Franchise Business Loans In Canada. What You Can And Can’t Finance With A Franchising Loan

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Avoid Doing Something Wrong With A Franchising Loan 

 

 

Franchise business loans in Canada.  Can the prospective franchisee avoid doing something really wrong when arranging their franchising loan? We think we can help clarify, so let's dig in.

 

 

PICKING YOUR FRANCHISE / FINANCING YOUR FRANCHISE PURCHASE

 

While a lot of entrepreneurs focus on the particular business or industry segment they are looking to participate in they sometimes sorely miss looking at how the franchise financing industry operates. It's somewhat of a given that it’s up to you to pick the franchise that best suits your talent, expertise, and budget.  But when it comes to financing your business are you 100% sure of the expectations of your lender or lenders.

 

If there is any good news is that you do have some solid options available to yourself when financing your new business.

 

  

KEY ELEMENTS OF A  FRANCHISE LOAN FINANCING   

 

What exactly are some of the key elements of any franchise finance scenario? Well, they include the franchise fee, equipment, leaseholds, working capital, and ongoing capital and cash flow needs.

 

 THE NECESSITY TO FINANCE LEASEHOLD IMPROVEMENTS 

 

Leaseholds are one of the most misunderstood aspects of the franchise finance mystery or conundrum.  Typical leaseholds might include construction, HVAC, plumbing, lighting drywall, etc. If your franchise is not going to be fully financed by a specialty franchise lender then the best solution to financing leaseholds is under the auspices of the Govt small business loan program, In fact, this program was designed solely for two asset categories - equipment... and the leaseholds we have been talking about.

 

In certain cases, the franchise lender may wish the co-operation of your landlord when it comes to what is understood as collateral in the terms of your agreement with the landlord. The situation can sometimes become more complex if there is not clarity and understanding around certain assets that you as a franchisee may have thought was a leasehold improvement as opposed to assets that become attached to the building such as oven hoods, etc. (That’s in the case of restaurants, etc)

 

At the end of the day, it’s both the combined quality of the franchise you are buying as well as your own financial strength as determined by opening balance sheet and projected revenues and profits. Business plans and cash flow projections are a necessity in franchise loans - At 7 Park Avenue Financial we prepare a business plan for clients that meet and exceed the requirements of lenders.

 

If there is one continuous misunderstanding or misconception that we see in discussions with clients on franchise business loans it’s as follows: The franchisor rarely plays a key role in franchise finance. That’s your job or the job of you and your Canadian business financing advisor. At the end of the day, your goal is simple - you want to be in a position to raise the right amount of capital you need to open and develop your business for success. Only the smallest percentage of franchisors in Canada offer any real tangible financing assistance.

 

  

4 TYPES OF FRANCHISE LENDERS  

 

Who are in fact the lenders you should be working with when arranging your franchise loan? In broad categories they are:

 

SPECIALTY FRANCHISE LENDERS

THE GOVERNMENT SMALL BUSINESS LOAN (very well suited to franchise finance) These loans are somewhat similar to U.S. ' sba loans'

EQUIPMENT LESSORS - They finance equipment and in some cases leaseholds

CANADIAN CHARTERED BANKS - Ongoing working capital and cash management -

 

The reality is for many franchises the type of loan you need may in fact be a cobbling together of a number of different finance solutions. In some franchises, there may even be a real estate component that can be often addressed separately.

 

Important to note also that you can buy a new franchise or one being sold from a franchisee that is selling, with the approval of the franchisor of course.

 

DO BANKS REALLY FINANCE FRANCHISES? YOU DECIDE!

 

Since our theme is ' avoiding doing something wrong ' in franchisee finance it’s important for us to clarify bank loans in this industry segment. While a bank would consider financing your business directly it would place heavy reliance on your equity in the business, your personal credit, and collateral that you might have in savings, your home, etc.  In our opinion where the banks do a better job is in the underwriting of the BIL loan when it comes to direct franchisee finance. Franchisees should ensure they can demonstrate a good credit score in personal finances as well as a reasonable net worth , which will also affect the interest rate they can achieve. Interest rates are at an all-time low for every type of business financing and won't vary greatly in most franchise funding alternatives .

