Financing A Business Purchase In Canada - Acquisition Loans

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How To Purchase a Business With The Right Financing

Buying A Business ? Ways To Finance A Business Acquisition

Buying a business in Canada often provides a large opportunity for success. While many owners and financial managers may prefer the strategy of organic growth for sales/revenue and profit potential the attractiveness of not having to start a business cannot be discounted.


But financing the business purchase capital, i.e. putting your transaction together is another story. There are numerous options available to the entrepreneur/business person when seeking a business acquisition loan, In some cases your transaction may be a management buyout or the focus on financing a takeover.

Acquisition Finance Solutions

Ways You Can Finance The Purchase Of A Business

Bank loans (Secured and unsecured) - In some cases the actual cash flows of the business can be used to finance the entire business purchase. This can be augmented with either a fixed asset/equipment loan as well as a revolving business credit line.

The importance of financing ongoing operations post the acquisition can't be overemphasized. If new owners are unable to finance through their reserves then options such as a business operating line, a non bank business credit line, or simply a/r invoice financing should be considered. We recommend Confidential Receivable Financing as the optimum method of financing sales when traditional bank credit can't do the job.


Franchise loans - The booming franchise industry, which supports a huge part of the economy has niche finance programs available to acquire both 'new' and 'existing' franchises. Corporate stores owned by the franchisor can be financed, as well as existing franchisees that have chosen to sell.

Tip: Find out why they are selling. Financing the purchase of an existing business is very common in the world of franchise financing.


Asset based Loans - These ' ABL ' loans cover the financing of assets as well as cash flow needs, including the often required credit line. These loans are ' non bank ' in nature and often provide higher ' loan to value ' financing when typically required loan and debt ratios don't work. The asset based lender in effect becomes the equivalent of your senior lender, in the same manner as would Canadian chartered banks.

Asset based lenders certainly help when the transaction makes sense to have a higher leverage based on the quality and size of the asset base. Main asset categories are receivables, inventory, equipment and real estate.

Most business owners wish to maximize the leverage and therefore enhance their return on investment but many times don't consider the dangers of over leveraging when it comes to debt.

While traditional Canadian bank financing might be the obvious or ' go to ' choice for many buyers it should be no surprise that they place significant emphasis on personal guarantees, potential outside collateral, and are usually focus on firms with very strong cash flows, balance sheets, etc. Naturally the Canadian banks can offer the lowest interest rates but financing an acquisition might often be a challenge. Also it should be known that banks aren't proponents of 100% financing - they demand, and desire the proverbial ' skin in the game '!

Government Small Business Loans - aka the ' Canada Small Business Loan '. This is the quintessential small business loan in Canada, One great way to acquire a business if your business fits some basic criteria - i.e. financing required for equipment and leaseholds. Acquisition loan rates, as well as other terms and conditions, are very favourable under the Canadian ' SBL ' program, not to be confused with the U.S. equivalent, the ' SBA ' program from which the Canadian program was modelled.  Crown corporations also can potentially assist in your purchase .

While not necessarily a 'creative' strategy, Government guaranteed business loans have solid 'traditional' type rates, no penalty for prepayment options, terms and structures, as well as.. wait for it ... a very limited personal guarantee! Finally, some help from Ottawa, but we digress....

It comes as a surprise to many people that the government does not lend money directly under our Canadian small business financing program - instead it charters the banks to fund the deals under the bank's guidelines. The government provides a guarantee to the banks. Many clients of 7 Park Avenue Financial advise us they have seen the banks interpret those guidelines as they saw fitting.


We can’t over-emphasize the importance of ensuring you understand the financial position of the business you are looking to purchase/acquire. If the seller's motivation is not 100% clear in initial negotiations it may well become clearer when the financial position of the company is understood.

