds of millions are provided to the Transmedia industry in Canada.

Let's first focus on the SR ED program. Many clients we deal with have faithfully filed claims every year - while in some cases many feel that a large number of those who qualify haven’t even heard of the program or consider it too time consuming. We can only speak for ourselves, but if the government was handing out those billions of $ to our competition we'd be first to get in line.


One thing that is very common to both the SR ED and media tax credits is who prepares them. In the case of the former it’s a SR&ED consultant. His or her goal is to maximize your claim, which became more of a challenge in the last few years as the govt tightened up the program. When you finance your research and development SR ED credit a certain amount of weight in the approval process is always given to the quality and reputation of the preparer of the claim.



The software industry in Canada is a huge user of SR&ED credits. After all someone has to pay for all that ' bleeding edge development that is begging to be commercialized. In the case of media and film credits its all about utilizing the right program among several that pertain to incentives provided to the industry. It's interesting to note that it is very possible to use a SRED credit for gaming software, again re-enforcing the need for a great SR&ED or Media accountant.

In the case of the media tax credits the above role falls on the tax credit accountant, a specialized and focus individual or firm who maximizes your claim on your budgets based on numerous criteria that must be met and can be exploited for a richer claim. So as un - exciting as it might seem to many , when it comes to preparing, and financing tax credits in Canada ' beancounters ' rule!

An interesting part of the whole tax credit preparation and financing scenario is the fact that your firm (in the case of SRED), or your production (in the case of film, media, animation) does not necessarily have to be profitable or in the case of SR&ED successful. You must have to validate that it was money properly spent under the auspices of the program.


It's all about ' the spend' when it comes to tax credits and maximizing the financing around them. If your financials and budget can validate your research (SR&ED) or your production budget (film) tax credits can be financed in two key ways. For both types of credits it's almost a co incidence that they are financed in the same manner. Claims that you've prepared and filed already are typically financed at the 70-75% level of their full value.

In both cases the financing structure typically used is a ' bridge loan'. The good news here is no payments are typically made by the applicant, and things are ' settled up ' on final approval of the claim by the SRED or film authorities (CRA and your province). At that time a typical claim has you receiving the balance of your claim, i.e. the other 30%, less financing costs.

Because only a very small handful of niche divisions of our banks actually will consider a tax credit financing a large amount of tax credits in both sectors are financing by non bank entities with people and expertise pertaining to each type of credit.

If you’re looking to maximize the full benefit of tax credits in Canada (via financing them!) seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your 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 Tax Credit Financing expertise







Have A Question /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

Email = sprokop@7parkavenuefinancial.com

Stan Prokop