How Does Purchase Order Financing Work vs Traditional Financing : Finance Your Orders & Inventory

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Information on Purchase Order Financing & Inventory Finance Companies

Purchase order financing is a relatively new addition to the Canadian business landscape . When utilized successfully it allows companies to take advantage of major opportunities that might otherwise not be possible .

Typically purchase order financing is most relevant to companies that are unable to obtain capital either in the amount required or at favorable rates . The financing is especially suited for firms such as importers, distributors, and manufacturers.

Other forms of financing highlight a clients historical financial results . P O finance looks to the future, without the collateral need that the former results require.

How does the financing work ? In essence the purchase order financier purchases the materials required by the client for their order or contract . Many transactions are time sensitive for the client , and the type and amount of financing required do not lend themselves to traditional lending time frames re due diligence required , etc . In essence the client is using the lenders capital to finance future growth .

A simple breakdown of the transaction flow on a purchase order/contract financing is as follows :

* Company obtains a large contract or purchase order
* Payment is made by lender to the supplier directly
* Suppliers ships goods/product
* End user customer acknowledges receipt
* Company's receivable lender ( usually a bank or factor firm ) pays purchase order finance firm


It is important to note that purchase order financing usually focuses specifically on the order or contract . The client requires an additional credit facility in place in order to retire the receivable and payback the purchase order financier .

Our experience is that a purchase order finance firm is looking for a longer term relationship, this is not a one shot deal business .

In the current banking and lending environment, with more increased focus on risk, it has been very difficult for firms to get traditional bank type financing for large new orders and contracts . Most firms quickly realize that banks prefer more stable predictable growth, and large new contracts or orders are challenging to financing when they significantly increase a banks exposure . Needless to say that foreign aspects of many purchase order transactions only exacerbate that issue - i.e. how does a supplier in China get paid, or even ' vetted '.

Our experience is that purchase order/contract financing only works when the client has solid gross margins that can handle the additional financing expense .

Customers looking to finance purchase orders and contracts need to focus on solid partnerships with firms that have capital, experience, and relative ease of doing business re paper flow, documentation, etc . The proper mix of those attributes will foster a solid business relationship that is mutually profitable for all within the unique purchase order financing realm .


Hand in hand with P O financing we at 7 Park Avenue Financial find that more and more Canadian firms require inventory financing as a component of their business and sales growth . Inventory financing in Canada is relatively under utilized and most business owners don't understand how it works . This new form of financing is growing .

Inventory growth needs put financial pressure on the balance sheet as vendors and suppliers continue to dictate payment terms in order to meet their own business and profit goals . As more financial managers know the ability to turn inventory over as many times as possible is a significant operating measure for any firm .

A company computes its inventory turns by simply dividing the ' Cost of Goods Sold' by the amount of ending inventory and ending up with a turnover rate . The rate of inventory turns is never an absolute number , as different industries have different acceptable inventory turns . Also, we should note that there are sometimes different inventory components - i.e. raw materials, work in process, and of course the final finished goods .

Many Canadian, ( and U.S.!) firms moved significant purchases to China in the last number of years , As China has changed its banking policy, and has also been a victim of the world liquidity crisis , more and more Chinese manufacturers are not willing to carry accounts receivable in the manner they did several years ago .

The crux of the inventory problem issue for any firm is the inability of the company to convert orders into sales simply because they don't have the inventory to satisfy their customers . Without orders the firm has no financeable asset . Day to day cash flow rarely is enough to generate significant additional inventory purchases.

The ability of a inventory finance firm to finance required inventory in turn allows a firm to generate receivables which are converted in true working capital .

An inventory finance firm will evaluate the company's overall prospects , its management, inventory controls, etc and determine what per cent of the companies inventory can be financed . To take the matter further a lender might, on occasion, require the inventory to be inspected at regular intervals, or in extreme cases, held in a separate location under the control of the lender . The inventory lender is looking for an acceptable business model which is replicable . Generally speaking inventory financing is never done on a ' one shot deal ' basis.