In some cases owners may be willing to provide a ' VTB ' - aka the vendor take back. They may often make or break the financing as long as the seller is willing to take a 2nd position to your financing, and, more importantly, that your lenders don't view the VTB as more ' debt '. Negotiations around the actual amount of the vendor take-back will often dramatically change the nature of the selling price - upward or downward. Seller financing, that vendor participation we are talking about is powerful because it gives you the leverage to minimize owner equity if there are challenges in that area, and sellers are often willing to participate in some creative structuring of the ' take back '.


It removes some of the challenges of conventional financing, and sellers are many times 'motivated' to get the transaction done. There is no real stated percentage of what a typical seller finance percentage might look like, it varies with respect to the circumstances around your transaction so don't forget also that 'seller financing' can be a key part of any successful transaction.


'Goodwill' is difficult to finance part of any transaction, and the easiest financings in business acquisition tend to be ' asset ' oriented, not ' share sale ' focused when you are looking for a loan to buy a business in Canada. That concept of ' goodwill ' is a key part of understanding business loan requirements and what is required to often cobble a transaction together with different types of finance. Buyers should understand that in many cases a ' cobbling together ' of sorts, i.e using multiple sources of financing will often make a transaction work successfully. That is where external expertise can be of great assistance.



Buying and financing that business purchase via a well thought out and executed finance strategy is a solid way to become a Canadian entrepreneur. Speak to a trusted, credible, and experienced Canadian business financing advisor to kick start your business purchase.





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 areas 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

Demand Loan Called ? Forbearance Agreement ? Refinancing Is On The Way !

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Must Know Steps To Take If Your Demand Loan Has Been Called By The Bank

When a business demand loan has been called by the bank there has never been more of a time when a ' perfect ' solution is needed, in a timely manner. That ' forbearance letter ' is a call to action like no other. You need the help and ability to restore your company to a more financially healthy state.

What then are the steps required to ensure survival in the demand loans and callable loan scenario when your company has entered into a forbearance agreement. The definition of that is when the lender, typically a bank, but not always, allows your business to amend the original payments and covenants.  Your goal: avoiding receivership/bankruptcy and litigation, and guide your business into a more healthy state with the right traditional or alternative lender.

The Bank Wants You To Sign a Forbearance Agreement? How Does A Forbearance Agreement Work?

The key to the meaning of a forbearance agreement in Canada is the lender's agreement with your company to a specific date. That allows your firm, the borrower, to focus on a refinancing plan.

We've got some solutions, and refinancing commercial loans might not be as difficult as you think.

Not all business owners or their financial mgrs will always understand why a bank has called their commercial loans - why would they forsake interest income and put your company in a very difficult position. In many cases your firm might have even not missed a payment!

Difference Between Loan Modification & Forbearance 

 

 

 

   

However, when you are in the ' special loans' category at the bank there is only one immediate goal -  Where can the funds come from to settle the bank's outstanding loan/ loans? Ensuring business survival becomes job 1! 

Timing is everything if your firm has been placed in, or notified under a  ' special loans' scenario. An agreed upon new repayment schedule must be considered, and companies should note that typically higher fees and miscellaneous charges such as appraisals may also be requested by the bank/lender.

Every business and industry typically have different issues around what caused the loan to be called. More sophisticated lenders such as banks and mortgage companies may have concerns around the ratios and covenants your firm originally agreed to. They might also have a concern around the position of other lenders your firm may have entered into for additional financing.

One of the most severe scenarios under a callable loan scenario is when monies are owed to the Canada Revenue Agency under payroll taxes or HST.   Is there any good news?! Borrowers will be glad to know that under many refinancing arrangements the' deemed trust ' position of the government can be paid out under new financing arrangements, typically via an alternative finance lender.

That challenge, unfortunately, comes with short time frames and the pressures on the business can be intense as the company's future is in doubt.

On its part the bank has rules around the timelines on called loans and their ability to ensure their capital and liquidity. So they are always looking at their commercial loans to determine in their minds what might be signs of financial distress. In other words, they are monitoring what might be potential ' bad debts.' By ' calling loans '  banks are in effect increasing their liquidity.

