Condo Corp Loan Financing In Canada: Condo Term Loans Make Absolute Sense In Numerous Circumstances

 

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YOUR CONDOMINIUM CORPORATION NEEDS A FINANCE SOLUTION!

CONDO CORPORATION FINANCING 101 -

Surviving the Special Assessment: A Condo Owner's Guide to Unexpected Costs

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the  biggest issues facing business today

ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS  FINANCING OPTIONS?

CONTACT:

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

 

CONDOMINIUM CORPORATION LOANS CANADA

 

Condo corp loan financing is a growing need arising out of numerous situations confronting the condo corporation directors and the owners they represent. 

 

 

 

INTRODUCTION - CONDOMINIUM CORPORATION LOANS  

 

Condo association /Condo corporations can borrow money to fund major repairs and upgrades to the condominium corp - Talk to the 7 Park Avenue Financial team about making this process easy and ensure the proper steps are in place to avoid any complexity around the loan and ensure financing reflects condo fees paid by owners.

 

 

  

BENEFITS OF CONDO CORPORATION LOANS   

 

The condominium corporation has many benefits from taking out a condo loan. The first is maintaining a  healthy reserve fund, which will help them if any project or building unit repairs go wrong.

Maintaining strong finances helps keep the functioning of a condo corp going more smoothly while also protecting investment in unit owners' condominium property values via effective condo corp term financing solutions. Adequate financing via properly structured condo loans eliminates a special assessment and prevents owners from paying a  large lump sum.

 

Repairs and upgrades can be addressed immediately as required without waiting to reserve funds to accumulate.

Financing costs are competitive, and the cost of the financing can be amortized over the life of the project - it's a common sense financing strategy to match the useful life of assets with the term of the financing - that helps minimize the impact on condo fees to the owners.

 

While it may well be that cash and reserves cover needed investment to repair the common property or to address major repairs/upgrades and renovation costs, the condo board and the property management firm must consider borrowing via condo term loans when funding major maintenance et al.

 

INSURANCE

 

In numerous cases, some damages or repairs may be covered by the insurance policy of the condominium corp. This will depend on policy coverage and the types of damages, repairs, and upgrades the board may require.

 

 

 

BREAKING DOWN CONDO FINANCING AND UNDERSTANDING  SPECIAL ASSESSMENTS, RESERVE FUNDS  

 

The financing of Condo corps has long been an underserved market sector for their funding needs for necessary repairs when traditional business banking solutions are not available for providing term loans for the growing demand in this real estate sector via funding of majors repairs to the common elements  Let's dig in on a deep understanding of this subject.

 

 

 

 

WHY DO CONDOMINIUM CORPORATIONS BORROW? 

 

Loans for registered condo corporations make funds available and finance capital expenditures related to major repairs or replacements from things such as plumbing fixtures down through exterior finishes and whatever affects the general living conditions within these premises via replacements, add ons and repairs and alterations.

 

Long-term care and upgrades of existing condominium supply will remain essential to Canada's high-profile housing situation around individually owned units and exploding condo developments on the Canadian landscape.

 

Condo loans work and can assist projects that are either primary residences, vacation homes, or investment properties.

 

 

SPECIALIZED CONDO TERM FINANCING 

 

There are numerous reasons, many of which we will cover for condominiums to seek special financing. Of course, financing is the alternative to depleting the condo corp reserve, or... Heaven forbid, issue a special assessment to each condo owner.

 

WHAT IS  A SPECIAL ASSESSMENT

 

The condo boards and property managers will have to approve a special assessment for any repairs needed if financing is unavailable if the reserve has no or does not have enough money, and when owners pay or have to pay special assessments to replace or repair common property. Owners have a key interest in the ongoing resale value of their property.

 

The condo boards and property managers will have to approve a special assessment for any repairs needed if financing is unavailable or if the reserve has no or does not have enough money, and when owners pay or have to pay special assessments to replace or repair common property. Owners have a vital interest in the ongoing resale value of their property.

 

 

Special assessments are the funding that is required when the condo corp's reserve fund is either unable to bear the cost of a significant repair or upgrade to common elements  - That involves the board of directors of the condo corp levy a specific assessment to individual condo owners to cover the costs of repairs of upgrades - It is common to spread the cost of the repairs and upgrades equally among unit owners relative to their proportionate interest ownership.

 

In any case, while many condominium owners and their management might maintain a positive and healthy reserve, the full depletion of that reserve is highly undesirable.

 

FINANCING CONDO CORPORATIONS  / CONDOCORP TERM FINANCING

 

While good planning, cash flow forecasting, and reserve analysis are the essence of any solid condo mgmt owner/mgmt team, surprises often occur, as they do in any business. That's when a condominium corporation loan might make sense to save the day.

 

Condo repair and upgrade financing is a specialized form of financing. In many cases, the transaction certainly isn’t ' collateralized' in the same manner as a typical business corporate entity might be. So it's clear that solid loan application expertise is required for the condominium corporation to borrow effectively. That ability to translate the condo corps' payment ability into the real world of cash flow is critical.

  

 

 CRACKING THE CODE OF CONDO CORPORATION FINANCING   

 

In many cases, Canadian chartered banks don't offer this type of financing; it's highly specialized, as we have noted. Considering that the individual owners move and the board and condo mgmt company can also be in flux over the years, the term 'specialized finance ' makes tremendous sense.

 

What documents are critical to a solid borrowing plan from a lender's perspective? Key elements include a budget and cash flow forecast, historical and current financials, and specialized docs specific to a condominium, such as a reserve study.  That cash flow analysis is reviewed carefully as with any other regular business operating entity.

 

While in theory (and law!), the condo corp can issue special assessments and ' liens' on the property. Those actions are highly undesirable and not how the boards of condominiums like to operate. By the way, boards that intend to borrow require a solid bylaw to be in place, ensuring the board of directors has full authority to borrow.

 

  

Funding majors Repairs To Common Elements Of Condominium Property 

 

Lenders will also want to ensure proper use and disbursement of funds vis the reserve and operating expenses. Characteristics of a good condo cor loan are that they are for proper repairs warranted in  ' common element' areas. Condominium repair loans are typically structured as term loans with fixed interest rates. Larger projects might be funded in stages via ' progress payments.'

 

Careful care should be taken by the board (and the lender!) to ensure cash outflows match the asset or improvement's useful life or repair.