The risk in this type of financing is reflecting in the pricing . Normally the only other way a company could attract capital to generate high inventory levels is to issue additional equity . This is categorically more expensive than debt, or in this case the inventory financing cost .

They types of companies that require inventory financing are usually in the following categories :

1. Growing importers who sell wholesale in North America

2. Importers who sell to consumers

3. Intermediaries who purchase product and ' flip ' the inventory to someone else

4. Manufacturing firms with fast turnaround business cycles

They also have good gross margins which can withstand the more expensive cost of this type of financing .

In summary , inventory financing is a growing component of business financing . It works well in certain industries . Most firms who require inventory financing are either start ups, or those who cannot get traditional bank financing . ( In our experiences banks can rarely, if ever, meet a company's inventory margining requirements .

If you are looking for purchase order finance solutions seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success.



7 Park Acvenue Financial:
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

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 100 Million $ of financing for Canadian corporations .

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.



Stan Prokop

SR&ED Tax CredIt Financing vs Waiting For Your Refund

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Information on SR&ED Tax Credit Finance Solutions In Canada

Sr&ed tax credit financing is an important method of raising cash - primarily for younger or higher growth firms who can utilize the capital . Claims can be financed for approx 70% of their filed value . The financing works more efficiently when the claim is prepared by a firm with a solid track record .

The formal name for the program is the Scientific Research and Experimental Development ,( hence 'SR & ED' ) program . The Canadian government allocations well over a Billion dollars to this program annually, and it can be a valuable source of financing for many firms, particularly those in early stage.

Claims are generally in the 35% + range for all r&d performed. and can include portions of a firms overhead costs! After filing a proper SR ED claim business owners can finance that claim with our assistance. 7 Park Avenue Financial encourages all its clients to file SR ED claims where applicable, and if financing those claims makes sense we will get the job done !


Many Canadian firms are not aware that they can finance their SR ED tax credit claims. Lets backtrack a little bit. The SR ED Tax credit program is a Canadian government program which allows Canadian privately controlled firms to recoup a very large amount of direct and indirect expenses related to their innovative business processes, research and development, and asset acquisition related to those very efforts.

Thousands of Canadian firms file such claims and the program has disbursed close to 2 Billion dollars annually to Canadian firms.

Funds received from the government, while taxable, are NOT repayable, we repeat, NOT repayable! Claims are generally prepared by one of two parties, either the firms accountants, or, more frequently, an independent SR ED preparation firm who are experienced in the writing of these claims, and have amassed expertise and bench strength in that customers particular industry. We note also there is a growing SRED industry around film and TV credits, digital media, and gaming.

We are continually amazed at the number of companies who are eligible for the program but in fact have never heard of the program. You can imagine the expression on the business owners faces when they are told they have been eligible for the program for years, and have in fact relinquished their rights to these funds.

As a technical matter companies can only claim funds for the last 2 years of r&d, business process development, etc. Furthermore the claims have to be file at the same time the firm files annual tax returns.

Let's get back to the financing of the claim!

The financing of the claims is in effect a temporary loan against the SR ED claim, allowing the company to monetize immediately the incoming cash flow related to the SR ED claim. One of the key factors around the financing of the claim is the size. Generally speaking it makes sense to finance claims that are in excess of $200,000.00.

However, realistically many smaller Canadian firms file claims significantly below that amount. While these claims are somewhat more difficult to finance it certainly can and does makes sense in many instances. Our firm has worked with many customers who view the claim as one of their most significant cash inflows during that year.

 Typically it takes between two - four weeks to arrange for a proper financing of the claim. Proper due diligence around the general financial health and prospects of the firm is done, and typical credit assessment is done around the lenders ability to properly secure the claim vis a vis a collateralized registration against the claim.

Loans against the claim are typically made at approximately 70% of the total of the combined federal and provincial claim. Why 70%? A safety buffer is in fact created in the event that the claim is adjudicated by the government and a portion of the claim is downsized or disallowed. We have noted that this happens when customers or their consultants file claims that are too aggressive. The customers mentality seems to be ' I will file a claim for $300,00.00, if they knock it back a bit I will still get more funds than originally intended '. In general this is probably not a good strategy.