Initial steps in refinancing your business will revolve around ensuring banks are behaving properly, perhaps negotiating new deadlines, or negotiating settlement proposals. These actions are often best served when you are working with a trusted, credible, and experienced Canadian business financing advisor with a track record of success.


 In many cases, ratios and covenants can be renegotiated, and some firms may on their own be able to bring in new capital. Don't forget that callable loans are a  costly process for the bank also, so a mutual solution is often very desirable. Business owners are well cautioned to ensure they understand the ' call provision' in their loan documents. Bank doc's can always be a bit overwhelming.

Developing a professional reputation with the workout mgr at your bank in this time period is critical. They are experienced in dealing with challenging credit situations, from simple to complex.

So what about the 'real world ' solutions to refinancing your business in a special loan scenario.

 Basic Solutions  To Refinancing Your Company

A typical refinancing of your business under forbearance/demand loan scenarios will involve a new operating line of credit, typically asset based and focused on current and long term assets as your total borrowing base.  At 7 Park Avenue Financial we work with businesses to ensure a new and solid business plan and cash flow projection is put in place.

Where necessary a reappraisal of critical assets will also suggest possibilities for new financing, for example a sale-leaseback.

Unfortunately in some situations staff reductions and sales of assets may also have to be considered by the owners.

Asset-based lending solutions are often the best way to solve the challenge of new financing options when a demand loan has been called.

Solutions depend on the loan amount and can  include:

Asset based non bank business credit lines

A/R Financing

Sale Leasebacks

Cash flow loans

Asset sales

Inventory Financing

Term Loan / Loans

When considering refinancing strategies  most experts recommend external expertise that allows you to receive and view the right recommendation around a new lender/ lenders.

Seek out and speak to business finance experts with specialized knowledge in business downsizing/refinancing and recapitalization under a forbearance plan.



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 areas 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

Working Capital Financing & Most Effective Business Finance Solutions

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And Now For Something Completely Different - Solutions for SME Business Finance

What is Working Capital Financing ?

Working Capital Financing – Canadian business owners want to maximize the utilization of their receivables, inventory and incoming orders and contracts to leverage working capital.

The goals are very clear, grow business revenues and profit with the right combination of internal growth, borrowing from banks and others, and achieving the best blend of working capital and cash flow by leverage those current assets.

Long term debt or additional new equity is not often the business owner’s choice in arranging more working capital and cash flow for the business.

We meet with many business owners who tell us they have the opportunity to significantly increase sales. They are looking for a financial strategy to grow those profits and equity while at the same time minimizing loan interest and any other external financing costs.


When a business gets its hand on a proper working capital loan solution it has the potential to reduce or minimize debt, and increase bottom line equity or value in the business. It is all about achieving the optimal working capital ratio which quite often is industry specific as the cash conversion cycle for many industries is vastly different


Our point is simply that if your business can absorb a reduction in your gross margin – (the cost of working capital associated with receivable, inventory and PO financing) then you can avoid debt and equity scenarios and still grow your business.

Looking For An Example Of Working Capital Loan Types

It is cash flow solutions such as factoring, invoice financing, and our recommended favourite -' Confidential Receivable Financing ' that are most often associated with cash flow financing, It is important to note that inventory financing, a subset of asset based lending also can provide substantial day to day operating capital.

True asset based lending facilities that encompass the finance of inventory, receivables, equipment, and even allow borrowing power against owner real estate provide a real, shall we call it ' holistic' approach to Canadian business finance. Even purchase orders can be financed as a subset of asset based financed.

The Canadian business owner and financial manager's challenge is to grow the business and understand the cost of growing the business under various financing methods.

Clients are often surprised to learn how much their business can change by a simple analysis of their working capital financing choices.

Using factoring or inventory financing as a cash flow supercharger is many times the best strategy for working capital enhancement. Most non financial business owners do not appreciate that power that working capital turnover and are focused on repayment meaning.

There are all sorts of tools that your business can very easily use to monitor your working capital needs. One is simple - you need to monitor your working capital to sales ratio.

