Equipment Financing Companies - Must Know Info On Business Lease Finance

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Equipment financing companies in Canada. We maintain that when it comes to a business lease for asset financing there is certain information on this subject is ' nice to know ‘, while in other situations its absolutely critical to your asset finance success - i.e. you need to know this! Let's dig in.

 

  

ANY ASSET, NEW OR USED, CAN BE FINANCED!  

Business owners and financial managers should always understand that just about any asset, even intangibles such as computer software as an example can be lease financed. The entire application process for leasing approval has never been shorter - transactions under 100k are often approved the same day, or even online, or within 24 hours. Larger complex transactions will always take a bit more time, but will invariably be approved faster than a business loan.

 

  

 

EQUIPMENT FINANCING IS A LONG TERM FINANCE DECISION   

 

When it comes to the asset financing decision it's all about short and long-term decisions and that timeframe can be all-important to your financing success.  More often than not the majority of equipment leases in Canada tend to be in the 3-5 year range. These are typical terms when it comes to plant and fixed assets and equipment; note also that interest on lease payments are tax-deductible in leasing.

 

MANY MANUFACTURERS HAVE CAPTIVE LEASE FINANCE SOLUTIONS

 

It might, but should not, come as a surprise that some of the largest asset lessors in Canada are manufacturers themselves, offering lease financing. They compete with independent commercial finance companies to finance their own equipment - bring incremental profit and additional sales opportunities into their picture.

 

 NO MONEY DOWN / NO DOWN PAYMENT? 

While we are big proponents of equipment finance we're the first to admit that on occasion terms such as ' 100% financing ‘, etc. are somewhat overused by the industry. More often than not down payments of security deposits of some sort are required, especially if your firm is not ' investment grade ' when it comes to credit quality. Lease approvals are available for almost any credit quality, in some cases, interest rates will vary depending on the final restructuring of your transaction to ensure credit approval for the equipment you need.

Business owners should know that any equipment can be financed ( new or used ) that might be medical equipment, construction equipment , rolling stock, computer leasing, software leasing - new and used.

 

EQUIPMENT FINANCING IS AN EASY WAY TO ACQUIRE ASSETS

 

Canadian business owners and finance managers like leasing because it’s a simplified process when it comes to asset acquisition.  Your firm simply negotiates the type and price of a business asset and the leasing company buys the asset, on your behalf, from the manufacture or distributor. It’s, as we have said, a solid alternative to equity financing or long-term debt on your balance sheet in the form of term loans.

 

HAVE YOU CONSIDERED THE OPERATING LEASE TRANSACTION?

 

Not all acquirers of business assets are familiar with operating leases.  A simplified way of looking at these transactions is simply that you should consider them as ' service ' type leases.

 

ADVANTAGES OF OPERATING LEASES

 

What then are the advantages of operating leases? There are several, they include the fact that the leases are not fully amortized so even with interest built into the transaction you quite often are not paying even the full amount of the value of the asset. 

 

How can that be, ask our clients? Simply speaking it’s that the lessor is making a bet on the useful economic life of the asset when you return operating lease assets at the end of the lease term. The lessor hopes to sell or release the assets under your operating business lease.  So there, the secret is out!

 

FLEXIBILITY AT THE END OF TERM OF YOUR EQUIPMENT LEASE

 

If there is one both beneficial and creative aspect to equipment financing companies offering operating type leases it's that they allow you a lot of flexibility during and at the end of the term of the transaction.  Your firm has the ability to return, upgrade or even buy the asset at mid or end of the term. Now that’s flexibility!

 

  

THE CAPITAL LEASE - YOUR '  LEASE TO OWN ' STRATEGY  

 

Capital leases are the opposite. They are fully amortized, cannot be cancelled, and the interest rate clearly defines the lessor profit to which they are entitled. (Hopefully, it’s a ' reasonable ' profit!)

 

  

HAVE YOU CONSIDERED A SALE LEASEBACK?  