Should You Finance Your SR&ED Claim ?

In summary:

* Companies should file claims if they are eligible * If cash flow and working capital is important the SR ED claim can be financed

* Customer should use their accountants and financial advisor to originate proper financing of the claim

Seek out and speak to a trusted , credible and experienced Canadian business financing advisor with a track record of business financing success to discuss your working capital and cash flow needs.







7 Park Acvenue Financial:
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

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 100 Million $ of financing for Canadian corporations .

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.



Stan Prokop

How Does Receivable Financing Work ? Factoring 101 ! Now You Know

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Information on Account Receivable Financing in Canada

Most people agree that Canadian business model and the Canadian psyche differ from those of our friends in the United States in many aspects of business

Accounts receivable financing, also called ' factoring ' goes back to the 1400's and is an accepted way of doing business . Simply speaking it is the ability of a company to immediately obtain cash for their receivables , thereby augmenting cash flow . Factoring is generally viewed as expensive , as the company views the discount rate as the ' interest rate ' on the transaction .

Key benefit of Proper A/R Financing and Factoring :

Improved Cash Flow

In both the U.S. and Canada very typical accounts receivable factoring rates range from 1 - 2% per month. Issues that drive the overall rate are the over all transaction size, the credit quality of the debtor , and the historical time that the debtor has taken to retire invoices .

To be clear, when we talk about the participants in a factor transaction, there are three, the company selling the receivable, their customer ( the debtor ) and the finance or factoring firm . Choosing the right receivable financing companies is critical!

Customers choose factoring , or are forced into considering factoring, when they do not have bank financing, or the financing that is in place is not sufficient to fund working capital .

Companies in Canada have been slow to utilize factoring - there are numerous smaller finance firms that offer the service, and more predominantly, the landscape is covered with branch firms of U.S. and U.K. companies who are established leaders in their respective countries .

A few in Canada offer factor facilities, a fact not generally known to the Canadian business market .

More often than note smaller and medium firms who don't have access to traditional bank lines of credit utilize factoring . They use this financing facility to grow their business, maintain acceptable levels of cash flow, and ensure debt and government payments re taxes, etc . are made on time .

How much is it? No we aren’t in line at a department store, we're sitting with our clients who are always asking what the true cost of factoring receivables is and if a receivables financing facility is their real solution for working capital problems. They ask other questions also, such as how the facility works and what is the best type of facility for the Canadian business marketplace, so we we'll cover those off also .



We don’t think there is more of a misunderstood business financing in Canada, notwithstanding the fact that receivables financing is growing in popularity traction everyday. The biggest stigma around the topic is really the true cost, and we use the word true cost because many Canadian business owners and financials managers simply don’t understand the components of that true cost, and more so, how these costs can be significantly offset and reduced.

We'll point out that coming up the rear fast and furious behind true cost are the issues of how the facility works and what type of facility is the best one in Canada - as there are several types.

To properly address our issue lets quickly define our subject - factoring, ( also called receivable discounting and invoice financing ) is simply the sale of your receivables to a third party firm, that firm providing you with immediate ( and we mean same day!) cash to finance your business

One of the misconceptions clients have around pricing is related to the fact that you receive (depending on who you are dealing with) 80-90% of your invoice amount in a receivables financing scenario. This must be taken into account when you are looking at total factoring cost.

One thing that constantly disturbs us is that the terminology mumbo jumbo that many factor firms use when they are offering you pricing on your facility. That’s why it makes total sense to talk to a trusted, credible, and experienced Canadian business financing advisor that will work with you through the (industry created) maze of factoring, factoring cost, and day to day paper flow.

You can quickly and easily focus in on the true cost of factoring by simply keeping in mind three things that you need to know - they are:

1. The percentage that you are advanced on your invoice (refer to our previous comments)

2. The discount rate charged on the advance

3. The length of time that you typically collect your receivables in

Most business owners are not readily facility with their DSO, their ' day’s sales outstanding '. You have to be, because it’s an ongoing measure of the time it takes to collect your receivables in days. It’s calculated simply by taking your receivable on an annual basis, multiplying them by 365 (days) and then dividing that number by your sales for that time period.