What Is Working Capital?

How do we calculate the working capital to sales ratio? It’s easy. Working capital is essentially your current assets minus your current liabilities. Take that number form the balance sheet and divide it by sales. If you have a low ration then your ability to generate cash flow is stronger.

The solution for Canadian business owners is to maximize the turnover of those current assets such as receivables and inventory via working capital facilities. If those facilities can’t be arranged with a bank then you have the option of working capital lines of credit and asset based lines of credit that will cover receivables, inventory and even under many circumstances bulges for new contracts and purchase orders

Working capital facilities via asset based lending business credit lines, factoring or inventory financing or purchase order financing maximizes your cash flow – they also cost more and many Canadian businesses simply focus on the cost.

But they fail to measure the cost of carrying those receivables and the cost of not turning over that inventory efficiently. These two costs alone have the ability to completely in some cases erase your cost of financing under a working capital and cash flow facility.

How does a business compute its cost of credit? The formula relates to your firm not taking credit and payment terms extended by suppliers. Your supplier gives you terms that specify a payment date the amount of the discount if you pay early, and of course the due date. The cost of NOT taking that discount is huge! Most owners don’t realize that. If your firm can negotiate better prices by utilizing working capital financing strategies such as factoring and inventory financing and purchase order financing you have just become the best comparison shopper in business!

In summary, the cost of not taking trade credit discounts is very significant when your business has the ability to take those discounts via aggressively financing your receivables and inventory. Utilize great working capital strategies, you will find that the cost of paying in full is higher than the cost of a working capital facility to cash flow those receivables and inventory!

What is The Cost Associated with Working Capital Finance Solutions?

Non bank, non regulated commercial finance companies that offer cash flow solutions in Canada have traditionally been somewhat cumbersome for the Canadian borrower and often mirror the Canadian chartered bank borrowing experience.

The banks focus on long term loans is often not what the client is looking for. That is changing rapidly with the rise of online finance/peer to peer lending. The types of working capital provided by banks often involve lengthy application processes and solutions such as long term loans. That forces the business owner to assess the difference between working capital loan vs. line of credit. Online providers utilize slick software solutions that are focused on speedy approvals, albeit at much higher costs.


We recommend utilizing a business finance expert to determine which online solution, if any, is recommended for your firm. Also, it's important to note that typically working capital provides have no geographic boundaries, and operates throughout Canada.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business finance experience who can assist you with loan and cash flow 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

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 areas 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

Business Finance In Canada & Financing Alternatives

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Alternative Lending : Use As Directed

 

 

What Is The Best  Business Financing Option For Your Business?
Business financing alternatives in Canada - For many business owners and financial managers it , must seem like they spend a tremendous... aka ' too much' time searching for the credit and banking alternatives and the sources of cash they need to run and grow business. Raising business is even more challenging when the search is for financing for startups!

What then are some of those decision points when your business is looking for business funding of any type? Business sources such as Canada's premier business dailies such as the Globe & Mail and Financial Post constantly reveal the challenges of the SME commercial finance sector in financing a business. Let's dig in!

Easy to say, but fundamentally it's all about finding the right types of funding in the amount that you need that carries an acceptable level of risk and cost relative to means of financing utilized. As we said, easier talked about than done.

More often than not it's about taking on the wrong kind, or too much debt and therefore risking business failure. Working with the right type of banks or finance companies is also important; it's all about knowing the lay of the land!

Business Financing Alternatives

There are several ways in which business finances itself.  Business owners should know that interest rates vary based on what type of traditional or alternative lenders are utilized. Sources of cash for your company include :

Vendor / Supplier credit - That is financing a business without a loan!

Lease Finance / Equipment Financing

Bank Financing

Government of Canada Small Business Loan and Grants for startups - ( Working with government programs and crown corporations often can seem frustrating for business people. It is strongly recommended that you use a business finance expert who has a proven track record in business finance

Asset monetization

New equity

Online Lenders

Many business owners often underestimate the power of supplier finance. The terms and credit needs you're able to negotiate contribute significantly to business cash flow. Supplier credit stems from the outflows of cash. The bad news here is that everybody's in the same boat at the end of the day, as everyone, including your clients attempt to stretch payment terms.