 

  

CONCLUSION  

 

To avoid making tragic, costly and time wasting mistakes in a franchising loan consider seeking and speaking to a trusted, credible and experienced Canadian business financing advisor who can asset you with franchise business loans that make sense for your future investment  and success.

 

 

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. He is an experienced

business financing consultant

.

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 financing 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.

Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020

Canadian Business Financing - Capital Funding And Finance Solutions And Tips

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 Business Finance For Smart People

Canadian business financing solutions. Does it seem that the capital funding you need to finance your business is always ... elusive? Knowing how healthy your company is will allow you to select methods of financing your business.

 

 

MAKING THE RIGHT DECISIONS IN BUSINESS FINANCE 

 

Over the long term that adds value to your business and allows you to make the best decision possible around accessing capital, or even buying a competitor or synergistic partner. So consider us your mentor on one of the biggest challenges to business in the SME sector today - funding!

 

FINANCING NEW ASSETS  

 

Are you effectively financing your assets?   How you do that effectively allows you to manage your cash flow and working capital, budget for next year, and determine if you're as profitable as you can be. In cases where you are not generating profits now the ability to finance assets and growth can turn that around quite nicely.

 

Quick case in point? The other day we met with an established small business that had modest revenues in the 400k range. They had aggressive plans to grow to well over a million dollars this year. Only problem? No financing to get there, or eliminate the current operating losses due to a heavy investment in marketing their product to the ' BIG BOX ' stores.

 

 BUSINESS FUNDING TO ACCELERATE GROWTH  

 

Our recommended solution to the client?  A combination receivable / inventory working capital line of credit, combined with a supply chain/PO financing solution. If implemented the client would have a lot more confidence in reaching that new aggressive sales goal. Hey, maybe they could turn a profit also?!

 

BUSINESS FUNDING FROM THE GOVERNMENT?  YES YOU CAN !

 

The Canada Small Business Financing Program is an excellent capital funding solution for Canadian business financing needs. This small business loan funds leasehold improvements, equipment and even real estate. It is not a ' cash flow/working capital/line of credit  ' loan per se and only funds the three asset categories we have mentioned here. Interest rates are very competitive in this small business financing program. Small business loans for startups are difficult in the best of times - let's not even mention a pandemic !!! , so the ability to fund your company at an interest rate and term that suits your capital needs is a solid benefit to the entrepreneur.

 

Under the program, the government of Canada allows the financial institution, ie a chartered bank or business-oriented credit union to administer the program under the government auspices. While many business owners chase venture capital, angel investors, friends and family funding they eventually find these solutions for the smallest amount of eligible firms.

 

 

UNDERSTANDING YOUR FINANCIAL STATEMENTS IS CRITICAL

 

 

A lot of clients we meet shy away from the financing... or dare we say it ' accounting ' aspects of their business. In some cases, they entrust that role to a bookkeeper or other employee who is the farthest thing from a finance analyst, controller, CFO, etc.  Our point - you don't have to be any of those to have a strong handle on your business. It's simply about understanding some business relationships (others call them ratios) and getting some solid assistance from, let’s say, a Canadian business financing advisor to implement solutions around some of those balance sheet, profit, and cash flow parts of their business.

 

  

CAN YOU ANSWER THE FOLLOWING QUESTIONS?  

 

Investing some time and internal or external expertise allows you to finance the assets you have to their highest use.  Are you 100% comfortable in answering the following questions:

 

- Are we aware of all options to finance inventory and equipment needs

 

- Will it be necessary to put in more owner capital (sometimes it is, but never always!)

 

- What in fact are the basic sources of traditional and alternative capital?

 

- Should I lease business assets, or purchase them outright?

 

-  Can we generate more cash flow out of our accounts receivable?

 

CONCLUSION

 

Business Financing Canada style doesn't have to be the challenge and mystery that it seems to be for many business owners and financial managers, Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your finance and funding 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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial





Stan Prokop
7 Park Avenue Financial/Copyright/2020

How To Buy A Franchise : Franchising Financing Companies

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The Other Half Of The Battle – Financing Your Franchise

How To buy a franchise. We guess that's challenge # 1.  And # 2?  It's of course franchise financing companies and solutions that will allow you to realize on the franchisee dream in Canada. That's our job we guess. Let's dig in.