 

Equipment financing companies will also consider sale-leaseback transactions. You take assets you already own and sell them to the leasing firm, typically to enhance your working capital or cash flow needs.  We have even seen our own chartered banks sell their bank towers in downtown cores, freeing up millions in capital for the banks themselves.

  

CONCLUSION

  

As we have said, there’s ‘nice to have ‘and ‘need to know ‘when it comes to business lease finance via Canadian equipment financing companies.  Financing equipment should not be a challenge for business owners in the SME economy. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in completing a transaction that benefits your company for your business 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

Business Cash Flow - Are You ‘ Pro’ ? The Case For Working Capital Finance Solutions And Management

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Is Cash Flow The Oldest Word In The World ...Perhaps?!

 

Business Cash Flow in Canada.  It always seems to us like a bit of an understatement when you talk to clients about working capital finance solutions and their importance. Business owners and finance managers know the challenge of raising capital or monetizing existing assets... or both!

 

WHAT FINANCE NEEDS DOES YOUR FIRM NEED

 

Naturally, financing needs are diverse. It could be operational cash flow, replacing existing assets, etc. Any change in working capital cash flow impacts your firm either positively or negatively. Even managing your accounts payable effectively in daily operating activities provides movement in your cash flows. Addressing the inflows and outflows of capital is the key to long term business success as you manage liabilities due within 12 months.

 

A FINANCING DROUGHT IN THE SME ECONOMY?

 

Is there an SME drought of some type in Canadian business financing? The commercials and ads we see every day seem to say not, but in talking to small business owners and managers finance often seems just a step away from crisis mode as they search for an increase in working capital.

 

What is business cash flow? At the end of the day it's simply the flow of funds in and out of your business - most often measured by a 12-month timeframe. That cash flow comes from sales revenues/accounts receivable collections, inventory turns, and the management of your payables.

 

 

Cash flow represents all the money that is flowing into and out from your business during a specified time frame. Cash flow can consist of accounts receivable, accounts payable, and inventory. ... Working capital refers to all the current assets as well as current liabilities in your small business.

 

2 KEY ISSUES IN BUSINESS FINANCE

 

When it comes to business cash flows and working capital resources it comes down to two basic issues -

 

Managing your assets - asset turnover and the flow of money in your company

 

Accessing traditional or alternative finance to meet your needs - Understanding the cash flow statement

 

Top experts tell us that surveys of business indicate that well over 50% of all businesses in the small to the mid-market sector in Canada, in all industries are either worried or concerned about their ability to finance operations. Therefore how to calculate the change in working capital must be job 1 for the business owner and financial manager. Changes in working capital are basically the changes that arise out of changes in current assets and current liabilities on your balance sheet. That the ' textbook ' answer for the working capital formula.

 

While simple mismanagement of your business assets is one reason for that the other is simply your inability to collect promptly from late-paying clients. In some cases, your clients actually might be temporarily unable to pay!  Our traditional lending institutions such as Canadian chartered banks are risk-averse - that has made them very strong in global profiles, but has left Canadian business shall we say ' unfulfilled '!

 

SOURCES OF CANADIAN BUSINESS FINANCING

 

Rather than wait for the government to step in resourceful business owners/managers have simply gone out and accessed alternative financing to meet their cash flow fluctuation needs.

Those sources of Canadian Business Finance Solutions  bringing capital and cash flow  include:

 

A/R Financing

Inventory Loans

Access to Canadian bank credit

Non bank asset based lines of credit

SR&ED Tax credit financing

Equipment / fixed asset financing

Cash flow loans

Royalty finance solutions

 

Purchase Order Financing

 

Short Term Working Capital Loans/ Merchant Advance

 

Securitization

 

WHAT IS THE MOST POPULAR NON BANK  METHOD OF WORKING CAPITAL FINANCE

 

Invoice (A/R Finance) is probably the most popular method of addressing the working capital challenge. Accounts receivable and inventory are the 2 key current assets on the balance sheet that represent potential business liquidity.