Therefore, if you know your collection period, and get an honest, clear answer on our three points you can easily determine the cost of factoring.

Let’s give you a clear example: Your factor firm advances you 80% of your invoice. Their discount rate is 3%. So if you are in the lenders shoes your annual return on the client (that’s you!) is simply: Discount rate % times 365 days Divided by number of days invoice is outstanding.

In Canada that rate is typically going to work out to be in the 1.5-3% per month range depending on the lenders perception of the size and quality of your accounts receivable portfolio.

Is that expensive financing? You tell us, because if you take into account the receivables financing facility provides you with unlimited cash flow to generate sales and profits, and that you can use the cash to offset financing costs, well... we dont think so .Costs can be offset by using the funds to take supplier payment discounts, and purchase in larger volumes and better prices re your inventory needs, etc.

Typical advance rates on factored invoices are in the 80-90% range . Firms utilizing factoring are often not aware of the mechanics of how these facilities are priced on a daily or monthly basis. Two different business models exist within the industry, recourse, and non- recourse . If the debtor does not pay the invoice a recourse transaction forces the company to pay back the factored amount, or replace it with another invoice .

As stated, many firms do not properly focus on the many nuances of the factoring transaction . These include the amount held back by the factor firm, when the hold back is released, and most importantly the paper flow involved in the transaction.

Canadian firms have tended to view factoring as very intrusive . They , unlike their U.S. and U.K. counterparts , have not appreciated that their customers are contacted regularly by the factor firm to verify invoices, demand payment, etc.

Ultimately the Canadian market seems to desire a non-notification factor model which is not widely available .

Prudent business owners and financial executives , both in the U.S. and Canada , can enhance their use of factoring by negotiating arrangements specific to their business , re receivable size, quality, customer time to pay, etc . Many firms also quickly realize the cost of the factoring can be significantly offset by the use of additional cash to negotiate supplier discounts, take trade discounts offered by suppliers, and in general , improve supplier relations .

When you are considering factoring a/r seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success, who can assist you with your working capital and cash flow needs.



7 Park Acvenue Financial:
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

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 100 Million $ of financing for Canadian corporations .

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.



Stan Prokop

Best Business Line Of Credit Solutions In Canada ? Read On !

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Every Business With Working Capital Needs Requires a Business Line Of Credit

Whether you call them Operating Lines of Credit , or a business line of credit, or even Asset based lines of credit via ' non-bank' lenders, these asset based lending and corporate finance solutions are fast becoming one of the most flexible and popular methods for small, medium, and large customers to finance their operations .

What if your business does not qualify for a bank credit line ? The solution ? Asset based lending is getting increasing popular with Canadian firms.Terms are more accommodating, and are usually ' non covenant' based . Unpredictable cash flows and seasonality are often other reasons why an asset based line of credit has substantial appeal to business owners and CFO's. These operating loans are totally focused on the assets of the business , most predominately receivables and inventory . The total focus of the facility is the ' Current asset ' portion of your balance sheet, ie receivables, inventory.

In certain cases equipment, real estate, and intangibles can be financed . Credit line facilities are set up based on your borrowing requirements relative to your receivable and inventory assets . Generally receivables under 90 days are financed, as those > 90 days infer uncollectability . Although some focus is placed on over all viability and secondary sources of repayment overall the focus is on the business assets . Rates vary based on size of facility, overall asset quality, and the lender pricing model.

This type of financing provides the firm with significantly more liquidity as the Canadian chartered banks usually lend only 50-75% on current asset categories such as receivables and inventory .


More and more Canadian businesses in the small and medium sized enterprise space are finding it difficult to achieve the operating lines of credit they need from our traditional lenders such as the Canadian chartered banks. These firms are turning to asset based lenders . In our experience many companies are not even aware that such a financing option exists .

