Is Working Capital Management Via Business Credit Solutions Imaginary In Your Company ?

Turning Working Capital Challenges Into Opportunities ? One Guarantee You Won’t Like At All !

OVERVIEW – Information on working capital management for Canadian businesses. Addressing the need of business credit in the financing landscape of Canadian businesses





Business credit challenges in Canada often revolve around your firms overall working capital management. How you address improvements in cash flow management via internal management and external financing solutions makes and breaks a business in Canada.

If you're in the SME ( small to medium enterprise) commercial sector in that's often even more of a challenge, as the big guys seems to have solutions and access to capital crawling all over them . We wish! Does that have to always be the case? We don't think so, let's dig in!

A lot of the cash flow needs in a business are in fact ' hiding' in your financials - it's your job to identify and fix them. While a healthy amount of clients we meet seem to initially only be focusing on revenue / sales management often the root of the problem is in your current asset accounts - i.e. inventory and receivables.

So it's the job of the business owner / financial manager to identify those root causes and implement improvement. In the case of A/R it’s all about a sound credit granting policy and collection of accounts - if your company is growing that is even more important as your inventory and A/R ' eat' cash! So addressing solutions for the ' appetite' we've just spoken of are simply critical to business survival.

In cash flow and working capital management its all about current assets and liabilities. Liabilities? Didn’t we just say that it’s all about the A/R and inventory? We did of course, but its easy for the business owner/manager to forget that effective management of payables stops cash outflows, and the more you get your key vendors and suppliers on side is a classic win/win.

How you finance your A/R and inventory ties directly into your overall access to business credit for growth.

So that's why taking some time to understand some key terms such as your cash operating cycle is in our opinion a million dollar investment of your time. Simply speaking it’s the time it takes for a dollar to flow through your business.

When it comes to assessing external business credit solutions its all about flexibility and cost.

The solutions around working capital credit come from a small handful of external financing solutions

They include:

Canadian chartered bank credit lines
Receivable Financing... aka ' Factoring'
Inventory Financing
Asset based non bank lines of credit (they combine A/R, inventory and equipment into one credit facility)
Tax credit monetization - i.e. bridge loans for SR&ED claims
PO/Supply chain financing

Which one/ones are right for your business?

Any one or a combination of these solutions delivers cash flow. They come with different costs, they operate differently on a daily operational basis, and in some cases are limiting and in other cases (Asset based credit lines) offer unlimited growth financing potential

Looking for an iron clad guarantee in business credit. Here's one. We guarantee if you don't manage and finance your current assets properly you'll be out of business fairly quickly.

Probably not the guarantee you were looking for? Instead, consider seeking a trusted, credible and experienced Canadian business financing advisor who can assist you with working capital management solutions.


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 = Working Capital Management Financing Solutions







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

Canadian Business Loans : On Your To Do List For Accessing Financing Options?

Feeling Lost Out On Loan And Finance Options In Canada?


OVERVIEW – Information on access to Canadian business loans in Canada. Commercial financing options are not just available from our banks



Canadian business loans and financing options are often very near the top of the business owner/financial manager’s TO DO list when it comes to running and growing the business. It can be also said that it’s often common for the owner/manager in the SME sector to feel ' lost ' when it comes to achieving those finance goals. Has to be the case? Not really... let's dig in.

By now pretty well everyone seems to recognize that the SME (small to medium enterprise) sector in Canada is one of the constant powerhouses of the economy. Everyone seems to have a different definition of what this sector is; some maintain its, for example, companies with under several hundred employees and sales of 20 Million as an example. That's not that SME to us! , but less focus on the solutions available to finance those firms.

The one thing everyone does seem to agree on though is that ' size counts ' in business financing and the small to medium guy has a lot more of a challenge in accessing. More often than not it feels like an obstacle course, as the owner /manager finds it very difficult to obtain long term financing options that will help secure business growth.

On occasion it might help to put yourself in the shoes of the bank or the many commercial lenders that offer financing solutions to Canadian business. Lenders focus on key items such as tangible equity, assets, and in many instances outside collateral.

Canadian chartered banks in Canada are often the ' point person' when business financing discussions come up. While often criticized for providing the financing business needs they do participate positively in a number of ways.

Banks typically provide:

Govt Guaranteed Business Loans
Very Small Loans
Small overdrafts
Mortgages

They are successful because they are on every corner, have very clear rules and borrowing applications, and can be a source of constant contact with the owner/manager.