 

  

 CONCLUSION - FUNDING MAJOR REPAIRS IN THE CONDO CORPORATION  

 

If you're looking for financing for registered condominium corporations and expertise in condo finance for repairs and improvements that bring financial flexibility and health to your condominium corporation, seek out and speak to a trusted, credible and experienced Canadian business financing advisor who has a long successful track record and who can assist you with condo term loans that make sense.

 

Let the 7 Park Avenue Financial team show you how providing tailored financial services and effective condominium corporation financing for Canadian condominium corporations helps and increases the equity/ownership value of your property and the health of condo financials. We're a boutique financial services company that can help you with your economic challenges.

 

   

 FAQ: FREQUENTLY ASKED QUESTIONS /  PEOPLE ALSO ASK / MORE INFORMATION    

 

 What is a reserve fund?

Financing significant repairs to the condominium corporation invoices the spending of reserve funds.

Also called a  ' sinking fund, this is a savings account into which a condominium corporation regularly contributes. The fund is intended to cover the cost of significant repairs or replacements of the condominium's common elements, such as roofs, elevators, boilers, and parking garages. The amount to be saved is typically determined by a reserve fund study, which is an in-depth analysis of all the major components and systems of the condominium, their remaining lifespan, and their  replacement cost.

 

 

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

Acquisition Financing In Canada - How To Finance A Business Acquisition

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YOUR COMPANY IS LOOKING FOR  FINANCING TO BUY A BUSINESS

FINANCING A TAKEOVER VIA  DEBT FINANCING AND CASH FLOW FINANCE

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the  biggest issues facing businesses today

ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS  FINANCING OPTIONS?

CONTACT:

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

 

FINANCING AN ACQUISITION

 

Business acquisition financing of another company, appropriately done, plays a crucial role in helping to grow a business. Profitably!

 

INTRODUCTION

 

Financing your business acquisition with the proper financial planning plays a crucial role in purchasing an established business - Proper financing allows the entrepreneur to expand operations and leverage existing assets.  It is important to understand financing options and the various implications that come with those funding options, and whether they are available for entrepreneurial success in buying a business.

 

 

While there are some common ' go to ' solutions when buyers seek acquisition funding, such as lines of credit, traditional loans, etc., other financing options are available to enhance business operations. Specialized financing via non-bank private lenders is often a final solution, and these alternative solutions come with less strict criteria than those requirements by traditional financial institutions.

 

Bank financing for an acquisition focuses heavily on stable sales revenues, good cash flow, profits, and collateral. In some cases, those aren't always all available!

 

 

DO YOU HAVE THE INFORMATION YOU NEED TO BUY A COMPANY?

 

We're talking about the proper buy-side strategy in acquisition financing in the Canadian market,  whether that's m&a financing, a management buyout, or simply loans to buy a business in Canada. Let's get you to the goal line in your business buyer letter of intent to purchase a business and that final sale and purchase agreement.

 

Your purchase might sometimes be part of a succession planning process in transferring business ownership and a management buyout. Let's dig in on business acquisitions and the various types of acquiring a company with alternatives suited to your specific needs! Think of it as your buying a business checklist from 7 Park Avenue Financial.

 

ESTABLISHING VALUE IS  CRITICAL TO A SUCCESSFUL FINANCING OF A BUSINESS PURCHASE

 

Buyers can use various business valuation methods to determine the target company's value. In some cases, buyers can analyze the amount of time and cost it would take to start a similar business in areas such as technology, sales costs, financing costs, acquiring assets, hiring staff etc.; that is a lot of work!

 

Some purchases can use analytical techniques such as the company's net asset value or compare comparable prices to earning ratios of public companies in a similar industry.  Other methods, such as net present values of future cash flows in the analysis of the financial statements are more technical and might require the help of an experienced business valuation professional,

 

The Harvard Business Review has an excellent article on ' paying too much '  when buying a business - Click HERE for the article.

 

WHAT IS ACQUISITION FINANCE

 

Acquisition finance is all about the different types of capital that can be sourced to buy a business or, in some cases, merge with another. Funds can come from a variety of sources in Canada. Given the potential complexity of any deal, successful acquisitions and financing services will always have a plan attached to them.

 

In most cases, one type of financing may not provide the total solution, so a ' cobbling' together of different financings will ultimately lead to a successful transaction.

 

In some cases, established businesses might be looking for what is known as a tuck-in or bolt-on acquisition - considered for augmenting an existing business.

 

The question? What are the best sources of financing and business capital to complete your transaction based on financial flexibility and the cost of capital? The buyer can focus on the best acquisition financing solution to establish the target company's value.

 

CONSIDERING THE  ' DEBT VERSUS EQUITY ' QUESTION IN BUYING A BUSINESS

 

Financial professionals tell us debt is cheaper than equity  - a reasonable debt level will ensure no risk of diluting owner equity  - Naturally, debt levels are always a concern. Long-term debt can be a challenge to the financial health of a business. The key  benefit of more owner equity in a transaction is that it does not require repayment and will allow a company to assume more debt under the right circumstances,

 

 

WHAT ARE THE KEY WAYS TO FINANCE YOUR TRANSACTION 

 

Sales of business are completed by either a share sale or an asset sale, naturally for public companies, a significant share transaction.  Cash may also fund your transaction, often unlikely in the private sector, given the potential deal size. Most firms are acquired through debt and the cash flow monetization of assets - and in some cases, an acquisition bridge financing solution as a path to a complete transaction.

 

Most transactions are a combination of senior debt via a term loan based on assets or cash flow financing ability, which typically is the bulk of the total solution and complemented by an operating credit line or unsecured mezzanine cash flow loan.

 

Mezzanine loans/mezzanine financing is cash flow-based, and historical and present cash flows are analyzed carefully. Mezzanine finance is unsecured debt and ranks behind other secured lenders, meaning a higher risk level for the ' mezz ' lender.

 

Debt is much less expensive than equity, a financial point not always contemplated by many business purchasers. Cash flow financing, or mezzanine finance, might include a smaller equity component. Mezzanine financing provides additional flexibility to your transaction.

 

Key elements of your acquisition analysis include the target firm's profitability, overall cash flow potential, and the amount of debt it can manage post-acquisition.

 

When a transaction cannot be completed on a 'cash flow ' basis, the ability to assemble a proper asset-based finance solution is key. Asset-based finance - ' ABL' used the key assets of the target company to complete the transaction.