Instead of paying with cash for equipment and technology assets businesses can choose to lease those assets on a lease or rental basis.  Terms of anywhere from 2-7 years, sometimes longer, are available to leases assets such as rolling stock, computers, heavy equipment, production machinery, etc. Bottom line... any asset can be financed.

Canadian commercial banks offer significant financing choices when your firm seeks business credit.  The most desirable bank facility is typically the ' revolver' allowing you to draw daily against the cash you need up to a set limit.  The danger of breaking a bank arrangement often leads many businesses into a death spiral.

While in many cases it's desirable to get new equity into your company the challenge here is that it dilutes ownership at the expense of current owners.
Many owners and finance managers who focus on getting new equity don't fully realize that numerous ' Asset Monetization ' strategies exist as an alternative to equity in many cases.

They include-

Receivable financing
Inventory Financing
Tax Credit Financing
Royalty financing
SR&ED Tax credit monetization
Non bank asset based lines of credit
Sale leaseback
Canada Small Business Loan and BDC Funds
Bridge loans

4 or 5 key issues typically should come up in your overall financing decision. They include:

1. Flexibility of the financial offering
2. Risk
3. Cash flow and profit concerns
4. Control exerted by the lender based on the finance offer  - that refers to issues such as loan covenants, financial ratios that must be maintained, and those ever-dreaded ' personal guarantees'.
5.Timing

At certain times in any company’s history it can't always get the financing it needs. Issues such as your overall leverage and your capital structure need to be addressed carefully. Growth, while always desired by almost all firms requires a proper assessment of your financing needs.


Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with business credit and banking decisions that make sense today and tomorrow.

 

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 areas 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

Business Capital Solutions In Canada : Accessing Proper Cash Flow & Commercial Financing

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Cash Flow Solutions - What Are The Types Of Capital For Your Business

Business capital requirements in Canada often boil down to some fundamental truths the business owner/financial mgr/entrepreneur needs to address when it comes to financing for businesses.

One of those truths? Knowing the true state of their financial condition and what financing they do and don't qualify for when it comes to meeting commercial lending requirements in Canadian business.

Business Loans In Canada

Whether you are smaller or start-up firm looking for information on how to get a business loan or a larger established firm looking for growth financing or acquisition opportunities we're highlighting 3 mistakes that commercial loan seekers like your company need to avoid making when addressing, sourcing and negotiating your cash flow / working capital and commercial financing needs.



1. Understand the true condition of your company finances - These are almost always successful addressed when you spend time on your financials and understand how your financial statements reflect your access to commercial loans & business credit in general



2. Ensure you have a plan in place for sales growth and financial needs as it relates to commercial financing



3. Understand that actual hard facts about cash flow which is, of course, the lifeblood of your company



Can you honestly answer or feel optimistic about all those 3 points. If so, pass Go and collect $ 100.00!



An excellent way to address your company's finance plans is to ensure you understand growth finance solutions, as well as how to manage in a downturn - i.e. not growing, losing money, etc ; It's never fun to fund yourself in an economic or industry downturn such as the COVID pandemic of 2020!



When we talk to clients of new or established businesses it seems they are almost always talking about sales, so the ability to understand and focus on the differences in their profits and cash fluctuations is critical.



How do cash flow and sales plans and projections affect the type of financing you require? For one thing sales growth usually starts out by consuming your cash, not generating it. A poor finance plan will drag your business down, and addressing financing simply gets tougher and tougher.



Three basics always emerge when it comes to your search for the right business capital and financing.