 

THE COST OF FINANCING

 

While owners and managers are justifiably concerned about the cost of financing they sometimes forget that how you manage your assets can significantly decrease your overall financing cost. And while some ' alternative ' finance solutions are viewed as too expensive there are numerous ways to offset the costs of any financing you undertake.

 

Don't forget also there’s a huge difference between taking on new long-term debt versus monetizing assets for cash flow. Let's utilize a quick example:

 

  

A WORKING CAPITAL  EXAMPLE  OF FINANCE SUCCESS  

 

Consider a firm that borrows 100,000.00 as a term loan over 5 years, putting new debt on the balance sheet. Interest on that debt might easily be 15,000.00 over a 5-year term, even at excellent rates.   Consider the business owner who monetizes 100k of A/R for a 30 day period. Cost is approx 2000$, and new sales create profits over and over again as sales are generated and assets turned via operating capital for the sale of your products and services.

Your focus should be on the overall working capital cycle of your company - simply the time it takes to turn sales into cash. The longer that cycle is represents the need for more investment into working capital that is in effect ' tied up ' and might signal the need for external financing.

 

 

CONCLUSION

 

Our bottom line - don't underestimate the need for business cash flow and the power your firm has when it’s utilized properly. While ‘ cash flow ‘ may not be the oldest word or term in the world we can't underestimate its importance to business survival.

 

How much money do you need and will your firm always have enough cash? Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your business cash needs and working capital finance solutions.

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

Finance Factors In Canada / Decided If You’re For Or Against Receivable Factoring Cash Flow Solutions?

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 The Dreaded ‘ F ‘ Words - It’s Factoring, Funding and Financing Your Sales Hit A Cash Flow Home Run With Receivable Factoring Finance Factors In Canada 

 

RECEIVABLE FACTORING FINANCE FACTORS 

Receivable Financing Finance factors in Canada. When the Canadian business owner  / financial manager considers the weight of evidence for a factoring receivables he or she wants to be in a position to have the facts on how this method of financing sales works, costs, and attracts benefits otherwise not obtained. Let's dig in!

 

  

IT'S CRITICAL TO GET A STRONG SENSE OF YOUR TRUE CASH FLOW POSITION  

 

Whether your business is mature, a start-up, or growing like crazy you need to be in a position to ' model ' your cash flow. That's something you need for your own management of your business, as well as being available for any term or operating lenders.  The advantage of having such data is that over time you get a strong sense of your cash flow and working capital needs, giving you comfort on what’s coming in. and going out!

 

  

PROFITS DON'T EQUAL CASH FLOW   

 

Feeling disconnected lately?  One reason for that is what we see in talking to clients all the time - actual cash flow and profits are vastly different things. Are you really comfortable with the way your A/R tracks sales, or vice versa, and do you understand the implications of growth and working capital needs? Most firms are keenly aware it is more and more difficult to get paid on 30 day terms which historically were a norm.

 

That’s where Finance factors/factoring company solutions come in. An accounts receivable factoring solution reduces the time gap that it takes you to generate cash out of your products and services.

 

  

BANK FINANCING VERSUS FACTOR FINANCE - THE ONLY DIFFERENCE IS THE PAPERWORK!  

 

Unlike bank financing where you assign or collateralize your accounts receivable via a line of credit, the Factoring solutions is a straightforward immediate ' sale ' of your revenues as you generate sales. It gives you ' immediate funding ' and by that we mean basically the same day. So if you hopefully generating invoices for clients in the morning you receive the cash for that sale the same day. That’s cash flow optimization! Factoring differs significantly from a ' bank loan '.