 

Those assets include equipment, real estate, accounts receivable, and inventory.  A strong asset-based will always help in a transaction with more leverage than typical.

 

As a potential business purchaser, you need to focus on financing your deal and converting that purchase price into a successful transaction within proper due diligence in m&a financing.

 

 

 

REASONS FOR PURCHASING A BUSINESS OR FINANCING A TAKEOVER

 

Why would you consider purchasing an existing business?  Reasons vary but are not limited to:

 

- Growing revenues faster

- Expanding into new markets or geographies

- To eliminate some existing costs and therefore increase profits

-  capitalize on new technologies /products/clients

 

 

Naturally, firms can grow ' organically' via various means, such as the introduction of new revenue sources, marketing strategies, and new clients - That takes time, of course, which is part of the appeal of buying another firm, allowing you to reach synergies and economies of scale. In some cases, real estate acquisition loans can be a part of a transaction, requiring additional expertise.

 

Various critical parts of the existing balance sheet can play a vital role in the financial acquisition of your purchase correctly. A solid example of this is to table the issue of a  ' vendor take-back / seller note ' that can alleviate the amount of capital you have to either put in... or borrow.

 

Those elements will shape your final financing structure and your equity investment in the business. That becomes your proof of commitment to your bank or commercial business lender.

 

Naturally, not all sellers are motivated to stay in the deal. Still, a fair vendor take-back note has two great advantages in financing the transition to new ownership  - reducing the amount you need to borrow and enhancing some of the cash flow requirements that a lender might be concerned about.

 

It might be opportune to mention to a seller that, in some cases, a higher sale price can be achieved with a Vendor take-back type deal.

 

The existing accounts receivable must be addressed in transactions we have worked on. Putting some... or all of the existing A/R into the deal may offer particular advantages to you as a buyer.

 

So let's get to the ' nub ' of our issue -  Funds can come from various sources!

 

WHAT FINANCING STRATEGIES AND LENDING SERVICES ARE MOST COMMON IN ACQUISITIONS FINANCING

 

The most commonly used and almost always successful (if done properly!) include these solutions from acquisition financing lenders ->

 

 

 

ACQUISITION FINANCE STRATEGIES IN CANADA / BUSINESS ACQUISITION FINANCING OPTIONS

 

Government Business Loans ( The SBL Guarantee Loan now has a limit of $1,000.000.00 )   Remember that this type of loan only finances equipment and leaseholds, so another form of financing may be required to complete your transaction.

 

Nonetheless, it's a classic small business loan for smaller companies with the help of the Government of Canada.  The federal government loan guarantee allows many small businesses to be purchased successfully - The program is similar to the U.S.  SBA loan under America's Small Business Administration. It provides a lower down payment requirement and competitive interest rates.

 

Borrowers must meet minimum requirements regarding net worth, income, good personal credit scores, etc. Ask the 7 Park Avenue Financial team if this loan program works for your business purchase.

 

The interest rate and flexible payment terms are a key part of the success of this program which is utilized by thousands of entrepreneurs every year. Buying a franchise in Canada is a common use of the Canada Small Business Financing Program. Talk to the 7 Park Avenue Financial team if this loan makes sense for your business purchase.

 

The vast majority of business purchases with government loans tend to be a small businesses or a franchise, given that the term loan portion of the transaction has a limit of 350k. A real estate component is often handled separately from an operating business.

 

Bank Term Loans/ Revolver and lines of credit facilities - These are critical elements of finance to buy a business - Receiving financing through your bank as the financing institution involves understanding the requirements of traditional bank loans to secure the funding you require via a bank financing term sheet. Canadian banks will, of course, strongly emphasize financial covenants and final debt ratios / EBITA calculations, etc.

 

Asset-based loans / leveraged buyouts:  These loans finance all or parts of receivables, inventory, and equipment, as well as provide revolving credit lines for the ongoing business. Asset-based lending via lender financing can help solve some of the traditional challenges of buyouts and acquisitions as an acquisition financing ' lbo model. '

 

Asset-based financing acquisitions are a solid solution for business purchases that don't meet criteria around cash flows. Using the target company's assets, such as accounts receivable, inventory, real estate, and even potentially intellectual property, allows for a business purchase that relies less on covenants and guarantees. Any business acquisition around a solid asset base can use those business assets to unlock capital versus a ' cash flow analysis' type of valuation in due diligence.

 

Utilizing ' ABL ' via leveraging assets is a reliable method to maximize the potential financing needed. Structured or  Leveraged acquisition finance via an asset finance solution can shorten the timeline of your transaction as alternative finance solutions tend to be arranged much more quickly. However, financing rates and fees can be higher than a bank solution.

 

Focusing on the actual value of assets such as accounts receivable, inventories, and equipment maximizes finance potential. Asset-based lending is higher cost but can help you achieve business purchase success.

 

It's essential to consider the share purchase vs asset purchase choice as the transaction has positive and negative aspects for both the buyer and seller depending on which deal closing is agreed upon.

 

Unsecured cash flow loans and Term Loans

 

Franchise Loans (Franchising is a huge part of the Canadian economy)

 

Let's not forget seller financing/owner financing, sometimes known as ' vendor take-back financing ', allows the buyer to reduce the funding required to complete the transaction.  A Properly crafted vendor take-back loan will reduce the amount you are required to finance and are a common way of engineering a successful deal when the seller agrees to participate in your transaction. In some cases, a creative earn-out payment with the seller might be able to be negotiated.

 

Seller financing is, in effect, a deferred purchase price deal.

 

Owner financing, aka a ' seller note, 'can be a very creative way to complete an acquisition - The strategy also helps sellers to sell a business more quickly via their participation in the transaction- Buyers benefit from reduced costs of financing and seller finance strategies often come with more flexible terms and reasonable interest rates.

 

When buying a business, questions should always include whether the seller would help with vendor finance.

 

At 7 Park Avenue Financial, we get many inquiries around  100 percent acquisition financing on an acquisition deal,  which is generally not available in Canada as Canadian commercial lenders/banks, etc., require your proof of personal commitment to the transaction.

 

That equity financing commitment will not be the lion's share of your transaction but still varies based on various factors, including the type of transaction, industry, deal size, and overall perceived credit quality.  A potential solution might be a third-party investor or partner.

 

Large Canadian transactions might consider private equity firms, although this is rarely an option in the ' small business' SME/SMB company regarding a leveraged buyout.