While bank solutions are low cost and accessible its in fact commercial finance firms that provide a lot of the other financing options that will get your company to the goal line. Commercial finance firms generally aren't regulated, take more risk, and are profit motivated. Additionally they provide options simply not available from the banks.

Those options:

Receivable Finance
Inventory Financing
Non bank business credit lines
Asset Leasing/ sale leasebacks
Purchase Order Financing
SR&ED Tax Credit Cash Flow Loans
Unsecured Cash Flow Loans
Franchise Financing

Whether its bank financing or non bank commercial finance options the SME borrower doesn't have to feel lost

when it comes to financing options that suit their needs. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your operational and growth goals.











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/canadian-business-loans-financing-options.html




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

Government Business Loans In Canada . What’s The Big Deal

Your Personal Guide To Government Business Loans In Canada

OVERVIEW – Information on government business loans in Canada. Who runs this program and what does the Canadian business owner /entrepreneur need to know about the ‘SBL ‘ Loan







Government Business Loans in Canada don't really come with a guide and roadmap; and yes we do think the program is a ' big deal'

when it comes to business financing in the Canadian marketplace. Let's dig in.

Industry Canada

is an agency of the Canadian federal government which is charged with administering the Small business loan program in Canada. The program provides financial assistance, via a loan guarantee to your bank. It's a solid program for start up and small businesses - and the program actually defines ' small ' as those firms with real or projected revenues of less than 5 Million $.

One of the true revelations to many client we speak to about the program is that the governments only role is as the guarantor of the loan - institutions such as our Chartered banks run the program on a day to day basis . That's good news and some bad news

as we'll reveal later here.










Guidelines for ' SBL ‘(that’s the common acronym for the loan) loans are pretty clear. The program financing limit is $350,000.00 and finances only two asset categories - equipment and leaseholds.

Rates of the program are very attractive given that the credit profile of the borrower is such that traditional bank financing cannot be achieved. (Actual rates of the program are 3% over the current prime rate)

Borrowers are responsible to guarantee 25% of the loan personally; given that many forms of Canadian business financing require a 100% owner guarantee or outside collateral this is clearly a very attractive component of the SBL loan. Again, to be clear here, the bank grants and administers the loan, the government is the guarantor for the bank.

Previously we noted that there is some ‘bad news’ around Canadian chartered banks administering the program. In our experience many bankers are either unfamiliar with the program, and if they are they view the transaction as a ‘make work’ project. Our recommendation? Find a banker or business financing advisor that can fast track the program with a knowledgeable banker. Problem solved!

Many clients we meet initially have a strong perception that the application process for government business loans in Canada is cumbersome. Everyone has an opinion, but we strongly feel that's not the case. The only key components of the loan application are a personal net worth statement , a business plan or executive summary, a premises lease for your business location, and a list of items you wish to finance that reference the cost, mfr/supplier, etc. Surely that can't be construed as cumbersome!

By the way, it’s important that your business plan/exec. Summary include a good cash flow statement that shows how the loan is going to be repaid. Also, business people should understand that it is highly desirable to have some relevant business experience within the industry that you are in. Start ups take note!

Typical loan terms for the government loan are 5-7 years - Any shorter term than that is also appropriate. The government charges a one time 2% fee for the loan and we would add that this is often simply built into the overall financing/monthly payment. When properly structured there are no prepayment issues, which is another attractive part of the program; Many other types of business loans and leases penalize the borrower for repaying early. The SBL program does not do that.

When you recap the overall benefits of the SBL loan it's clear you might now agree with us that the program is in fact a ' big deal '. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can be your personal guide to Government business loans in Canada.


Stan Prokop - founder of 7 Park Avenue Financial

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :


7 Park Avenue Financial = Canadian Government Business Loans 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

Getting Debt Financing Right Doesn’t Have To Involve Crazy Risks: From Short Term Loans To Asset Finance Monetization

The Hunt For Debt Financing In Canada

OVERVIEW – Information on debt financing in Canada . From short term loans to revolving credit facilities Canadian entrepreneurs and business people seek finance solutions that will work for their needs



Debt financing in Canada , whether it's short term loans, asset financing, and other traditional and alternative finance forms requires some solid understanding of who's involved and what's involved. Let's dig in.

Business owners and financial managers feel a lot more comfortable taking on debt ( versus raising equity ) when they understand they have negotiating ability while at the same time recognizing that are terms and other requirements that come with debt.