Asset based lending places less emphasis on proven track records and financial strength , instead focusing on key business assets such as accounts receivable, inventory, and in some cases equipment and real estate .

True asset based lending should not be confused with ' factoring '. In a factoring environment the company in effect sells their receivables to another firm at a discount . Asset based lending allows the company to bill and collect its own receivables . The loan is paid down and reduced , in a fluctuating manner , as the company collects its invoices .

This type of financing can in effect become a strong lifeline in the current liquidity and credit crisis . Banks traditionally margin receivables in a more conservative manner , and further significant reliance is placed on the customers over all financial health with respect to the current balance sheet and income statements .

The one negative aspect of this type of lending is that it comes with a higher cost . The lender usually has a higher cost of capital and is looking for a significantly higher return than a traditional chartered bank .

In most cases more reporting by the company is often required . That is to say they are more often submitting updated reports related to current receivable and inventory levels . Overall a more rigorous due diligence is in place .

The current asset based lending market in Canada is still quite small , but the industry is clearly growing .

In summary, small and mediums sized businesses should check out asset based lending , ie an ' abl loan ' , as an alternative to traditional bank financing . Due to the complexity and relative lack of knowledge around this industry the firm should work with a trusted business financing advisor . Asset based lending can provide unlimited liquidity to firms who are growing - because it focuses on the assets, not the balance sheet and income statement !

Business owners and managers should seek qualified assistance in locating an asset based lender that suits their industry and overall financing requirements re loan size, etc . A study done by the CIBC several years ago indicated that business owners who sought out trusted financing advisors had revenues 76% above those who did not seek a business financing specialist or trusted advisor . Traditionally these types of loans or operating facilities are for firms with under 50 employees .

Asset based lending in Canada is a classic case of a source of capital at the right time, given the current turmoil in the financial and credit markets . Many special situations can be addressed by a constructive asset based line of credit - these include buyouts, cross border projects, and debt restructuring .

Many firms that are even in bankruptcy or receivership can avail themselves of a true asset based lending agreement . Although it is often a more expensive type of financing the case can be made that the asset based financing is much cheaper than the firm issuing additional equity and diluting ownership . Key benefits are improved cash flow, stronger reporting capabilities and the maximization of receivables and inventory financing .

Whether you are seeking of small business line of credit or if your firm has substantial working capital needs owners and financial mgrs should ensure they speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success who can assist you with your traditional or alternative finance needs.








7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

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 100 Million $ of financing for Canadian corporations .

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.



Stan Prokop

What Is The Government Small Business Loan Program In Canada ?

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The Latest News You Need to Know on Government Small Business Loans In Canada

The Government Small Business Loan in Canada is being offered ! Why isn’t your company taking?! We're talking about what just might be the best deal in town for Canadian small and medium sized businesses - the government loan for small business - in our affectionate terms - ' The SBL ‘! (Small Business Loan).

Do you equate business loans and the word ' success ‘in the same sentence when you think of your chances of business financing success? Most clients we meet don't! They recount countless challenges in meeting their financing needs from what we term as traditional financing sources.

So, time to give up. Never, we say. One of the most viable options you can explore are SBL business loans for your company. They are offered (perhaps the better word is sponsored) by the federal government and the rates, terms and structures of this small business loan beats anything out there, and we'll show you why.

A word of caution though - you need to invest a little bit of time in understanding two key elements of the program - first , what it offers, and secondly, how you get to the goal line .. Quickly! (Many clients we meet are frustrated by their timelines in achieving this financing - you don’t have to be in their shoes if you follow our advice)

So, what is the program and what does it finance? That seems like a good start. The SBL government loan - small business is sponsored by the federal Industry Canada department. The program has been in place for many years, and last year almost hit 1 Billion dollars in financing for your competitors. (We want to put you on that same boat!) . The programs official name is the BIL program, and it is a term loan, typically five or seven years in duration, at rates of 3% over prime.

While many larger corporations are required to provide full personal guarantees of owners for their business financings the SBL loan does not, requiring only that the business owner guarantee only 25% of the loan amount - how about that!.

