Sources Of Finance For Businesses In Canada : Are You In Reverse Gear In Financing Your Business

Do You Really Know How To Finance Your Business?


OVERVIEW – Information on financing a business in Canada. What are sources of finance for businesses and how does the owner/manager access and choose those solutions

Financing a business in Canada can often leave the business owner/financial manager feel like they are operating in reverse gear .

The sources of finance for businesses don't have to seem unattainable if you've got some of the basics under your belt... along with some expert advice which never hurts. Let's dig in.

Timelines are not what you might be associating with your company's finance needs. However, the reality is that almost all the financing you require has some sort of timeline attached to it - typically short/ intermediate and long term. And in today’s relentless pace of business and technology the ability to adapt mid stream is quite often a necessity.

What then are some of the elements of understanding what financing you need and when. In our clients mind it's usually cost, and of course that's a factor. Some financing sources present a certain element of risk. Take for example Canadian chartered bank financing - low cost and plentiful if you qualify. Those qualifications often come with debt and liquidity ' covenants ' - Failing to meet those has the potential to put your entire business at risk.

Knowing what the big boys call your ' capital structure ' is important also. - that will affect the amount of debt you can take on. In some cases Canadian business owners and financial managers have found themselves in a position that their industry or the economy creates severe financing pressures - i.e. access to liquidity, etc.

Top experts seem to always agree that arranging financing in advance makes most sense - that sense of desperation never seems to impress the lender/banker/financier

In some cases refinancing your whole business with a focus to turning short term debt into long term might makes sense. Knowing you cash flow capabilities is key here.

What then are those business financing sources, and can we put some timelines on them?


SHORT TERM - typically one year in nature

A/R financing

Inventory finance

Bank lines of credit

Asset based non bank lines of credit

Purchase Order/Revenue Financing

Tax Credit Monetization

Bridge loans


INTERMEDIATE TERM - typically 3-5 years

Equipment financing

Working capital term loans


LONG TERM - 5-25 years?

Commercial mortgages

Mezzanine financing


If you want to reverse gear on financing a business properly seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can ' right track' you to sources of finance for businesses that make sense.




Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :

7 PARK AVENUE FINANCIAL = CANADIAN BUSINESS 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

Direct Line = 416 319 5769

Office = 905 829 2653

Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop

Business Acquisitions Finance : SME Commercial Acquisitions Financing In Canada

Ever Prayed For Acquisition Financing ?


OVERVIEW – Information on business acquisition finance solutions in Canada. Financing acquisitions in the SME sector requires information on sources and methods of financing

Business acquisition finance solutions in Canada don't necessarily have to come with the requirement of saying a prayer. The ability to purchase, and finance a business requires knowledge of some fairly common sense factors coupled with expertise in some specialized areas. Knowing who to go to and what to talk about is key. Let's dig in.

Top experts tell us that acquisitions financing is such a hot topic for a couple of different reasons - one is the eternal need of the entrepreneur to purchase and operate a business, the other is the amount of businesses available today , particularly in the SME sector , as many founders/owners retire.

Only 1 question remains then - how do you finance the purchase? While Canadian chartered banks can certainly pick up a good part of the slack many owners, as well as the financial profile of the firm they are buying, simply don't meet bank requirements. Some statistics out of the states indicate that 80% of deals are bank rejected. That then requires specialized knowledge in a variety of other sources which can finance such transactions.

The one exception to bank participation in your deal is the Govt CSBF loan program, allowing you to finance business acquisitions to a maximum of 350k. However, that amount, as well as some other forms of ' top up ' financing might well get the entrepreneur on his or her way to close a deal.

Personal equity in the transaction is almost always a requirement in financing acquisitions. Amounts vary relative to the amount of capital you need and the risk profile of the deal. Also factored in there will be lender perception of your management depth and experience. Here's where solid concise business plans focused on cash flow and profits make total sense.

Don't forget also that the seller can also assist in the form of a vendor take back, the ' VTB '. While a lender appreciates the personal capital you are putting at risk the seller is also at risk to a certain degree when they agree to a vendor take back. More often than not they are always a positive influence on a deal.

The one thing to remember though is that in some cases a VTB might essentially be viewed as additional debt you are taking on. So that obligation must be factored into balance sheets and cash flows in your presentation.

Venture capitalists

and private equity groups finance only a small portion of businesses for sale - primarily because these transactions are often done in only the millions and tens of millions of dollars.