 

  

FACTORING A/R IS A LONG-STANDING SOLUTION THAT CAN BE ACCESSED QUICKLY  

 

Although the function and the formula for accounts receivable financing seem either strange or exotic or unheard of to some in reality this form of financing has been around for hundreds of years. It is widely popular in the U.S. and gains more traction in Canada every day. Quite frankly it’s the alternative to having to put more equity in your company or arrange debt financing that you may or may not be eligible for. (And business owners can, unfortunately, spend a lot of time these days on financing solutions that are either wrong for them or unattainable)

 

Where confusion reigns supreme sometimes is when some of the terms, pricing and players in the Canadian accounts receivable financing industry seem a bit confusing to the factoring ' newbie '.

 

5  KEY POINTS IN UNDERSTANDING RECEIVABLE FINANCE

 

A short overview of some key issues, points to consider is as follows:

 

1.A/R factoring documentation is between your firm and the finance factors - the factoring agreement will spell out clearly the factoring fee and final advance rate  ( managing your a/r well and focusing on dso reduction will lower costs associated with carrying slow paying customers - funds are typically advanced within 24 hours of your invoice being generated.

 

2.Our absolute recommended solution is a confidential invoice financing facility whereby you bill, collect and finance your sales to the amount you require and need.

 

3.Generally, receivables under 90 days can be financed at any time. Your receivable might be 1 day old or 60 days old. It's your call on when you want to cash flow them relative to the invoice amount/amounts and what your cash needs are. The faster an invoice is paid will lead directly to lower financing costs.

 

4.The terms advance rate and discount fee are absolutely critical in understanding A/R receivable factoring in Canada. Typically 10% of the financing is held back as a buffer or hold back, and the charge to discount or finance that sale is in the 2% range for a 30 day period. So using a $100,000.00 invoice as an example you would receive 98,000.00 of immediate cash for that item. Proceeds from factoring companies could be used to generate more sales and service and profits from your goods and services  - and in fact, your payables could be offset by taking discounts for prompt payment with your own suppliers.

5. Your company has the option to choose non-recourse factoring or traditional recourse factoring,w whereby in the latter your firm continues to carry the credit risk. Companies may also opt to consider receivable insurance which is available from a handful of specialized finance firms, allowing your firm to lower bad debt risk.

 

CONCLUSION

 

If you wish to smooth out and normalize small business cash flow, be less afraid of growing or taking on larger orders and contracts, and avoid ' cash crunches ' the weight of evidence might just suggest you should consider receivable factoring. 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

The Federal Small Business Loan In Canada. There’s No ‘ What If ‘ When It Comes To SBL Loans

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There’s No Shenanigans When It Comes To SBL Loans In Canada

The federal small business loan.  When we think of the term ' shenanigans ' it conjures up images of fooling around. There are no shenanigans when it comes to Canada ' SBL' loan. It's a straight forward program for small businesses, start-ups included, to get the financing they need to start/grow their business.

 

Is the program a great idea? We think so and here's why, so let's dig in.

 

  

THE SBL IS NOT A GRANT!

  

For starters, any connotation you have with grants or handouts need to be dispelled right away. You don't have a ' right ' to receive approval for such financing, so it’s a bad idea if you think you are on the ' auto qualifies ' path. You are not.

 

WHO RUNS THE SBL PROGRAM - WHO CAN APPLY

 

What SBL loans are about is the fact that it's a government-guaranteed financing program that is the cornerstone of at least 7000-8000 businesses every year – for Billions ( yes that’s with a  ‘ B’ ). The government, under ' INDUSTRY CANADA ' guarantees the majority of your loan to Canada's chartered banks.  The general theory around the federal small business loan is that the bank is making a loan under conditions they otherwise might not be able to make to Canadian businesses with revenues up to 10 Million $, which is the size cap for companies wishing to apply for a loan amount.