1. The amount of financing you need



2. The type of financing (debt/cash flow/asset monetization) The business loan interest rate will be dramatically affected by whether you choose traditional or alternative financing solutions. Private business loans in Canada come from non regulated commercial finance companies most often known as ' alternative lenders '. These lenders are typically highly specialized in one ' niche ' of business financing and may be Canadian firms or branches of U.S. banks and non-bank lenders



3. How the financing is structured to be manageable with your day to day operations

What Finance Company In Canada Can Meet Your Borrowing Needs & Why Is Capital Important In Business 

Let's identify and break down key financings your firm should know about and understand if they are applicable and achievable to your business. They include:



A/R Financing / Factoring / Confidential Receivable Finance



Inventory finance / floor planning / retail inventory



Working Capital term loans



Unsecured cash flow loans



Merchant working capital loans/advances - these loans are geared toward short term cash needs and are typically one year in duration. Loan amounts are typically 15-20% of your annual sales revenues.



Royalty finance



Asset based non bank business lines of credit



Tax credit financing (SR&ED bridge loans)



Equipment Leasing / Sale leasebacks - Equipment financing in Canada is used by almost 80% of all companies looking to acquire new, and used assets.



Govt Guaranteed Small Business Loan program - Government Loans in Canada are sometimes referred to as ' SBL', aka Note: BDC Finance solutions are available from this Canadian non-bricks and morter crown corporation. A small business loan via the government-guaranteed loan program comes with true flexibility around term loan duration, market rates, no pre payment penalties, and of course the low personal guarantee that is required by borrowers. These two ' government ' loan solutions are often perfect for financing a new business.



If you're focused on not making mistakes in your business finance needs and want to capitalize on the solutions your competitors are probably already using seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your cash flow and commercial financing 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

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 areas 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

Buying A Business In Canada: Financing A Business Purchase In Canada

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Financing A Business Purchase

How To Buy A Business With The Right Acquisition Financing

Buying a business in Canada via the right acquisition financing will often involve looking beyond the numbers when it comes to ensuring business purchase financing options are in place. Business loans to buy an existing business is not just all about negotiating the sale price - it's also about the necessary funding solutions that must be put in place to ensure business survival and profitability. Let's dig in.



The pros, of course, call it ' due diligence’, when it comes to considering a business investment loan and how to buy a business. As well financing a business for sale is all about a pretty basic common sense premise: ensuring sales, inventory, accounts receivable and accounts payable are all reasonable, and that projected sales volumes make sense in the long term. The right business acquisition loans are an integral part of planning future growth.



Bottom line- the proper business purchase loan finance solutions tie together your plans for mgmt, mfg or delivering services, and marketing.



The essence of any business, large or small, is cash management. Working capital solutions and business financing rates must also be considered for effective ongoing operations.



A/R Financing/factoring



Bank revolving credit lines



Non-bank asset-based lines of credit



Inventory Financing



Tax Credit Financing



Small business govt guaranteed loans (maximum 1 Million $) Small Business Loans To Purchase A Business Can Often Come From The Government Of Canada Small Business Loan Program



Firms that are not profitable or that have ' challenged' balance sheets will not qualify for what we call ' traditional' finance. These types of companies can't comply with the financial ratios and collateral demanded by our Canadian chartered banks. Almost all businesses that sell on credit, large or small, need some sort of business credit line.



Numerous alternative financing solutions are in fact available - but at the same time new owners/mgr must be able to address and talk to items such as gross margins, operating inefficiencies, etc.



At 7 Park Avenue Financial we speak to many clients who wish to purchase a franchise business. That can be achieved via various financing programs, and might often include some ' seller financing ' when it comes to an overall finance strategy. That seller finance assistance in essence is another alternative capital that can allow the buyer to successfully complete the transaction. We also note that both new and used franchises can be purchased and financed.

Business Acquisition Financing Canada

Buying a business for ' all-cash ' is almost never the option available to purchasers. Top experts tell us than not even a 1/3 of businesses purchased are done via 100% financing. Unfortunately sellers like/want cash! More often than not the final structure of your transaction will be:



Owner Cash

External Financing

Vendor Take Back/Seller Financing (not always, but often)



‘ABL ' (Asset Based Lending) is often a solid solution for a business financing strategy. These types of facilities allow you to borrow heavily against inventory, accounts receivable and equipment/fixed assets.