 

PROPER  FRANCHISING FINANCE SOLUTIONS HELP THE ENTREPRENEUR BE SUCCESSFUL

 

It goes without saying (but we will anyway) that the goal of every new entrepreneur in the franchise industry is to be successful. Putting a proper financing package together with solutions that match your needs, budget and cash flow is what that's all about.

 

FINANCING TO PURCHASE THE BUSINESS - AND FINANCING TO RUN THE BUSINESS

It's really a combination of financing you need to purchase and acquire the franchise and then funds required to run it. Although most franchises are run on a cash flow positive basis - ie cash sales, etc there still is a working component to your transaction. No matter how carefully you've prepared your budget and cash flows Murphy's Law always seems to kick in on occasion.

 

FRANCHISE LOANS ARE A COMBINATION OF YOUR EQUITY DOWN PAYMENT AND DEBT

 

In Canada the financing that you secure comes from yourself, that’s the equity component, and one or a combination of debt scenarios - your loan/loans. Financing from debt and equity typically covers franchise fees, equipment, leasehold improvements, and potentially a working capital component. Spending some careful time on the breakdown of those components will save you a lot of grief in the long run. Oh, and by the way your banker or commercial lender needs to see those also! Personal finances are also important, and you should be able to demonstrate a good credit score and reasonable net worth as well as business experience.

 

SBL LOANS TO THE RESCUE - THE CANADA SMALL BUSINESS FINANCING PROGRAM TO THE RESCUE

The goal of every business borrower in Canada is to minimize risk - to that extent you should try and avoid securing personal assets at all cost. One way to do buy a new franchise  is via an ' SBL '.

 

An ‘SBL’..? It's the trade name for the Government of Canada Small Business Loan, and hundreds, if not thousands (we’re not really on a first name basis with the govt) of franchisees utilize this program. It was certainly NOT created to specifically address the needs of franchisees in Canada, but boy has it turned out that way.

 

So why an SBL franchise loan? Some pretty basic reasons really - low competitive rates, limited personal guarantees, no personal collateral, and flexibility as to repayment without penalty etc. That's a powerful combo of benefits in case you haven’t figured it out already.

 

Franchisees can of course pay cash for their business purchase, and even contribute their own capital to financing the operations and growth of the franchise. However, we've always guided our clients not to collapse RRSP's, take out collateral

Home mortgages, borrow from friends and family. While those solutions work they quite frankly mix up your personal and business finances in an unhealthy way.

 

If you aren’t securing a Govt small business loan for your franchising you need the assistance of a specialized franchise finance firm. Alternatively, other Canadian lenders can assist you with solutions based on equipment finance scenarios that can help franchise owners.

 

A good credit score is required for all franchise loans, and it should be noted that typically the franchise fee itself is not financeable. The interest rate on a franchise business loan is very competitive and the government-guaranteed loan program has numerous other benefits that add the flexibility of the program. If the franchisors franchise agreement allows existing franchises can be purchased and financed.

 

One suggestion? Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your goal to buy a franchise and the solutions available to complete a successful acquisition of a new or existing business in Canada's fastest-growing business segment. A business plan is strongly recommended, if not required for any type of business financing and at 7 Park Avenue Financial we prepare business plans that meet and exceed the requirements of government loan programs and Canadian banks.

 

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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial



Stan Prokop
7 Park Avenue Financial/Copyright/2020

Receivable Financing Factoring Companies Help Thousands Of Firms. Could They Help Your Firm?

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Here’s One Method Of Saving Your Company From Cash Flow Challenges! 

 

Receivable financing factoring is a fairly simple process of funding working capital needs. The process? It's as follows -   As you generate sales and invoice your clients for goods and services you have delivered ( Yes, service companies can also be financed in this manner!) your finance factor company buys those from you based on an agreement being in place to do so.

 

HOW DOES FACTORING WORK?  WHAT IS THE COST OF FINANCING ACCOUNTS RECEIVABLE FROM A FACTOR COMPANY?