Other solutions to finance a business acquisition include:

Unsecured cash flow loans

Equipment financing

Bridge loans

Sale leasebacks

Asset based lending

Working capital term loans from Canada's crown corporation bank

A/R financing

If you're looking for solid, yet creative ways to finance a business purchase seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your acquisition needs.



Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :

7 PARK AVENUE FINANCIAL = CANADIAN BUSINESS ACQUISTIONS 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

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com



' Canadian Business Financing With The Intelligent Use Of Experience

Stan Prokop

Confidential AR Finance : The Inside Secret To Financing Receivables Via Factoring

Practically Invisible A/R Financing?

OVERVIEW – Information on how Confidential AR Finance works in Canada . This subset of ‘factoring’ allows businesses to run and grow their business without any 3rd party intrusion . It’s the non bank business credit line for working capital needs.

Confidential A/R Finance is a method which allows Canadian business owners and financial managers to benefit from the best parts of accounts receivable factoring. How is this method superior to traditional AR finance? Let' dig in.

Carrying a business receivable of course always involves some level of risk. Your ability to both manage and monetize your sales into cash is one benchmark of any successful business. That cost of extending business credit to customers is a key part of how factoring works, and in particular confidential receivable finance, also known as non - notification factoring.

If you’re not financing your receivables through a bank you either are self financing, and comfortable and successful with that, or are simply unable to meet bank starts for all the working capital business credit you need.

Naturally if you your business can't finance your working capital and cash flow needs you are not in a position to support sales through the ability to finance customers, purchase inventory, and fund operating expenses.

While the majority of clients we meet seem to focus on both trying to understand how this method of financing works , or what it costs they seem to forget some of the other key benefits of financing your firm in this manner.

Those benefits include:

The ability to substantially strengthen and increase supplier relationships - i.e. paying them on time, purchasing more

The ability to capitalize on opportunities for growth - that might include larger contracts or new customers in other geographies within Canada or the U.S. (Non North American receivables tend to need to be financed via credit insurance of some type)

Your overall business credit rating is critical to your long term success and factoring via confidential AR finance as payables can more easily be managed among all suppliers


Don't forget also that typically there is no upper limit in your borrowing power under a commercial A/R financing facility. That differs substantially from Canadian chartered bank credit lines, if only for the fact that those bank facilities tend to be capped at a certain limit. We should mention also that many customers who can in fact get approved by a bank often find
themselves in the position of having a low cost of funds but not being able to access all the capital they need.

So how does Confidential A/R finance work ?While it is priced competitively to other forms on non bank financing it allows you to bill and collect your receivables under you own name- accessing all the capital you need in relation to your sales growth . So, in our words, success and still being ' practically invisible '!

If you're interested in exploring what top experts deem to be the most innovate part of factoring seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
who can help you make that ' inside secret ' into cash flow success.



Stan Prokop - 7 Park Avenue Financial :


http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :

7 PARK AVENUE FINANCIAL = CANADIAN CONFIDENTIAL A/R FINANCING & FACTORING 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

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop

Business Finance Sources : We’re Name Dropping On Financing Options

Getting It Wrong In Business Finance Is Not An Option

OVERVIEW – Information on business finance sources in Canada . Avoid these financing options pitfalls with careful planning and expert assistance





Business finance sources in Canada can, unfortunately come with pitfalls if not planned picked or executed carefully. Let's take a look at those financing options while demonstrating that getting it wrong is a costly option. Let's dig in.

Whether a firm's business is in a great economic recovery or even when times are tough any type of business financing is a challenge. Growth? Access to Capital? Cost of Financing? All of those play into the business owner/ financial manager challenge.

While ' low cost' financing seems logical to every applicant the reality is that low rate financing is typically only available from our Canadian chartered banks. If your business can't meet the hurdles imposed by banks (the holy grail of profits, clean balance sheets, strong cash flows)

then it becomes a question of will your business make it with alternative finance solutions.











We promised to ' name drop ' on some of those traditional and also alternate sources of capital. They include, but are not limited to:

A/R Financing

Inventory Finance

Purchase Order/ Contract financing

ABL’S (asset based non bank credit lines)

Equipment Financing

Working Capital term loans

Sale leasebacks

Bridge Loans

Tax Credit Monetization

Business owners with needs in SME Commercial Finance also have the challenge of separating their personal and business assets in the area of personal guarantees that are required by many lenders, including the banks by the way.