As we have noted debt is the opposite of your other form of capital - that's equity of course. While no one form of financing is all perfect all the time debt finance via short term loans, etc has significant advantages. The bottom line on that is, of course, that using debt properly allows the owner /manager to grow the company with appropriate leverage.

And that's without giving up the ownership you forsake in considering equity dilution.

When looking at a debt solution one other advantage is that there is always and end in sight via repayment, cash flow assessment, etc - again our bottom line is you can plan on retiring debt a lot more easier than equity takeouts.

One solid way for the business owner/financial manager to look at debt asset finance solutions is to assess them from the point of view of restrictions - i.e. what they can and can't do by utilizing the covenants and ration requirements that come with any single form of debt - for example a senior term loan with a bank.

We're big supporters of hybrid type solutions; one good example is asset based lines of credit that may or may not contain a term loan component. While you do take on ' debt ' at the same time you have corresponding assets such as inventory, equipt. and receivables that offset the entire obligation. Some owners might even agree to a small equity component to a debt deal that makes sense for their business. In corporate terms this is known as a warrant / option, etc.

While debt financing can be secured or unsecured. Whatever the case it's always going to come down to your cash flow - historical, present, and thank god... projected! That cash flow will often be the key component in the bank or commercial finance company's decision to grant business credit. If debt is unsecured we can only say that the ownership/management better be able to prove good credit quality. Unfortunately unsecured debt typically is only being achieved by firms with great combinations of cash flow, clean balance sheets and healthy profits.

Canadian firms who can accurately demonstrate and project sales, asset quality, and turnover of current assets are always in a better position to take on any form of business debt. The lender will of course make their own assumptions on the quality of your overall business credit situation.

If we had to identify one mistake our clients often made it's that they chased the wrong financing sources for the type of debt or asset monetization they really need. Talk about a false start

in business that's both expensive and time consuming.










If you want to isolate the identify the types of debt financing via short term loans or other methods of business finance seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your 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 = Canadian Debt 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


Email = sprokop@7parkavenuefinancial.com

Stan Prokop

Financing Two Of Canada’s Tax Credit Programs: We’ve Got It Right In Film and SRED

Hard To Believe ? Tax Credits Can Be Financed!

OVERVIEW – Information on financing tax credit programs in Canada. Here’s Why You Need To Consider SRED and Film Financing for cash flow and working capital !

Financing tax credit programs in Canada. Whether its SR&ED R&D credits or the much more sexy ' film, TV, transmedia' credits it’s always a surprise to us that the actual users of these two Canadian programs don't always know, or consider that claims under these two programs can be financed. Let's dig in.

Any country, Canada included typically has some sort of generous and often well used non repayable credit (which can be monetized/financed) All sorts of Canadian government programs, grants etc are available - two of the most popular ( and financed by the way ) are ' SR&ED" and ' FILM'.

Numerous aspects need to be considered to successfully complete a claim, and finance it under each program. Let's discuss a couple of aspects and also identify some key similarities in the way in which these programs can be financed for cash flow and working capital.


SRED:

Canada’s Scientific Research and Experimental Development Program (S R E D) provides Billions of dollars of funding for research in Canadian industry. Despite a handful of what we can call key changes to the program claiming ' SRED’, (including a recent nationwide focus to validate the value of the program) thousands of Canadian businesses, including your competitors, file claims. When it comes to R&D claims its all about the technical aspects of your claim.

That's where the role of the preparer, known as the ' SR&ED Consultant' plays a key role. They prepare claims for you in one of two manners - they will prepare the claim for free at their cost, and charge what’s known as a contingency fee if the claim is successful. That has tremendous appeal to business owners, as the fees of 15-30% of the claim (that’ a typical range) are only paid if the claim is successful and your funds are received.

Note – You can of course pay a straight fee to prepare the claim, which will almost always be less then the contingency fee . Considerations are : CASH OUTFLOW / RISK .

Financiers of your claim will in almost all cases take a look at who is preparing your claim. If it is done by a legitimate recognized consultant with a track record naturally financing that claim becomes much more easier , because in SR&ED tax credit finance the main collateral for the loan is of course ' the claim '!

There's a lot of discussion in the industry these days, including the government around SR&ED consultants disclosing their fees - one concern being that high fees destroy the true spirit and effectiveness of the program.

We'll avoid those arguments and simply say that financing a legitimate and successful S R E D claim provides your company with cash flow and replenishment of research activities.


FILM/TV/ANIMATION:

The history of tax credit financing in the Entertainment industry has revolved around different cycles where the players and the programs change. Canada is now widely known for having a robust and generous tax credit program - with credits that are financeable in the same general manner as our aforementioned SRED claims.

So while the producer owner of Canadian content runs around town chasing private equity, hedge funds, and other ' alternative ' methods of financing projects one thing is always for sure - The film tax credit component will always be there to complete the funding cycle . It's more often than not the ' sure thing' component of the total capital plan for any project in film, animation, and television.

Firms that finance the tax credits, some Canadian banks included, like the tax credit programs because they reduce the risk of projects having to become commercially successful. After the 2008 economic collapse all media financing, as in other industries, became more difficult. However financing tax credit claims continues to remain a stable component of the capital structure of any project.

So while senior debt, ' gap' financing, advertising dollars, and pre sales all are challenge producers always know that a key component of their financing, the tax credit collateral is going to be there. Our Bottom line ' It's great to have a ' hit ‘, it's even better to have a tax credit'!

Tax credits in these programs are a combination of federal and provincial credits which can be monetizing after (or in some cases during) your projects. It's all about Canadian content and Canadian spending. The two types of credits are the CPTC and the PSTC. A significant amount of labor and production spending can be claimed.

Similar to the role of the ‘ consultant ' in the SR&ED program the most effective claims in media tax credits are prepared by Film tax credit accountants who specialize in maximizing the value of your claim.



Financing tax credit programs in film and SRED is not complicated. A simple application process exists for each type of claim. Financing, typically by a non bank finance firm is structured in the form of bridge loans. No payments are made until the government funds are received. Advances of 70% of the value of your claim are a typical range you can expect for either genre of tax credit.

Yes, believe it,

SR&ED and film tax credits can be financed - they provide Billions of dollars of funding each year. If you want to 'get it right' in financing your claim seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with the financing of your claim .




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 = SR&ED And Film 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

Sale Leaseback In Canada: Truth And Consequences Around The Equipment Leasing Company Reverse Solution

5 Reasons To Consider A Sale LeaseBack In Canada

OVERVIEW – Information on the sale leaseback in Canada. How does the equipment leasing company or commercial lender provide such a solution and what are the benefits?




A Sale Leaseback financing strategy is one of the more unique methods of replenishing your capital and cash flow. Let's examine the truth and consequences

of this business finance strategy, as well as some important considerations. Let's dig in.

Not all Canadian business owners and financial managers are aware of this somewhat unique strategy. At it's essence it's very simple. You are taking an asset you own and in effect ' selling' it back to the Lease Company or commercial finance firm. That entity then ' leases' it back to you via one of three finance vehicles:

Capital Lease
Loan/Bridge Loan
Operating Lease

What then are the 5 reasons that the business owner/manager rationalizes to consider such a transaction. They are as follows:

1. A need for working capital

2. A quicker way to raise cash as opposed to taking on new debt or considering additional equity

3.The unique need to both still use the asset in question as well as to maximize its value to your firm

4. To manage certain debt/equity relationships on your balance sheet

5. Maximizing your ' R O A ‘- (return on assets)


As we noted our described financing has both some consequences and considerations. Naturally the equipment leasing company or commercial finance firm must properly document the transaction from a legal and contract perspective. That's actually a fairly simple matter.

But one other consideration is the accounting treatment of your transaction, often overlooked in the early stages of the owner/managers consideration of a leaseback. You need to discuss, and consider the balance sheet and income statement effects of treating the lease back as either a capital lease or an operating lease.

For example, it might be recommended that you do an ' operating lease ' - in that case your income statement needs to reflect either the gain or loss on the value of the asset or assets in question. (Yes Virginia, some assets actually increase in value on occasion). Company owned real estate is a good example. More often than not we recommend Capital (lease to own) Leasing strategies when implementing a sale leaseback, if only because the accounting, tax and cash flow reporting consequences seem to be a bit straight forward.

We haven’t mentioned your firms ' CASH FLOW STATEMENT ' when it comes to a sale leaseback, but typically your accountant will recommend (or insist!) that your cash flow statement show the leaseback as a Financing inflow on your financials.

People are always going to have ' questions ' and ' issues' with a sale leaseback.

This is everything from a lender viewing it negatively as a cash grab, your accountant raising tax , balance sheet and reporting issues, etc. Nonetheless it’s a proven and often used financing strategy to enhance cash flow while keeping an asset you want to keep, or need for that matter.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in the ' truth or consequences' aspect of Sale leaseback financing.



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 = Sale Leaseback Financing Expertise

Stan Prokop