 

You typically receive 90% of your funds the same day or within 24 hours, the balance is remitted to you as soon as your client pays, less finance costs. In Canada, these costs average  1.5 - 2% per month - that is a fee and not an interest rate! (Various criteria affect your rate, more about that later). The factoring fee is an oft-misunderstood issue in a/r finance.

 

WHAT IS THE BEST TYPE OF FACTORING FACILITY

 

In Canada, the majority (99.9% is pretty well a majority don't you think) require that payments by your clients go directly to the factoring company. We're not big fans of that scenario, so that's why our recommended and preferred solution to clients is a CONFIDENTIAL RECEIVABLE FINANCING facility, allowing your firm to bill and collect your own A/R. That is our opinion is the optimal solution.

 

A CLOSER LOOK AT FACTORING RATES

 

Back to those accounts receivable financing rates, which tend to be a point of major discussion when we're facilitating this type of solution? Your overall rates are generally based on the following criteria - the size of your receivables is one. However, make sure you understand that if you're dealing with the right firm you are not required to finance your entire A/R portfolio all the time. You choose when you want to fund and in what amount. And that of course means you only pay for what you use. That's a good solution, right? It's a solid alternative to the traditional line of credit and a great way to finance the balance sheet for business growth.

 

OTHER FACTORS AFFECTING  ACCOUNTS RECEIVABLE FINANCING  PRICING

 

Other factors that affect pricing include the general quality of your customer base, the number of clients you have, average invoice sizes over time, and the overall quality of both your own firm’s finances as well as your client’s general reputation.  That’s a lot of qualifiers but in almost all cases unless your company is in a death spiral you will get the financing you need. That's why accounts receivable finance is a clear alternative when traditional bank financing is not available.

 

The thing about accounts receivable finance is being educated on who to deal with, it's one form of business finance where a ' word to the wise ' is a valuable gift! Many Canadian business owners and financial managers are intrigued by f factoring; they simply don’t have enough quality information to digest why it might work for them.

 

KEY ISSUES TO CONSIDER IN A/R FINANCING / ACCOUNTS RECEIVABLE FACTORING

 

When we sit down with clients we talk about a number of key issues in the whole A/R financing process.

 

That includes the 9 key issues -

 

1.Benefits of  Factoring  /Accounts Receivable  Financing Accounts &  Factoring finance

2.The value of an advisor or consultant

3.Cost of Receivables Factoring & Understanding how factoring fees are applied

4.Due diligence required to set up a facility/importance of owner credit history

5.Tips and tricks to enhance maximum cash flow via invoice factoring

6.Your firms newfound ability to take on larger business

7.Why negative perceptions of this type of finance abound

8.Accounting/banking issues that come with this type of  short term business funding facility

9. The merits of non-recourse factoring versus recourse factoring

 

  

CONCLUSION  

 

If you're looking for the straight goods on dealing with an asset-based factor company seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your 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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020

Corporate Asset Finance - Feeling Overwhelmed ? How A Lease Company Addresses Your Issues

Ever Thought About Corporate Asset Finance Lease Company Solutions? 

 

Corporate Asset Finance has the ability to be very complex today - the positive news being there are a number of options for the Canadian business owner / financial manager to choose from. That might be a lease company, a bridge loan provider, or even a Canadian chartered bank.   The owner/manager can then be forgiven for not truly grasping the benefits, and risks, of asset finance.  Worse, more often than not available advantages and benefits are underutilized.

One way to take control of the asset finance concept is to utilize the services of a financing expert. Truth be told it is a rare breed of business owner or manager that has the background in credit, law,  finance, tax, and accounting that are all part of the asset finance equation.

One way in which the asset finance question is often overlooked is simply the inability of the owner and manager to look at asset financing from a ‘cradle to grave ‘point of view

So what are those starting to endpoints when it comes to corporate asset finance via your lease company or other alternative financial institution?  First of all the borrower has to have a strong sense of the general marketplace – that is probably one of the greatest areas of misinformation or confusion.

 

We talk to countless clients who simply don’t understand the lay of the land when it comes to asset financing – namely who are the players in the asset arena they are playing in?  We can’t count the number or times we’ve seen a client who has previously spent a lot of time dealing with the wrong players and the wrong offerings. To put it simply, they don’t understand the lay of the land!