 

  

BENEFITS OF THE CANADA SMALL BUSINESS LOAN ARE SIGNIFICANT   

 

When you are approved for such an SBL loan financing it's safe to assume you have a good deal. Why?  Simply speaking rates, terms and structures are both attractive and competitive. Loan rates are 3% over prime, financing is repayable at any time without penalty, and the whole issue of personal guarantees is often allayed because of the need to provide only a 25% personal covenant for the loan.  Those sorts of terms, especially when it comes to startups, or franchises, are ultra attractive and simply not available with other more traditional loan financings. A small registration fee is required upon approval, and that amount can actually be bundled into the financing. The interest rate on the program is very competitive and terms and conditions are flexible regarding term and repayment.

 

THE BASICS AROUND CREDIT APPROVAL

 

So how does the bank, which administers the loan program for the government, assess credit criteria? As we said, there are no shenanigans here; it’s a very simple shortlist of criteria. Owners must have reasonable personal credit, they must be able to make a 10% permanent down payment (equity) contribution, and they must have a proper business location backed up by a premises lease.

 

  

WHAT CAN, AND CAN'T BE FINANCED UNDER AN SBL LOAN  

 

By the way, the SBL program in Canada is really one of the only vehicles that allow you to finance leasehold improvements which typically are difficult to finance under normal circumstances. Contrary to the belief of some this is not a working capital or term loan - it finances equipment, leaseholds, and real estate.

 

You also must ensure you supply a business plan and cash flow projection that demonstrates your ability to repay the loan, which has a maximum borrowing of $ 1,000,000.00. Remember that the SBL lender, aka our Chartered banks, are not equity players. They have no upside! They’re just happy that you can make the loan payments out of cash flow from profits.

  

  

CONCLUSION  

  

Most Canadian business owners and managers never seem to feel that business borrowing is straightforward. In reality, we agree its a bit of an art and science ... so seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your SBL small business loan 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

Working Capital Factoring. Your Persistence To Understand This Cash Flow Solution Has Finally Paid Off

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 Getting To Heart Of Working Capital Factoring In Canada

 

Dear John - Working Capital Factoring is not what you thought it was, so I have heard. When I heard that you were disappointed in your working capital factoring facility I wanted to try and provide you with proper information and insights into what will in fact get you the cash flow and working capital that you anticipated with your new Canadian working capital factoring facility.

So John, what went wrong after we initially talked. You wanted business financing that would allow your business to grow in order to be more competitive in your business and grow those profits and sales.  Factoring seemed like a great solution, and you indicated it is not up to expectations.

Let's backtrack a bit. I think at the end of all this you will see a viable way to achieve ALL of your business financing goals!

Here's where we think things went wrong for your firm. You need to understand that factoring came to Canada from the U.S. and Europe. Their method of doing business there is somewhat more ' abrupt ' if we can use that word. As a result you entered into a U.S. model type of factoring with a branch of a U.S.  Factoring firm. Under that facility you do receive immediate cash for your receivables but you found out only later the factor firm more or less bill, collects, and follows up with your customer directly.  Many Canadian business owners don’t like that method of doing business.

So, John, the solution, and I remind you it’s the one we proposed, is a non-notification factor facility. Guess what, under this facility you of course still get same-day cash, but you bill and collect your own receivables. Now we're talking, right!

You just achieved total financing control, you are getting all the cash flow you need, (i.e. not waiting 30-60, or 90 days) and you're able to reinvest in more inventory, sales, etc.

John - you said that you were considering going back to your bank - just remember that all the financing that you need is, in our opinion, not going to be achieved by either a bank term loan or a Canadian chartered bank line of credit. You will have a great interest rate, but your business will not have the cash flow and working capital that is required for your current sales and contracts.

So what's the bottom line John - it is as follows - work with a trusted, experienced, and knowledgeable business advisor - put a working capital factoring facility in place that runs the way you want it to, and then focus on your business growth and let the cash flow and working capital work for you to those goals. Investigate non-notification factoring - It’s a Canadian alternative to everything you didn’t like about factoring, with all the benefits!

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with cash flow 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. 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

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
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