One legal/technical issue often becomes a critical point in acquisition financing. That is the issue of ‘asset sales' vs. 'share sales'. From a buyer's perspective asset sales tend to make more sense - sellers focus on share and tax strategies for selling their businesses. This can often complicate financing.



We've seen there are some critical issues that can make or break the success of financing a business purchase. Those issues include proper valuation pricing, debt load, working capital and cash flow financing challenges.



If you're focused on a winning deal and financing a business purchase properly seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your funding needs.




7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
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 more than 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.
Before 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

Business Financing Cash Flow On Auto Pilot ?

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What Is Cash Flow Financing?

Business cash flow financing for many firms in the SME sector involves the necessity to turn receivables into liquidity for the company, in effect we're talking about ' invoice cash ' , that is the sort of financing that clients here at 7 Park Avenue Financial are looking for - i.e. cash flow lending That term is synonymous with cash flow challenges that hit many firms all the time. How then does the use of an AR finance company assist in meeting that challenge?

Sooner, rather than later is the need for business owners who want cash flow to support their company requirements. In many cases certain industries demand a lot more cash for companies that participate in the sector. That might mean more focus on capital assets or even research into new products and services.

What happens though when you can't get the credit financing you need from traditional banks / business-oriented credit unions, etc? That's where an AR Finance company comes in.
Your ability to quickly and efficiently set up a receivable discounting facility allows you to immediately remove the problem of waiting 30, 60 or even 90 days for receipt of client funds for your goods and services.

To receive full funding for your receivables from a Canadian charted bank there is of course an extensive loan and business application, with a lot of emphasis spent on historical cash flow analysis, balance sheet analysis, income statement and operating ratios, etc! Invoice cash services eliminate 90-95% of that type of waiting and negotiation.

So why then does ' factoring ‘, the more technical name for invoice cash work and in fact showing more popularity every day when it comes to  ' cash lending ' solutions. The answer is simple, an immediate flow of funds based on your sales revenues. That becomes most of the solution to what the pros call your ' working capital cycle '. That cycle, simply speaking, is the amount of time it takes a dollar to journey through your company and makes it back onto the balance sheet as cash.

When you finance through an invoice cashing - also called invoice discounting facility, you are not borrowing funds on a long term basis. Your balance sheet does not accumulate debt; you are simply liquidating current assets in a more efficient manner.

Is there one type of facility in the area of ' invoice cash ' that works better than others? We're glad you asked! We constantly recommend Confidential Receivable Financing, it's the 'non-notification' part of this solution, allowing you to bill and collect your own accounts, bank your own funds, and choose how much financing you need on an ongoing basis. It's classic ' pay for what you use ' financing when you're working with the right partner.

What Is A Cash Flow Loan? What Are My Firm's Options Financing Cash Flow?

A/R Finance is not always the ' only ' way to fund cash flow needs. Other strategies might include:

Working capital short term loans

Sale-leaseback strategies

Inventory finance

Tax credit finance ( sr&ed refunds are financeable)

Mezzanine Financing - (Unsecured cash flow loans)


Long term solutions of course involve scenarios such as new equity.




To receive full funding for your receivables from a Canadian charted bank there is of course an extensive loan and business application, with a lot of emphasis spent on historical cash flow analysis, balance sheet analysis, income statement and operating ratios, etc! Invoice cash services eliminate 90-95% of that type of waiting and negotiation.


Long term financing activities of course might involve scenarios such as new equity by owners.


So let's recap: Your business requires additional cash flow. You either have facilities in place and they aren't working, or you are self-financing and need cash flow to pay suppliers, employees, etc. Seek out and speak to a trusted, credible and experienced Canadian business financing expert who can deliver on invoice cash for your firms need.



7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
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 more than 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.
Before 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