After getting a strong handle on the overall market your firm has to have some sort of evaluation criteria. Those criteria involve rate, term, structure, useful economic life, etc. Documentation, tax and accounting issues, as boring or mundane as they might sometimes seem are critical to ‘best practices ‘in asset finance.

In entering a lease or asset finance transaction your company needs to know how this particular finance transaction can make or lose your company money. That might come from understanding applicable rate structures, or perhaps knowing your firm might have the bargaining power to issue a tender to solicit asset finance bids. The big boys and government does it - can you? Sometimes you can . Not always, but sometimes!

 

Key issues in accounting and finance play a key role in asset finance.

They might include depreciation policies, or simply your choice to enter into an operating off-balance sheet type transaction.

Part of the business of asset finance is of course knowing the long-term economic value of the assets you’re financing.  Your overall financing strategy brightens significantly when you’re keenly aware of asset resale values and obsolescence issues.

Want to get a solid handle on the pros and cons of corporate asset finance in Canada, dealing with a leasing company or commercial finance firm. If you don’t know it all  (who does?  ) seek out and speak to a trusted, credible and experienced Canadian business asset financing advisor who can assist you in getting un-overwhelmed!

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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial



Stan Prokop
7 Park Avenue Financial/Copyright/2020

Solutions For Optimal Financing Of Capital Structure In Canada

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Solutions For Optimal Financing Of Capital Structure In Canada

Substitute Failure For Success In Canadian Business Financing 

 

Financing your optimal capital structure might sound like a bit of an esoteric or technical term for many Canadian business owners and financial managers - in actuality, it's easier to understand than you might think, and .. Important!

 

The general idea of capital structure is for the business owner/manager to have a strong sense of whether money is coming from, or could come from your suppliers, your bank and other lenders, or your own owner equity in the company. That is the debt and equity balancing act!It's those three that comprise your capital structure! As debt increases so do those interest payments! Using debt properly and the cost of debt should always be top of mind with a business owner / financial manager. As debt increases, leverage becomes a double edged sword.

 

The manner in which you finance your optimal capital structure makes you successful or drives you into bankruptcy with too much debt. At 7 Park Avenue FInancial we prefer the former by the way - which is why we focus on delivering proper corporate finance structures.

 

In some ways, you might be managing your capital structure quite uniquely and successfully already. Case in point - supplier terms. Just getting a supplier to allow you to pay anywhere from 60-120 days brings you a solid source of cash at minimal cost. Hopefully, the ultimate cost isn’t the relationship you have with your suppliers of course!

 

WHO ARE THE LENDER TO ASSIST IN OPTIMAL CAPITAL STRUCTURE / BUSINESS FINANCE

 

Canada's chartered banks, asset-based lenders, lessors, or working capital firms such as receivable finance and PO based finance firms are your short and long term lenders for capital structure as it pertains to debt. And that debt of course is short term, or long term, depending on the nature of the borrowing.

 

ISSUES AROUND COLLATERAL

 

Another point to be made is that the debt you undertaking within your capital structure has collateral attached to it -and there's only so much collateral to go around.  A positive aspect of debt is that you can leverage it to maximize returns on capital and investment - if done properly.  A great rule of them is that your long term debt is not greater than your shareholder equity. That the standard debt and equity relationship for  many industries And when it comes to total debt a typical bank requirement is that it should exceed equity by no more than 2 or three to 1.Naturally the cost of capital has to be factored into your analysis , and financial experts agree debt is cheaper than giving up equity ownership.

 

BUSINESS ACQUISITIONS REQUIRE PROPER TIME SPENT ON OPTIMAL FINANCING STRUCTURE

 

If you are looking to purchase a business for example it's important to understand that financing will come from a combination of lenders,  your firm or you personally, and potentially the seller - aka the Vendor Take Back.

 

BANKS AND CASH FLOW COVERAGE

 

In talking to a bank about financing your capital structure they are going to focus on cash flow stability.  Banks and other lenders use a simple cash flow analysis tool called ' coverage ' and they like to see cash flow exceed debt coverage by 1.25:1 typically.