 

CONCLUSION - BUSINESS ACQUISITION LOANS CANADA

 

Acquisition financing is a required tool for buyers looking to purchase a company. Understanding how it works and ensuring you are up to date with various business finance options helps the business owner make informed decisions and allows for leveraging the benefits of different traditional and alternative business financing methods. Whether it's conventional loans from banks, government loans, alternative loans via asset-based lending, or a combination of own equity and seller financing will allow the business purchase to realize financial objectives.

 

Financing is often a factor in the proper preparation of a transaction. If you're focused on obtaining financing and a commitment letter on the acquisition of a business and if you need expert advice on business acquisition and the right financing solutions properly.

 

Speak to  7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with buying and financing a business properly with acquisition debt financing that makes sense. Grow your new business with proper financial solutions to make a successful acquisition.

 

We'll work closely with you to finance an acquisition and determine the best acquisition finance structure and the methods of valuation you might employ to complete your transaction and understand earnings quality to achieve your desired future growth strategy in financing acquisitions.

 

That final capital structure and company recapitalization is your key to entrepreneurial success. In many cases, the more information you have, the better prepared you will be to succeed with a loan to buy a business in Canada when financing a takeover.

 

FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION

 

What is acquisition financing, and how does acquisition financing work?

 

Acquisition finance refers to business capital used to purchase another business via debt and equity finance. The financing provides the resources required to close a transaction between a buyer and seller on favourable terms for both parties. All cash deal transactions are rare in SME acquisitions, and typically, a bank loan /alternative debt funding and owner down payment make up a final capital structure.

 

  

What are the common choices for acquisition financing?  

 Common choices include lines of credit, traditional loans, Government Small Business loans, debt security, and owner financing, and each type of financing requires a risk assessment.

 

  

How can companies secure acquisition financing from traditional banks or specialized lending services?  

 

Companies can apply for loans through traditional banks or specialized lending services by meeting their requirements, such as demonstrating steady revenues and profitability.

  

 What happens to debt in an acquisition?   

When a company acquires, it will either assume the target company's debt on its balance sheet, deduct it from the total sale price, or repay it before closing the deal. The buyer can negotiate with the lender and reduce the target company's debt to lower the total acquisition cost.

 

How does a bridge loan work in acquisitions?

 

Bridge loans are types of acquisition financing acquisition loan that are a means of quick funding to fill a gap until a company can obtain long-term financing or if the transaction requires more equity capital. These are short-term loans for companies to secure and fund a business acquisition or a leveraged buyout with asset backed financing or mezzanine debt, or subordinated debt based on the company's cash flow when there is enough free cash flow to support debt.

 

What is an earnout?

An earnout in the acquisition financing process on target companies is a financing mechanism that provides additional payments to the seller's shareholders if the business achieves specific financial metrics or milestones. An earnout is used when the acquiring company wants to buy the target firm for a lower price, but the seller believes the valuation should be higher based on projected cash flow and profit margins.

In case of an earnout, both parties will agree to the transaction at the lower price, but the seller is guaranteed they will "earn" a portion of sales and profit after the acquisition is closed. The earnout period is typically between 1-3 years but can last up to five years.

 

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

How To Obtain Business Financing In Canada / From Capital to Success: How Debt Financing Fuels Business Expansion

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YOUR COMPANY IS LOOKING FOR  BUSINESS FINANCE SOLUTIONS!

Business Financing: Exploring Debt Financing and Cash Flow Solutions

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the  biggest issues facing business today

ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS  FINANCING OPTIONS?

CONTACT:

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

Direct Line = 416 319 5769

  

The Path to Financial Freedom: Exploring Debt Financing and Cash Flow Strategies

 

Business financing in Canada has never been as important as in recent times. A company can fail in the best of times, whether it's poor finance practices around your existing financing strategy or simply the inability or lack of knowledge around business capital, cash flow, and working capital solutions. At 7 Park Avenue Financial, we believe any firm can benefit from a better overall financing strategy.

 

INTRODUCTION

 

Business financing plays a  key role in how your business grows and operates on a daily basis. One aspect of financing your business is taking on debt - Debt finance works in different ways and has implications around costs and pros and cons around balance sheet debt.  We'll take a look at managing debt and costs and look at cash flow and asset-based lending solutions as well. The question of ' How much debt is right for your company is important - here is an article from the Harvard Business Review on the subject.

 

And boy, have things changed! Long gone are the days when funding a company simply revolved around low-interest long-term bank loans, when approval seemed cumbersome but ultimately successful.

 

HOW DEBT FINANCING WORKS  

 

Debt financing is a business financing mechanism that allows companies to raise capital - and requires repayment of a combination of principal and interest. It differs from equity financing which requires giving up partial ownership in the business. Debt financing is generally regarded as a less expensive form of financing than equity.

 

 
THE COST OF DEBT FINANCING   

 

Taking on debt financing that requires principal and interest payments has a substantial influence on a company's cost of capital - Ensuring the business owner understands the relationship between the cost of debt and how this capital is deployed is key to ensuring ongoing profit of the business.  Also, lenders and owners measure the relationship between debt and equity and the amount of debt relative to the company's capital stack- Lower debt is preferable and helps the company ensure future funding will be available for growth and the financing of day-to-day operations. 

 

7 Park Avenue Financial's vision was founded specifically on that landscape that changed. No secret that these days, not all business borrowers fit the mould of traditional financiers such as the Canadian chartered banks.

 

 

DEBT FINANCING AND THE COST OF FINANCE / INTEREST RATES

 

Safe to say that interest rates play a key role in taking on debt in your business. Overall business creditworthiness will always affect the cost of financing and the lowest rate that can be achieved. The ability of the company to ensure it can maintain appropriate covenants and balance sheet ratios is key to how lenders view debt financing.

The right combination of debt and equity will ensure access to capital and the ability to grow cash flow and maintain ownership and control of the business.

 

 

PROS AND CONS OF DEBT FINANCING  

 

Debt financing has several advantages including the ability to use capital for accelerated growth of the business - Interest payments are a business tax deduction and the lower cost of debt financing is preferred over the owner having to give up equity ownership to raise capital.

The challenges of debt funding include the business risk associated with cash flow not being sufficient to make payments which have several negative consequences.