Misunderstanding. That’s what we run into a lot when we explain to clients what the loan can be used for. Unfortunately it is not a cash flow, but a loan that can be used for 3 separate categories of assets, equipment , leaseholds, and real estate also. Our own experience is that it is rarely used for real estate, but it’s nice to know that that facility is available to your firm.

Timelines. Time is money - who hasn’t heard that one? You can easily facilitate your SBL utilizing the motto of the Boy Scouts of Canada - ' BE PREPARED!'

When you are ready to commit to the loan ensure you have a crisp business plan ready, one that addresses the needs of your business and has a financial model in place showing repayment of the loan. Your own respectable personal credit rating is key also, and the loan typically requires a credit bureau score of 650 to gain approval .

While we speak in terms of a government loan the reality is that the feds charge our chartered banks with the actual administration of the loan - so in actuality the loan is available on almost ever street corner in Canada - where there is a chartered bank branch of course !

Want to learn more about Industry Canada's most popular finance program .. and, even more importantly, fast track business finance success? Speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success on government loans for small business - Get the SBL working for you... today!



7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value added financing consultation for small and medium sized businesses in the area of cash flow , working capital , and debt financing .



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 100 Million $ of financing for Canadian corporations .

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.

Stan Prokop

How to Access Used Equipment Financing For The Ability To Finance Assets

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Equipment Financing for both used equipment and new assets has been embraced in Canada for decades . f Most Canadian business owners and financial managers know they can obtain financing for equipment, but they are often unaware of some of the hidden benefits, and, yes, pitfalls, of equipment financing. Let’s explore a couple of those key issues that you need to know about.

Equipment Financing Canada – One Big Mistake Not to Make

Myth ! - Only ‘new’ equipment can be financed. Various asset categories can be financed ' used ' . Both used construction equipment and even farm equipment can easily be financed when you know some key basics.

Nothing can be more farther from the truth. Lease financing is readily available for all types of equipment in Canada, including used and refurbished equipment. This equipment typically is bought at auctions, as well as via the internet, or in many cases from dealerships that have taken a trade in or have a machine that has come in off- lease.

The main benefit of used equipment financing typically is the price. Lets look at an example – lets say you are buying some production equipment and the price for new equipment is 300,000.00$ - Typically this type of equipment if lease financed over 4-5 years. If you were to acquire the asset as used, and lets say you got it for $ 225,000.00 (certainly not unrealistic), then you are saving that 75,000.00 – that’s obvious to anyone of course. But remember that 75,000.00$, if purchased new, is a part of a 4-5 year financing so the ability to cut 75k in long term financing out of your cash flow is a very large benefit .

We would point out that in some cases, because the equipment is used, it might need to have an appraisal or a valuation attached to the financing – this would typically be obtained from a qualified third party appraiser. Typically, as in all financing costs, the borrower, or in our case, the lessee, (that’s you) pays for the appraisal. So the common sense question simply becomes – if your equipment was warrantyed, guaranteed, and you felt it had long term value, would you in fact invest 1k in an appraisal to save 75k++ in financing costs . We think our clients would!

Does the type of equipment alter the pricing and structure of your equipment lease – in some cases it might, but typically not drastically.

Used Equipment Financing Rates & Strategies

The lessor might in some cases ask for a down payment, or a larger down payment, and also might, on occasion, lower the term of the lease ( for example – 3 years , not 4 years , etc ) but overall lease financing for used equipment is still a great value . In many cases even computers are often re financed after they are returned to the vendor or reseller.

Clients often ask if there are certain types of used equipment that can’t be financed. Used industrial equipment financing is a huge part of the lease finance industry and should be considered when new assets might be too expensive, etc. The reality is that pretty well everything can be considered for financing.



Normal credit underwriting is done, focused mostly on your ability to repay the lease from cash flows generated from your company and the asset. All types of equipment should be considered, especially when you and your team have confidence in your ability to acquire, price, install and maintain the asset.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of success when it comes to financing new and used assets to run and grow your business.




7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

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 100 Million $ of financing for Canadian corporations .

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.



Stan Prokop