Many capital needs for your business, whether operating, or term in nature are actually rooted in the need for, or lack of planning. We couldn’t count the amount of clients we meet that often have no knowledge of, let alone actual cash flow budgets.

When you don't know how you'll make loan payments, or take on new or larger orders a downward spiral often starts.


Don't forget also that its not just about accessing new cash, it's also about managing what you've got. Adopting strong metrics in collections, inventory turns, and utilizing equipment financing proactively to acquire new assets (it conserves cash flow) should by your new normal.

Looking for professional help? That might come from your lawyer, accountant, or by seeking a trusted, credible and experienced Canadian business financing advisor who will help ensure that ' getting it right ' is your new strategy for Canadian business financing success.




Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :

7 PARK AVENUE FINANCIAL = CANADIAN EXPERTISE IN BUSINESS FINANCING 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

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop

Financing Research And Development Tax Credits : SRED Finance Is The Easy Part Of Your R & D

The Short (And Long ) Answer is ‘ Yes ‘ : SR&ED R&D Tax Credits Can Be Financed

OVERVIEW – Information on financing refundable research and development tax credits in Canada. SRED Finance loans monetize your claim and provide .. cash flow today!

Financing research and development (R&D) tax credits in Canada is really the end to a successful outcome of your SR&ED claim. There's been a healthy dose of ' no you can't ' when it comes to a lot of the changes in the program over the last several years. SRED Finance loans are the positive monetization of your claim - in effect the easy part! Let's dig in.

Most Canadian business owners and financial managers who participate in the benefits of the program probably though do realize that for a program that has been around close to 30 years there was probably some ' Times They Are A Changing' ) that were due . (Apologies to Bob Dylan who it turns out wasn’t writing about refundable tax credits)

While top experts and pundits maintained the program was ' broken ' it nevertheless continued to fund Billions of dollars every year for thousands of firms enhancing their business prospects through research. Anything that involves both provincial and federal governments is of course going to evolve.

Participants in the program of course know the basics - it's all about proving some sort of technological advancement. Here it’s about documenting your spend on fixing ' uncertainty ' and trying to progress to ' technological advancement’


After your claim has been filed you're in a strong position to... you guessed it... wait! That waiting can be totally eliminated by utilizing a SR ED bridge loan to monetize your filing, accessing your cash now... instead of weeks, months, or longer? based upon whatever status your claim is in with Canada Revenue. In some cases that of course might be financial or technical audit, in other cases just the bureaucracy that comes with those nice folks in the government.

How then does a SR&ED loan work? It could not be simpler and in fact we maintain that if there’s been changes to the financing of the program they have all n fact been quite positive! SRED loans are financed as bridge loans. You receive 70% of the total value of the claim on approval of the loan. The key collateral of the loan is, as you might surmise, your SR ED.

No payments are made for the duration of the loan, and when claims are finally approved you receive the balance immediately less financing costs which are mezzanine in nature due to the risk profile of this type of financing.

Financing research and development tax credits is a pretty easy decision - it boils down to:

Do you need the cash today and what use can be made of the funds? It's really the ' opportunity cost ' that you are looking at. Funds of course can be used for what the accountants call ' any general corporate purpose ‘. That of course includes operating financing, purchasing new assets, or doing more R&D!

Oh by the way, even next years claim can be financed today if you have a track record or can demonstrate a quality claim with your SR&ED consultant.

Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your financing needs in research tax credits. It's the ' easy ' part of research.




Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :

7 PARK AVENUE FINANCIAL = CANADIAN SR&ED CLAIM 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

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop

Cash Flow Financing In Canada : Reducing Working Capital Finance Challenges

How To Make A Success Story Of Your Business Cash Flow

OVERVIEW – Information on cash flow financing strategies and solutions in Canada . Working capital finance can more easily be accessed with this information





Cash flow financing in Canada is rarely termed a great success story by Canadian business owners and financial managers. How can working capital finance challenges be reduced? Let's dig in.

Numerous factors affect your ability access the right amount of funding you need to run your business. Profit or the amount of it is certainly one of them. Many firms are profitable, but only marginally - and in a lot of cases we see with clients those profits fluctuate tremendously year over year.

Turning profits into cash flow is of course another story. In traditional ' bank lending ' it’s a strong requirement, as opposed to alternative financing which often focuses on assets and collateral in your business. And every business owner knows that in the SME ( small to medium enterprise ) sector most times a personal guarantee of some sorts is of course required. Those personal guarantees are a discussion for another day.