 

Lenders, i.e. banks and other commercial finance firms will at the same time look to the balance sheet for collateral - which typically is going to come from receivables, inventory and fixed assets and even real estate. In your search to find the optimal business capital for your firm your firms 'net worth ' / market value will always play a key role.

 

CONCLUSION

We have seen that capital structure is all about the proper mix of debt and equity - the goal is to enhance the value of your company while ensuring you are taking on the right level of risk to ensure the proper ' ROE ' - aka return on equity.

Getting a handle on today’s subject will help guarantee business success. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with financing solutions within your capital structure.

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 '

Your Road Map To Success With Leasing Companies - Equipment Finance Rates And Lease Finance Solutions

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 How To Get Best Leasing Rates From Equipment Financing Companies

 

When it comes to using leasing companies for equipment finance in Canada is there a road map that Canadian business owners and financial managers can use to ensure they are getting the best solutions, rates and structures for acquiring business assets.  We think there is a basic road map that can be followed to ensure asset financing success.

 

6 Paths To Great Lease Rates & Equipment Financing Solutions

So what would the elements of that road map be? We think it comes to the following categories :

1.Solid  structures, interest rates and terms- typical lease terms are  36-60 months but for some assets 72 months might be available

2.Understanding the benefits, and yes the risks of lease finance

3.Ensuring you have chosen the right lease with a monthly payment and term that supports your financial needs

4. Understanding the accounting and tax implications of your transaction- documentation is key and the lease payment may include miscellaneous items not planned for, ie service agreements, etc.


5..Troubleshooting to ensure you're dealing with the right lease company

6.Utilizing Proper third part assistance when needed for purchase of the equipment and vendor negotations

When you have those points covered off we're pretty sure you are very close to having a solid road map in front of you for the equipment lease  journey.

There really isn't another more popular method of financing your business asset acquisitions in Canada and the U.S.  In fact billions of dollars of assets are financed every year, and the ability of your business to acquire assets with financing that comes with other benefits make this business tool extremely popular.
 

CAPITAL LEASES / OPERATING LEASES - WHICH ONE IS RIGHT FOR YOUR BUSINESS

The actual asset that your firm acquires has both a useful life and some economic and hopefully operational value to your business.  In many cases these assets will have a residual value. That's where it’s important for you to ensure you're still following some of our road map issues - namely understanding who to deal with and what type of lease you choose. Those two choices boil down to lease to own (capital lease) and lease to use (operating lease), and how you address the end of the lease options you have.

How you shape and negotiate your payments around that asset is what makes you a winning in dealing with leasing companies. Equipment finance rates themselves are important, but at the essence of this financing, tool is the fact that you have access to a lot of structuring tools that come with both risks and opportunities for you and your chosen lease company.

When it comes to types of equipment that you can finance almost any asset can be leased, and that includes technology your firm might need, medical equipment, personal protective equipment, or even application software. Yes, software leasing and financing is available. New equipment, as well as used equipment, can be financed -  Note though that used equipment should be part of a commercial business to business transaction.

 

LEASE FINANCING IS ALL ABOUT MONTHLY PAYMENTS TAILORED TO YOUR NEEDS

Typical benefits associated with a leasing company include the ability to match monthly payments to cash flow streams that make sense for your firm relative to the original purchase price. Many industries are capital intensive and use leasing extensively to conserve cash. Despite all the flexibility that is offered with lease structuring more often than not the business owner and manager simply want to know that a regular fixed monthly payment is a known factor they can readily deal with.

 

USE THESE LEASE TOOLS TO MANAGE CASH FLOW IN ACQUIRING ASSETS

When equipment finance rates and monthly payment values from a  leasing company are critical you have access to a number of solid tools -. They include lengthening the lease term, including a residual value in your structure, or negotiating lower down payments.

 

CONCLUSION

If you want to maximize the leverage your firm has in acquiring assets through leasing companies spend some time on our key road map points and protect your interests and assets. Approvals are quick and flexible in lease finance and it is not unusual for smaller deals to be approved within 24 hours! Using your business line of credit due to a good interest rate is not the best allocation of cash and you are making the mistake of matching short term cash availability to long term assets.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with commercial equipment leases or a business loan to meet your asset acquisition 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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial




Stan Prokop
7 Park Avenue Financial/Copyright/2020