 

CASH FLOW VERSUS ASSET-BASED LENDING SOLUTIONS

 

 

Many cash-flow financing solutions are available withing the asset-based lending business landscape in Canada. These solutions differ from cash flow-based financing and don't rely heavily on projected cash flows - instated they focus on monetizing the business assets on the balance sheet - accounts receivable, inventories, fixed assets, commercial real estate, etc.  Each business will have to determine which option may be preferred over the other.

 

THE ONLINE LENDER OPTION -  BUYER BEWARE!

Many businesses try online lenders - yet while the applications and loan process is viewed as online, there is a distinct lack of personalization that your company and industry might need. Even worse, the multitude of online lenders confuses the business owner, if not downright deception, in a few circumstances.

In the case of the short-term working capital industry, which evolved out of the U.S. Merchant cash advance loans, many Canadian borrowers have found they can approach and get approved by several lenders.. in effect, they ' stack ' new loans on top of each other

When investigating online solutions, we encourage clients to ensure they are dealing with a trusted, credible and experienced Canadian business financing advisor with a track record of business financial success to eliminate any disastrous financing.

A proven solution towards the path of solid business financing is to analyze short and long-term cash flow needs ( a cash flow plan ) that allow your company to understand where liquidity is needed.

An  ' informed ' business borrower armed with proper knowledge of the types of financing and the cost of their financing needs is the best scenario to strive for. In many cases, your industry will typically benefit from many of your competitors' financing types, which can assist your own firm's funding journey.


While many owners/ managers and entrepreneurs in general focus on sales revenue growth as the key metric to success, that motivation has to be complemented with good cash flow management & financing solutions geared to your cash flow and asset monetization needs.


Sales will drive a lot of your financing choices and will, in many cases, dictate or suggest what type of debt finance or asset monetization you will utilize.  While it's important to be optimistic about sales growth, that same revenue issue can be a source of stress regarding cash flow.


One reason why? Simply because building inventories and receivables and investing in new assets are cash uses, not sources, as our good friends accountants would say.

While cash flow and sales budgets are important  and reflect good management  the real world dictates that  Murphy’s law will often kick in, which might mean:

Large New Sales or Contract Opportunities

Seasonal cash flow needs

Loss of a major customer

 

WHAT IS THE BEST SOLUTION TO FINANCE SALES GROWTH

 

ANSWER:  A traditional or alternative business line of credit ( traditional = non-bank)


1. Canadian Chartered banks


2. Non-bank commercial finance asset-based credit lines



It often takes new/used assets to build and grow a business, i.e. equipment, machinery, rolling stock, technology a la computers, software, etc. In that case, equipment lease financing is your best bet as it conserves cash flow and matches the benefits of the asset in question to cash outflows. From start-up to mega-corporations, 80% of all-size businesses utilize lease-based asset financing.

 
 

BUSINESS FINANCING FOR SMALLER/NEW COMPANIES IN CANADA

Newer businesses and smaller businesses, including startups, should consider the Canadian Govt Small Business Loan - aka the  ' SBL ' loan. That loan is guaranteed by the govt and only requires a 10% personal guarantee against the loan, which can be anywhere up to 1 Million dollars depending on the asset you wish to finance. A good owner personal credit score is required.


Cash flow concerns boil down to liquidity.  The 2nd most liquid asset you have on your balance sheet is receivables. Collecting them promptly and financing them properly is key to business success.


For those firms that can't access or get approval for the amount of business credit line, they need numerous solutions are available, the most popular often being  A/R financing via a ' factoring' or 'Confidential Receivable Financing ' invoice financing program. This solution monetizes sales as you generate revenues - instant cash. Key advantages include instant liquidity and no additional debt on your balance sheet and the ability to forecast cash flow needs.


Businesses in Canada's SME sector (small to medium enterprises) will never have too much cash. Increasing sales, buying assets, and hiring people drain cash- sometimes slowly, other times not so slow!


Some other solid real-world solutions to cash flow and loan needs include:

SR&ED Tax Credit Financing


Sales Leasebacks


Unsecured cash flow loans


Short Term Working capital loans

Mezzanine Financing  ( Unsecured cash flow term loans )

 

 

 

CONCLUSION - UNLEASHING THE POTENTIAL OF DEBT FINANCING AND CASH FLOW FINANCE SOLUTIONS  

 

Debt financing of some amount is a critical tool for companies that want to grow - allowing the business to leverage business capital and maintain control of ownership of the business. Accessing business financing at reasonable rates is always more beneficial than equity financing - but the business owners must ensure repayment and debt load can be managed effectively.

 

Many cash-flow financial solutions and asset-based lending combined can help the business manage finance costs and ensure the relationship between debt and equity is optimal and can help sustain the company's growth ambitions.

 

Businesses can achieve these goals by managing cash flow on a day-to-day basis via cash flow planning and sales projections.

Financing a business in Canada, in ordinary or extraordinary times, takes some time, knowledge and access to funding solutions that are in your firm's best interest. Stay educated and ensure you are working with someone on your side when it comes to maintaining finance solutions tailored to your business health.

 

At 7 Park Avenue Financial, we call that ' Financing With The Intelligent Use Of Experience '!

 

 

  

  

FAQ: FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION   

 

 What is the difference between debt financing and equity financing? 

 

 Debt financing involves borrowing money that must be repaid, while equity financing involves selling ownership stakes in the company. Debt financing allows the company to retain ownership control without diluting ownership while leveraging capital.

 What are the advantages of debt financing? 

 

Debt financing allows businesses to leverage a small amount of capital for growth, the interest payments on business loans come with tax deductibility, and the company retains ownership control. It is also generally less costly than equity financing.

 What are the risks associated with debt financing? 

 

One risk of debt financing is that interest must be paid to lenders regardless of business revenue and financial performance via the company's expected cash flows.  This can be particularly challenging for businesses with inconsistent cash flow. Additionally, taking on too much debt can increase the cost of capital and reduce the value of the company when wrong investment decisions are made.

 How does cash flow-based lending differ from asset-based lending? 

 

Cash flow-based lending relies on credit terms around projected future cash flows of a company to determine loan eligibility, whereas asset-based lending considers the balance sheet assets as collateral. Cash flow  lending is suitable for companies with strong projected cash flows but limited physical assets, while asset-based lending is often preferred by companies with valuable assets but potentially tighter margins or unpredictable generated cash flows around cash flow projection.

 What are the factors to consider when choosing between cash flow-based and asset-based lending? 

 

 When deciding between cash flow-based and asset-based lending to borrow money, companies should consider their future cash flow stability, availability of collateral, and their specific financing needs around sustainable growth  Cash flow-based lending may be faster and require less collateral, but asset-based lending can provide access to larger loan amounts based on valuable assets. Companies with consistent cash flow and strong balance sheets may opt for asset-based lending, while those with strong projected cash flows but limited assets may prefer cash-flow-based lending.

 

 How does debt financing affect cash flow

Debt financing can have both positive and negative effects on positive cash flow:

Positive Impact: Debt financing can provide a boost to cash flow in the short term. When a company secures a loan through debt financing, it receives an infusion of capital that can be used to fund operations, invest in growth opportunities, or meet immediate financial obligations. This injection of funds can help improve cash flow by ensuring that there is sufficient liquidity to cover expenses and maintain a healthy working capital position reflected in the cash flow statement

Negative Impact: On the flip side, debt financing requires regular interest payments and eventual repayment of the principal amount. These financial obligations can put a strain on cash flow, especially if the company's revenue streams are inconsistent or there are challenges in meeting the scheduled payments. The outflow of cash for interest payments can reduce the amount of available cash for other operational needs, potentially affecting the company's ability to invest in growth initiatives or respond to unexpected expenses.

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

Alternative Financing Business Loans In Canada: A Smarter Working Capital Solution For Growth Financing ?

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YOUR COMPANY IS LOOKING FOR  BUSINESS ALTERNATIVE  FINANCE SOLUTIONS!

Breaking Boundaries with Alternative Finance: The New Face of Business Loans

 

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the  biggest issues facing business today

ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS  FINANCING OPTIONS?

CONTACT:

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

 

BUSINESS FUNDING OPTIONS IN CANADA OUTSIDE THE TRADITIONAL FINANCE SYSTEM 

 

Business Loans in Canada come from ' traditional ' or alternative loans and working capital sources.

 

  

INTRODUCTION TO WORKING CAPITAL / CASH FLOW SOLUTIONS VERSUS TRADITIONAL FINANCING  

 

Around the time of the 2008 financial crisis, the nature of business financing and access to capital changed in Canada - a lot .. and can we not even talk about the Pandemic, please! Traditional lenders in Canada consolidated and somewhat retreated from SME financing in Canada. Alternative lenders have stepped in over the last number of years to fill the void, offering  Canadian business financing solutions that are accessible when compared to a traditional business loan.

 

For any business, large or small, access to business capital is critical - As a company's needs evolve, it is more evident than ever that non-bank business financing can provide every type of finance a business needs to grow. Let's dig in on the types of working capital and cash flow solutions you need.

 

Working capital and cash flow loans exist in more abundance than ever. So if you're a business owner or financial manager looking for help with small business financing outside of other companies' traditional thinking, let's dig in on types of business financing that make sense for your company!

 

  

  

UNDERSTANDING ALTERNATIVE FINANCE AND THE ROLE OF  TRADITIONAL LENDING VERSUS ALTERNATIVE FINANCING    

 

Alternative financing offers a large variety of Canadian business finance solutions; these include short-term working capital loans,  receivable financing solutions, non-bank business lines of credit, asset-based financing, and tax credit financing for r&d of film projects.

 

Traditional lending often entails complex application processes and strict requirements, with approvals primarily based on credit rating. Conversely, alternative financing offers a more accessible route with a streamlined online application process, faster turnaround, and a focus on a business's potential, making it an attractive option for businesses seeking swift, reliable funding.

 

 

Historically business owners and financial managers with SME COMMERCIAL FINANCE   asset finance and working capital needs worked through traditional channels, almost always' the bank. '  These firms traditionally don't have access to bank loans or the capital markets/venture capital. Given up on equity crowdfunding? So have many others! And don't forget equity funding will always demand a small percentage of your business - if not more!

 

Competition and efficiency in the Canadian lending markets have brought several new and different types of alternative capital solutions to your business - the challenge is knowing which is the right good option for your company and how one accesses capital in this manner.

 

UNSECURED LINES OF CREDIT

 

The golden solution in the past has been 'unsecured bank lines of credit ', focusing on companies with proven cash flow, great balance sheets, and good history for companies and owners. The problem is that thousands of firms, maybe yours? ... can't meet all those requirements, as logical as they might seem (if you're a banker).

 

Numerous alternative cash flow sources have grown steadily in Canada - one of the fastest-growing is in the area of receivables finance/invoice finance/invoice discounting,  where the ability to use your sales as collateral via business A/R overall credit rating is the appeal.

 

  

FINANCING OF WORKING CAPITAL  

 

Some great solutions are derived from this method of invoice factoring for business owners via the financial channels of a third-party factoring company for accounts receivable. For example, historically, your clients had to be notified of this process and financing. Not so fast, though! Utilizing Confidential Receivable Finance for unpaid invoices - acting as almost a bridging loan that allows you to generate immediate cash flow as your business sells and generates revenues while giving you the option as your firm takes responsibility to bill and collect with no notification to other parties as customer pay.

 

 

A factoring company, via accounts receivable factoring/ invoice financing, is, in fact, one of the most popular funding as an example of non-bank lenders who provide alternative funding.  Unlike banks, each  A/R  financing solution has its own benefits, so talk to the  7 Park Avenue Financial team about what suits your business model when you're looking for easier access and a streamlined approval and application process.

 

EQUIPMENT LEASING SOLUTIONS

 

When acquiring assets for your company (equipment, technology, vehicles, software, etc.) Equipment leasing is a bit unique in that it embraces both traditional forms and alternative finance needs. Almost any asset can be financed with considerable flexibility regarding monthly repayments, amortizations, prepayments, down payments, etc. Interest rates are very competitive regarding equipment lease financing - as well as it is a solid alternative to a bank loan with more stringent credit requirements in the traditional financial system.

 

That is what small business owners want to hear!

 

Clients often ask us why we are so bullish on alternative financing solutions. For a starter, don't get us wrong - Bank financing in Canada has a low cost, has a lot of flexibility, and provides virtually unlimited access to capital. Still, when it comes to unsecured business loan requirements, many firms can't meet bank criteria for borrowing.

But when ' the bank says no, '   working capital loans and asset monetization strategies from alternative lenders might work.

 

But reality sets in when many business folks realize that banks prefer ' upstream ' - namely, more significant deals with high-quality credit companies. Top experts tell us that one recent survey indicated over 40% of firms in the small to medium enterprise sector in Canada don't fully qualify for bank financing.

 

 

 ALTERNATIVE  FINANCE PRODUCTS / SOLUTIONS  

 

Alternative lending solutions are available for a broad range of business finance needs. Each type of financing suits a specific need around cash flow and working capital that help to fund business growth and profits.

 

P O financing

 

Tax Credit Financing (sr&Ed / film and TV)

 

Leasehold Improvements Financing

 

Condominium Corp Finance Loans

 

Management buyouts/acquisitions

 

Commercial Property Finance

 

Non-bank Asset-based business lines of credit

 

Bridge loans against real estate and equipment

 

Working capital short-term loans - Initial loans are typically based on a percentage of your sales financial history - Online lenders/peer-to-peer lending sites often offer this solution, also known as a merchant cash advance. Your business agrees to repay the loan on repayment terms that are on a typically fixed installment basis. Good owner credit history/credit score required.

 

It's no secret that organizations such as the CANADIAN FEDERATION OF INDEPENDENT BUSINESS.  Companies consistently cite that the SME COMMERCIAL FINANCE  needs of the Canadian economy always focus on the lack of and access; to.. more capital!

   

The Power of Alternative Lending: Empowering Businesses   

 

 

Many business owners and financial managers find their firms turned down by traditional bank financiers and are sometimes unaware of the criteria for SME borrowing in Canada when they want quick access to funding.

 

Small and medium-sized businesses must understand that traditional banks type financing will always revolve around the ' infamous ' 5 C's of business credit -

 

 

  

THE 5 C'S OF SMALL BUSINESS FINANCING APPROVAL   

 

Character

Capacity

Capital

Collateral

Conditions

 

Sometimes, you may want to ensure you have a solid business plan. The 7 Park Avenue Financial team prepares business plans that meet and exceed bank and commercial lender /alternative lenders' requirements. Startup funds and startup funding, in general, are difficult to access if you are not adequately prepared.

 

 

  

CONCLUSION - ALTERNATIVE BUSINESS FUNDING OPTIONS 

 

Canadian small and medium-sized business in Canada needs access to reliable sources of working capital - When conventional financing is not available and timelines to access traditional funding are long Canadian businesses can access alternative lending solutions that provide flexibility and ease of access to financing.  Alternative finance solutions are a compelling and needed alternative to traditional funding to support the growth of a business.

 

The bottom line?  Your business has finance alternatives for alternative lending solutions versus traditional financing for a financial product suited to your needs.  Business finance for small businesses in Canada will always be a challenge - but solutions do exist.

 

Speak to 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with business loans and working capital solutions that make sense for your company and industry.

 

FAQ: FREQUENTLY ASKED QUESTIONS

 

What is alternative finance?

.

Regulated banks and similar financial institutions are great for many businesses. Still, the criteria they impose on smaller firms often can be too much to handle regarding bank loan requirements for business. Alternative lending refers to the need for other financing options versus traditional financing options so small companies may thrive and prosper in their respective markets without being suppressed by an unfair playing field favouring larger enterprises with more resources than these small and medium-sized businesses and startups have access to presently.

 

Alternative finance is a well-utilized commercial financing vehicle for available funding when companies can't raise funds based on their trading history. Alternative finance/ structured finance refers to non-bank financing via p2p lending, 3rd party commercial lenders / accredited investors, hedge fund managers, etc., who lend money..typically at higher interest rates and who view this as an alternative investment in alternative asset classes.

 

 What is alternative financing for small businesses?

Alternative financing refers to non-traditional methods businesses can use to obtain funding versus a traditional bank loan. These methods deviate from traditional financial institution such as standard bank loans and traditional business financing, including merchant cash advances, invoice factoring, or an online line of credit. They are primarily utilized by small- and mid-sized businesses looking for flexible, fast, and more accessible funding solutions via alternative business lending.

 

How does alternative financing compare to traditional bank loans?

Unlike traditional bank loans, alternative business financing offers quicker approval times, less stringent credit requirements, and a more streamlined application process than conventional bank loans. While traditional loans can take weeks or months to process for a business looking for a small business loan, alternative funding sources often approve and deliver funds within a few business days. However, alternative financing can have higher interest rates and shorter repayment terms than traditional loans.

 

Why is alternative financing becoming more popular among small businesses?

Alternative funding for small business loans is growing in popularity due to its flexibility and accessibility compared to traditional bank financing. Small businesses often face challenges obtaining traditional bank loans, like rigorous credit checks, long approval times, and high collateral requirements. Alternative financing provides a solution by offering various lending products, including asset-based loans and invoice factoring, focusing on the overall business performance rather than just credit history.

 

What types of alternative financing options are available for small businesses?

A wide range of alternative business loans and financing options are available for small businesses. Some of the popular ones include merchant cash advances, where companies receive a lump sum in exchange for a portion of future sales via the working capital loan based on an annual revenue calculation; invoice factoring, where businesses sell their unpaid invoices to a lender for immediate cash; business lines of credit, allowing firms to borrow as needed; and asset-based loans, using a company's assets as collateral to secure the loan.

 

What factors do alternative lenders consider when approving a business for a loan?

The alternative lender will look at various factors beyond business and personal credit scores. Alternative business lending criteria can include time in the business/industry, monthly sales, cash flow, and overall health. In many cases, alternative business lenders use technology to evaluate these factors quickly and efficiently, making the application process faster and simpler than traditional methods.

 

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

SR&ED Tax Credit Financing : Your Cash Flow & SRED Loan 'How To' Primer

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YOUR COMPANY IS LOOKING FOR CANADIAN SR&ED TAX CREDIT FINANCING! 

Revolutionizing Cash Flow with SR&ED Loans: A Game Changer for Canadian Companies

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the biggest issues facing businesses today

                              ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

                  EMAIL - sprokop@7parkavenuefinancial.com 

 

From Tax Credits to Immediate Cash: The Magic of SR&ED Loans

 

 

SR&ED tax credit financing allows owners/financial managers to fully explore the cash flow potential of Canada's SRED program. 

 

SRED financing is a financing process that allows a business to access the cash for their sr&ed tax credits before the government refund arrives, which in many cases can take many months - That whole process goes by several names - ie sr&ed financing, sr&ed loans, and even sr&ed factoring as your claim is, in effect, a government receivable. Let's dig in

 

INTRODUCTION

 

Canada's Scientific Research and Experimental Development (SR&ED) program has been a benefit for thousands of companies every year as these companies take advantage of the sr&ed federal tax incentive program - It is of course the Canadian government's way of encouraging businesses in Canada to work on research and development (R&D) projects within Canada.

 

The challenge within the program is that businesses face a cash flow challenge as they spend on r&d and then wait to receive their tax refunds due to government delays around claim approval, a potential claim audit, and review, etc - Naturally PSAC CRA strikes never help also!

So the Sred loan process changes that cash conundrum into a solid financial tool that solves the cash flow challenge around research and development.

 

WHAT IS THE SR&ED LOAN  AND HOW DOES THE SRED FINANCING PROCESS WORK?

 

SR&ED loans are a  truly innovative financing solution that allows a business to beat the slow release of refundable tax credit refunds by the government - aka    Canada Revenue Agency (CRA).

 

So how difficult is it to finance your SRED claim?  It involves a very typical business financing application, as well as a full backup for your SRED claim, including who prepared it, details of any previous year's submissions and approvals, etc.

 

 

The actual sr&ed loan process could not be easier - A  simple application process around the company information, as well as information on your actual sr&ed claim, is all that is required.  The vast majority of companies in Canada hire' sr&ed consultants' to write and prepare their claims.  Knowing your claim is prepared by an experienced and credible sred consultant simply enhances both approvals of your claim by CRA, as well as the same time enhancing its ability to be

financed.

A company can choose various financing options around funding sred claims - they include funding claims before they are filed, financing filed claims on a one-time basis, or arranging for timely disbursements depending on cash flow needs,

 

KEY POINT - The collateral for the claim is the actual refund itself, no payments are made during the loan period - and claims are typically financed at 75% of the claim amount - Companies receive the final 25%, less accrued financing costs when the claim refund is paid by the government.

 

Talk to 7 Park Avenue Financial on how you can receive the lowest financing rates in Canada for your sred refund.

 

Whether your business is a first-time, or multiyear claimant everyone is in the same boat - waiting for the refund cheque. Occasional audits of either your technical claim or the financial aspect of the claim can further prolong your receipt of funds.

 

In talking to many clients we can safely say that most firms who have a commitment to R&D capital probably could put those funds to alternative uses.

 

 

BENEFITS AND USES OF SRED LOAN FINANCING 

 

The uses of SR&ED loans go well beyond basic cash flow needs - In the majority of cases, it allows businesses to fast-track and complete their research and development - thereby enhancing the valuation of the company which is so critical in the early stages of a business.

 

Opportunities that arise in the interim can be taken advantage of, and business owners love the fact that sr&ed finance is non-dilutive in nature - that has a great appeal to the entrepreneur attempting to build value and maintain ownership.

 

Simple concepts such as hiring additional technical staff can add to larger claims and greater business success.

 

 

Bridging the Gap: How SR&ED Loans Are Driving Canadian R&D Forward 

 

 

Clients we meet use SR&ED refunds for working capital, buying new equipment, reducing payables, and of course also furthering their R&D enhancements. In essence, you're enhancing and continuing to expand your business.

 

Therefore as powerful a tool, as an SRED claim is, the reality is that it itself can create short-term cash flow problems. Those challenges are on top of the ones Canadian business owners and financial managers face every day, slow receivables, demanding payables, opportunities to purchase more inventory, or in some cases invest in equipment and long-term fixed assets.

 

How then does monetizing your SR&ED claim address your overall working capital and cash flow position?  Simply that you can monetize your claim as soon as you file it, or even while you're preparing the claim. That's called an SR&ED accrual or SRED credit line facility.

 

SRED, aka SR&ED tax credits, are financeable! So your ability to finance your claim simply allows you to receive approximately 75% of your claim today in the form of an SRED bridge loan. And remember, that's not additional debt on your balance sheet, since the SRED loan is in fact offset or collateralized by the full value of your actual SRED refund. 

 

Talk about kick-starting cash flow - you're receiving cash for non-repayable refundable tax credits under the program.

 

Even if your firm is experiencing financial challenges you are still very much in the position of being able to discount, or in effect factor your SRED claim, because that is the asset that supports the financing. Many firms that look to SRED Loans for cash flow are also start-ups in many cases, or at a minimum, early-stage firms - in all industries.

 

An SRED cash flow loan can be completed in a week or two assuming your full ability to provide backup on the claim, info on your firm, etc. It's a very basic process.

 

CONCLUSION - THE SR&ED LOAN BENEFIT

 

SR&ED loans are a solid solution for any business in Canada focusing on r&d and wishing to address the cash flow challenges that come with that investment - SRED loans bridge that critical gap between executing your r&d project and waiting for your tax credit refund - Whether your company is established, or a startup let sted tax credit financing alleviate cash flow pressures around the large amount of r&d you are spending. These short-term bridge loans bring no long-term debt to the balance sheet and come at competitive financing costs much less than other financing solutions such as long-term longs or short-term high-interest working capital loans.

 

Call 7 Park Avenue Financial,  a trusted, credible, and experienced SRED finance expert who will no doubt help them accelerate the financing of sr ed credits for cash management - ending the waiting game!

 

FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION

 

 What is the sr&ed loan process? 

 

The sr&ed loan process involves the company detailing basic claim preparation on  r&d activities on the research project - That process, often via an sr ed consultant, includes technical reports and summaries,  as well as supporting documentation on eligible expenditures around the technological innovation in the project.  The sred loan application is a basic loan application based on the collateral of the sred refund itself and comes with competitive rates compared to many forms of financing.

After basic due diligence around the company and the claim which typically takes a few days, a term sheet is provided to the borrower.  Loans are typically in the 75% range of claim or accrued sred work values and the loan is collapsed and repaid in full to the commercial lender/ financial institution  when the sred refund arrives - Businesses can also take advantage of advance funding for claims  for their financing needs, prior to filing  the formal claim at  financial year end with their corporate tax return

 

What is the Sr&ed Program? 

The Scientific Research and Experimental Development (SR&ED) program is a Canadian tax incentive program for Canadian firms that is designed to encourage businesses of all sizes and in all sectors to conduct research and development (R&D) in Canada. These tax incentives come in three forms: an income tax deduction, an investment tax credit (ITC), and, in some cases, a sr ed refund.

 

 

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