Let's recap traditional and less than traditional methods of financing cash flow and working capital. They include the following:

Traditional Canadian chartered banking - credit lines/term loans

A/R financing

Inventory financing

Working capital term loans

Government Small business loans - structured as term loans but with maximum flexibility around payment

Asset based lines of credit - (These ' ABL''s transform all your business assets into one revolving credit line

Tax Credit Monetization

Unsecured cash flow loans, often terms ' sub debt' or ' mezzanine’

Sale leasebacks of owned assets - this might include assets in one of two categories - equipment and real estate

In some cases it makes sense to form some kind of cash flow contingency plan that might include various forms of ' bulge financing ' solutions, or approaching suppliers and lenders for a payment moratorium of sorts. Those are tough to do, by the way.



Unfortunately many clients we meet don't always have a handle on their financial performance. In some cases they are ' rear focused' , having only historical data , which is challenging if no financial forecast or financial statement strategy is in place re reporting and analyzing.

Businesses with a handle on financial performance have much greater credibility with lenders; it’s as simple as that.

Remember also that while cash flow financing solutions are the fix from an external perspective it makes even greater sense to manage your assets to create internal cash flow.

That is done by having strong A/R controls and turning inventories over faster if inventory is a key part of your business. Naturally financial statement tools and other forms of business software greatly aid the business owner/finance mgr today. Knowing your DSO (day’s sales outstanding) and inventory turns and days outstanding payables is a fundamental you must know to be successful. Watch the business news on TV at night and you'll notice the ' big boys ‘, those major successful corporations always have a handle on these numbers , They're the key elements of the cash flow operating cycle.


If you're looking to be a SUCCESS STORY in your mind (or that of your competitors) seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can help you reduce those cash flow and working capital challenges.


ABOUT THE AUTHOR:
Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :


7 PARK AVENUE FINANCIAL = CANADIAN CASH FLOW 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

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com






' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop

Franchising Loans In Canada : Top Franchise Financing Tips Explained

Unlocking Franchise Financing Secrets In Canada

OVERVIEW – Information on franchising loans in Canada . What franchise financing strategies are available to the prospective franchisee

Franchising loans in Canada, properly obtained and constructed, help guarantee entrepreneurial success for prospective franchisees. We're going to unlock some of those ' secrets’ to help ensure that success story. Let's dig in.

We can categorically say, notwithstanding the tremendous growth in franchising in Canada, that there's no ' easy money ' on the table when it comes to this type of loan or finance solution. In fact, we can safely say that many of the requirements of any business loan apply to almost all franchise scenarios.

So it becomes a question of leverage ( the amount of debt ) the franchisee can take on, the collateral value of assets being financed ( equipment, leaseholds, real estate, rolling stock ) as well as the business experience of the owner .

Often overlooked, or simply forgotten, is the franchisee's ability to misgauge the working capital and growth financing that might be needed post acquisition. While in some cases it might be assumed your business will lose money in the early stages it clearly makes sense to focus on cash flow and profitability from day one.

We meet with many franchisees who are interested in, or in the process of acquiring an existing franchise. Getting past the fact that the franchisor itself must approve this type of sale it's absolutely critical to determine what levels of success (or distress) that business was experiencing pre purchase. This necessitates a strong look at existing financials, personnel, and market conditions re location, industry growth, etc.

While it might seem logical that Canadian chartered banks are the predominant financier of franchises in Canada this might actually not be the case. While the banks do in fact align themselves with the big names in the business those franchises are often, for the obvious reasons, more expensive and require much more capital investment and personal financial commitment.

The reality in Canadian franchise financing? It's that most operations are financed by a small handful of specialty lenders, as well as those borrowers to choose to opt for the Government Small Business Loan (aka the ' SBL ‘). Other forms of supplementary financing are also utilized and available to borrowers - they include equipment lessors, term lenders for working capital loans, merchant advance cash flow financiers, and loans secured by personal assets of the franchisee, the latter not recommended.

If you're looking to be successful and wanting to navigate the tips and tricks of the franchise finance maze in Canada seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you on the journey to entrepreneurial success.




Stan Prokop - 7 Park Avenue Financial :
http://www.7parkavenuefinancial.com
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :


7 PARK AVENUE FINANCIAL = CANADIAN FRANCHISE 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

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop