Construction Manufacturing Equipment Financing – Options for New and Used Equipment

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YOUR COMPANY IS LOOKING FOR CONSTRUCTION MANUFACTURING EQUIPMENT FINANCING

OPTIONS FOR NEW AND USED EQUIPMENT HEAVY EQUIPMENT FINANCING

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

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Construction Equipment Financing | 7 Park Avenue Financial

 

The Role of Construction Equipment Financing in Canada

Construction Manufacturing Equipment Financing plays a considerable role in the Canadian economy. Business owners and financial managers such as you want to ensure they have the best leasing and financing options available to them – It has been proven that financing equipment via leasing is very cost-effective.

 

Benefits of Matching Lease Terms with Equipment Use

One of the many essential features of such financing is the ability to match the lease term with your expected use and the residual value of the equipment.  Generally, lease financing for used and new manufacturing equipment can be arranged for terms varying from 3 to 5 years.

 

 

Understanding the Economic Life of Assets 

 

No one knows better than the business owner what the useful expected equipment life of the asset will be, and we encourage clients to match the lease financing transaction term with the asset's economic life.  The reality is of course, that trucks/rolling stock and  construction manufacturing assets  / heavy duty equipment have significantly longer useful expected values – (as compared to assets such as  technology and computers!)

 

 

The Importance of Consulting a Lease Financing Advisor 

 

We encourage clients to work with a trusted, credible, experienced lease financing advisor. The benefit of such knowledge can save you many thousands of dollars based on the overall rate, term and structure of your lease transaction.

 

Comparing Financing Options: Leasing vs. Loans

There are other financing options when it comes to acquiring such assets – those options could include a government small business loan or a term loan from banks. While these might have a lower rate to the overall transaction, they come with much more stringent credit criteria – heavy emphasis is placed on your firm's balance sheet and income statement. Leasing, in general, places a larger emphasis on the expected value of the asset during the term and at the end of the lease.

 

 

Financing Additional Costs and Leveraging Existing Assets 

Many customers don’t realize that some of the additional costs related to the acquisition of used and/or new construction manufacturing equipment can also be financed via leasing companies – these include maintenance, installation, shipment, etc. That’s a massive cash flow and working capital benefit.

 

  

Sale Leasebacks   

 

In some instances, your firm might already own such assets, and you might want to consider leveraging them through a sale-leaseback for additional cash flow and working capital. That is an excellent financing strategy that many firms have taken advantage of over the last year, as cash flow and working capital availability tightened significantly during the global credit crisis of 2008 and 2009 during the COVID-19 pandemic of 2019. Owners adopted a strategy of leveraging their asset equity to stay liquid and competitive.

 

 Lease Financing as a Cash Flow Strategy 

Many financial managers view lease financing of such assets as a solid cash flow strategy; you minimize payments and match them to the overall benefits of the equipment you are acquiring.

 

 Conclusion: The Importance of Strategic Lease Financing Planning 

 

Both loans and leases offer distinct advantages and financial flexibility when it comes to financing equipment.

With loans, you're actively building equity with each payment, and by the end of the repayment period, you own the equipment outright. This mode of financing also allows for the depreciation of the asset for tax purposes, and the equipment stands as an asset on your balance sheet, enhancing the financial standing of your business. Generally speaking, a high credit score is required for bank loans and term loans for financing assets.

 

Another advantage is that there are no constraints on how much you can use the equipment in terms of hours and wear. Essentially, installment payments mean you're not just paying for usage, but also accumulating ownership.

 

On the other hand, leasing is particularly beneficial for businesses looking to reduce initial costs. Typically, lease payments under a lease contract are lower than loan installments, making it a cost-effective short-term option.

 

Instead of tying up equity in machinery, businesses can allocate their funds to other operational areas. The essence of leasing is that you're paying for the use of the equipment, and once the lease term concludes, you have the flexibility to either return the equipment or buy it. This flexibility extends to replacing machinery, as you can easily return and upgrade to newer models at the end of a lease, ensuring your business always has access to the latest equipment without the hassles of ownership.

 

 Heavy Machinery Financing And Leasing - Loans Canada 

 

 

Call 7 Park Avenue Financial,  a trusted credible and experienced business financing advisor. Focus on which benefits of lease financing are most important to your firm. Structure and acquisition that makes sense from a cash flow, rate, and term structure based on the asset's value and your current financial condition. That is solid business planning for growth.

 

  

FAQ:  

 

What is construction equipment financing?

Construction equipment financing refers to the various financial products and services that allow businesses to acquire construction machinery and equipment loan options for their job site without paying the full amount upfront. Instead, they can lease or finance the equipment, paying for it over a set period, often with interest. Often 100% financing is available on most equipment and heavy machinery, so no large down payment is required for the right equipment selected by the borrower.

How does leasing construction equipment differ from purchasing it outright?

Leasing construction equipment allows businesses to use the machinery for a specified period without owning it. At the end of the lease term, they can choose to return the equipment, purchase it, or renew the lease. Purchasing equipment outright means the business owns the asset immediately, bearing all the ownership responsibilities. Leasing for construction companies can offer more flexibility and might be more cost-effective in the short term, especially for equipment that quickly depreciates or becomes obsolete via tailored loan payments/lease payments.

What factors should businesses consider when leasing and buying construction equipment?
 

Businesses should consider several factors, including the equipment's expected lifespan and technological relevance, their current cash flow, the tax implications of leasing versus buying, the total cost of ownership (including maintenance and potential resale value), and their long-term equipment needs. Additionally, the flexibility of updating equipment and the potential impact on their balance sheet might influence the decision.

Are there any additional costs besides the equipment's price in construction equipment financing?

Yes, depending on the financing or leasing agreement terms, there can be additional costs in heavy equipment leasing - Along with interest rates on financed amounts, service and maintenance fees, insurance costs, and potential penalties for early lease termination or missed payments. Some agreements might also include provisions for additional expenses related to equipment delivery, installation, and training.

Can businesses finance used construction equipment, or is it limited to new equipment?

Businesses can typically finance both new and used construction equipment via a heavy equipment loan or lease in the construction and manufacturing industries. Private sales are not allowed, so financing is limited to dealers . The terms, interest rates, and duration might vary based on the age and condition of the used equipment. Financing used equipment can be a cost-effective solution for businesses that do not require the latest models or for those looking to maximize their budget. However, ensuring that any used equipment is in good working condition and meets the business's needs is essential to borrow money for used equipment.

 

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

How Does Asset Based Lending Work?

 

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YOUR COMPANY IS LOOKING FOR  AN ABL ASSET BASED CREDIT LINE FACILITY!

The Future of Business Financing in Canada: Asset-Based Lending

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?

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

EMAIL - sprokop@7parkavenuefinancial.com

 

 

The Power of ABL Facilities: Guide to Asset Credit Line Solutions in Canada | 7 Park Avenue Financial 

  

Unlocking the Power of ABL Facilities: A Guide to Asset Credit Line Solutions in Canada  

 

 

Introduction

 

In alternative financing, Asset-Based Lending (ABL) facilities stand out as a robust solution for Canadian businesses across the spectrum—be it startups, SMEs, or large corporations.

 

Notably, despite ongoing debates in leading financial publications like the Globe & Mail and Financial Post about the state of business credit in Canada, ABL has proven to be a beacon for those struggling to meet the stringent criteria set by traditional financial institutions for working capital borrowing needs.

 

This article aims to demystify ABL facilities, emphasizing why they're increasingly becoming the go-to resource for savvy Canadian business owners.

 

 

What is ABL and Why Does it Matter in Canada?

 

ABL, or Asset-Based Lending, involves consolidating various business assets into a single credit facility. This unique arrangement accommodates new ventures and is a hit among growing and mature companies.

 

Despite the prevailing perception that Canada is flush with capital, the reality at 7 Park Avenue Financial reveals a different story: Businesses frequently approach us in search of feasible financing solutions.

 

The Canadian Context

 

Canada certainly ranks higher regarding financial stability in the grand scheme of global economies. Yet, the needs and complaints of Canadian business owners can't be ignored. ABL is a versatile tool, enabling operational finance and facilitating the acquisition of competitive businesses by leveraging existing assets for more capital.

 

The Advantages of ABL Over Traditional Lending

 

Traditional lending avenues like banks often fall short when addressing businesses' varied needs. They impose a gamut of prerequisites, from solid balance sheets and profits to collateral, which many companies find challenging to fulfill.

 

The Allure of ABL

 

The popularity of ABL financing has surged because it concentrates more on your business's tangible assets and revenue streams rather than exhaustive paperwork and financial history. It's worth noting that in the U.S., ABL accounts for nearly half of all business credit lines!

 

Its growing prevalence in Canada underscores its effectiveness as an innovative business finance solution.

 

The Core Differences: The 'Naked Truth'

 

The first significant advantage of ABL is the higher margin of assets, allowing for an elevated level of borrowing. This is particularly beneficial for inventory, which traditional lenders may overlook. Secondly, the asset based line of credit focus focus shifts from cash flow covenants to asset valuation, thereby making it more accessible to a broader range of businesses in Canada.

 

Operational Flexibility and Reporting in ABL

 

Asset based lines of credit offer unparalleled flexibility in accommodating the fluctuating financial needs of your business. However, it's essential to maintain detailed monthly reports on the company's assets eligible accounts receivable, inventory levels, physical assets,  and sales to sustain the ABL facility. This reporting framework also gives businesses insights, aiding in more informed decision-making.

In certain cases, intellectual property may be included in the facility, as can commercial real estate.

 

Conclusion

 

Asset-based lending could be your way out if you find yourself handcuffed by traditional financing options.

As a solution tailored to diverse needs, ABL focuses on leveraging your existing assets rather than restricting you with inflexible criteria.

 

To fully understand the ins and outs of ABL financing, call  7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor -we're ready to offer you the unfiltered truth about how ABL can unlock new growth avenues for your business.

 

FAQ

 

  

What is Asset-Based Lending (ABL)?

Asset-based loans (ABL) are a form of financing where your business assets, such as inventory, receivables, and equipment, serve as collateral for a  revolving line of credit. This allows you to maximize your borrowing power based on your assets rather than traditional credit criteria.

 

How does ABL differ from traditional bank loans?

Traditional bank loans as the primary banking relationship often require a strong balance sheet, good credit history, and even personal guarantees as well as financial covenants. In contrast, an asset based loan focuses on your tangible assets such as eligible receivables as the primary basis for financing, allowing for higher borrowing levels when a business draws funds,  and with more flexibility.

 

Is ABL only for large corporations or can small businesses also benefit?

 

ABL is beneficial for businesses of all sizes. Asset based lines of credit can be customized to meet your specific financing needs, whether you are a startup, a growing SME, or a large corporation.

 

What types of assets can be included in an ABL facility?

The ABL facility asset credit line can include different assets for eligible collateral, from accounts receivable and inventory to equipment and real estate. This diversified approach to collateral gives you a broader borrowing base for firms with substantial assets that can't meet bank credit criteria that often come with a financial covenant list!

 

Highly liquid assets such as receivables and inventory receive a higher borrowing margin, almost always higher than bank margins if they have an existing line with a bank or other commercial finance firm.

 

Are there any reporting requirements for maintaining an ABL facility?

Yes, asset based lenders usually require you to submit regular reports on various business metrics like inventory levels, sales, and accounts receivable. This helps the lender assess your current financial state and empowers you to understand better and manage your business.

 

 

How quickly can I get approved for an ABL Facility?

The speed of approval for an Asset-Based Lending facility can vary depending on the lender's requirements and the complexity of your financial situation. However, since ABL focuses on tangible assets, the approval process is often faster than traditional loans, sometimes taking as little as a few business days.

 

What are the interest rates for ABL compared to traditional loans?

 Interest rates for Asset-Based Lending facilities may be slightly higher than those for traditional bank loans due to the perceived risk associated with asset-based financing. However, the added flexibility and speed of access to capital often make ABL a more attractive option for businesses needing quick liquidity.

 

Are there any industries where ABL is particularly advantageous?

Asset-based lending is versatile and can benefit various industries, from manufacturing and retail to healthcare and technology. Businesses that have a significant amount of tangible assets like inventory or machinery will find ABL particularly advantageous.

 

Can ABL facilities help businesses going through restructuring or turnaround?

 

Asset-based lending can be an ideal solution for businesses undergoing restructuring or a turnaround. Traditional lenders may shy away from such scenarios due to perceived risks, but ABL focuses on assets, providing the necessary capital to navigate through challenging periods.  

 

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

Unlocking the Secrets of Canada's Small Business Loan (SBL) Program

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YOUR COMPANY IS LOOKING FOR  A GOVERNMENT-GUARANTEED LOAN! 

ACCESSING THE GOVERNMENT OF CANADA SMALL BUSINESS FINANCING PROGRAM

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

Financing and cash flow are the biggest issues facing business 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

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

Understanding  Government-Guaranteed Loans Through Canada's SBL Program |  7 Park Avenue Financial

 

Guide to Navigating Government-Backed Loans in Canada

 

 

Government-guaranteed business loans in Canada are unique and vital for financing small businesses in Canada.  (The program defines  ' small ' as any new business with fewer than 10 Million dollars of actual or projected revenue)

 

UPDATES ON SOME CHANGES TO THE PROGRAM

 

Recent changes to the small business financing loan program are intended to ' enhance' the program's level of attractiveness, eliminating some of the ' design flaws' associated with the program in the past on eligible purchases and types of financing.

 

1. Purpose: Helps small businesses obtain loans from financial institutions by sharing risk with lenders.

2. Historical Data: Over the last ten years, 53,000 CSBFP loans have been received, totalling $10 billion.

3. Eligibility:

   • Businesses operating in Canada with annual revenues under $10 million.
   • Farming businesses are not eligible.

4. Max Loan Amount: $1.15 million per borrower.

   • Up to $1,000,000 for term loans; max $500,000 for leasehold and equipment improvements; maximum $150,000 for intangible assets and working capital.
   • Up to $150,000 for lines of credit.

5. Application Process:

   • Handled by financial institutions.
   • Discuss business needs with a financial officer at a bank, caisse populaire, or credit union.
   • Loan registered with Innovation, Science and Economic Development Canada (ISED) after approval.

6. Usable Financing:

   • Term loans cover land, buildings, equipment, leasehold improvements, intangible assets, and working capital.
   • Lines of credit for day-to-day expenses.

7. Interest Rates:

   • Term loans: Lender's prime rate plus 3% (floating) or mortgage rate plus 3% (fixed).
   • Lines of credit: Lender's prime rate plus 5%.

8. Registration Fees:

   • 2% fee on term loans based on total loan amount.
   • 2% fee on lines of credit based on the total amount authorized.
   • Fees payable by the borrower to the lender and can be financed.

9. Financing Terms:

   • Option for unsecured personal guarantees.
   • Must take security on assets financed or other business assets.

 

 

WHO SPONSORS AND ADMINISTERS GOVERNMENT LOANS IN CANADA

 

Financial assistance via an ' SBL Canada '   financing comes under the jurisdiction of INDUSTRY CANADA.  Somewhat misunderstood by many potential borrowers is that the program is delivered ' by our Canadian chartered banks. 

 

WHO USES GOVERNMENT LOANS IN CANADA

 

The successful funding of start-ups and smaller existing businesses in Canada is a cornerstone of the program's success - with up to approximately 8000 businesses being funded annually. 

 

The government, via Industry Canada's CSBF program, guarantees a large part of the financing you receive under the loan proceeds. The maximum loan amount has been increased to 1 Million dollars, although equipment and leasehold improvements can be financed. The ability to finance real property improvements is a huge bonus for small business owners or their financial managers.

 

SBL'S ARE NOT A CASH FLOW OR WORKING CAPITAL LOAN

 

Contrary to popular belief, the loan can now be a cash flow loan or for working capital costs and needs. The asset categories are equipment, leaseholds, and real estate / commercial property.

 

FARM BUSINESSES HAVE AN ALTERNATIVE GOVERNMENT LOAN PROGRAM

 

Farming businesses in Canada have a separate version of the program suited to the agriculture industry for farms seeking loan and credit approval under the same government guarantees as the SBL program.

 

 

 

ONE CRITICAL KEY TO BEING SUCCESSFUL IN GOVERNMENT LOANS! 

 

A part of the challenge for being successfully funded under the program is that our banks tend to interpret the loan guidelines differently. So, finding an experienced banker or Canadian business financing advisor is critical to sourcing the right financial institutions.

 

A Business plan is also required - 7 Park Avenue Financial prepares business plans that meet and exceed bank and commercial lender requirements.

 

 

WHAT DO SBL LOANS FINANCE?

 

Commercial loans in Canada for start-up or simply smaller businesses are often difficult to obtain. So, the ability to finance equipment, leaseholds, computers, software, and even real estate under the program is a tremendous boon to Canadian borrowers in the SME (small to medium enterprise) market. In the 2022 program change, intangible assets can also be funded.

How much financing is required should be carefully assessed by the borrower.

 

PROGRAM RATES AND TERMS AND CONDITIONS FOR GOVERNMENT LOANS

SBL loans in Canada are structured as term loans. Amortizations are generous and typically in the   3-7-year range after receiving loan approval.

 

Interest  Rates under the program are only 3% over the prime rate based on monthly lump sum payments required,  which provides an attractive interest rate alternative to those firms seeking alternative financing, which would typically come at much higher rates. This business loan has a registration fee, and many start-ups are well-suited to apply for this type of financing.

 

 

While government-guaranteed loans (“SBL " ) are typically used for legally incorporated companies, it is also available for registered partnerships and proprietorships.

 

RISK SHARING BENEFITS THE BORROWER

 

Given that the bank and the government share the loan risk, the program is also very attractive to entrants into the Canadian franchise industry.

 

HOW TO QUALIFY FOR GOVERNMENT LOANS IN CANADA

 

Positively approaching the loan submission helps guarantee financing success. You or your advisor should ensure a business plan or executive summary and information on mgmt, an opening balance sheet, and a cash flow projection are available. (Loans are repaid from cash flow!) 7 Park Avenue Financial prepares business plans that meet and exceed bank and lender requirements.

The business owner's good personal credit history and personal credit score must also be satisfactory when qualifying for the program. Is your business eligible? Talk to the 7 Park Avenue Financial team today!

 

CAN YOU BUY A BUSINESS WITH THE GOVERNMENT SBL LOAN?

 

Don't forget that you may buy a complete existing business via SBL Canada loans. Many franchise financing loans are done under the program - a huge benefit for new franchisees.

 

 

 CONCLUSION 

Small business financing is a challenge - no argument there! When traditional bank or commercial financing is not attainable, speak to  7 Park Avenue Financial, a  trusted, credible and experienced Canadian business financing advisor who can help you eliminate those ' design flaws ' of financing to ensure loan success.

 

FAQ 

 

What is the primary purpose of the Canada Small Business Financing Program (CSBFP)?

The primary aim of the CSBFP is to make it easier for small businesses in Canada to secure loans from financial institutions. The program helps eligible small businesses access capital for various operational and growth-related expenses by sharing the financial risk with lenders.

 

Who is eligible to apply for a loan under the CSBFP?

Businesses operating in Canada with an annual gross revenue of $10 million or less are eligible to apply for the CSBFP. However, it's worth noting that farming businesses do not qualify for this program; they have a separate program called the Canadian Agricultural Loans Act Program.

 

How much financing can a business secure through the CSBFP?

A qualified borrower can secure a maximum loan of $1.15 million through this program. Out of this, term loans can go up to $1,000,000, with no more than $500,000 allocated for leasehold improvements or equipment purchases. For intangible assets and working capital, the limit is $150,000. In addition, lines of credit can go up to $150,000. The amortization period is negotiable for term loan structures for assets purchased.

 

What kinds of expenses can be financed through the CSBFP?

The CSBFP is quite versatile in what it allows you to finance. You can use term loans to buy or improve land, buildings, new or used equipment, and even leasehold improvements. Intangible assets and working capital costs, up to $150,000, are also financeable. For lines of credit, the funds can be used for day-to-day operating expenses of the business.

 

How are the interest rates and fees structured for CSBFP loans?

The interest rates for term loans and principal payments can be floating or fixed. For floating rates, the maximum chargeable is the lender's prime lending rate plus 3%.

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

Inigo Montoya’s Guide to Cash Flow Financing & The Business Working Capital

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 YOUR COMPANY IS LOOKING FOR CASH FLOW FINANCE SOLUTIONS! 

Revolutionize Your Business with these Canadian 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?

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

EMAIL - sprokop@7parkavenuefinancial.com

 

 

 

Bridging the Cash Gap: Working Capital Solutions for Canadians

 

 

Have we got a story for you? It's not even a story; it’s a fairy tale. A fairy tale? Truth be told, it’s been told already - we are talking about the movie 'THE PRINCESS BRIDE ', which some might associate with kids, but it's actually a film on a few different levels.

 

A character in the movie is Inigo Montoya. So, Inigo Montoya? The Princess Bride?  Oh, yes and cash flow financing! What in the heck could they have to do with each other? Let's explain.

 

In the movie, our friend Inigo is known for always saying, 'I do not think it means what you think it means'. That's our premise today on 'cash flow'. With apologies to Inigo Montoya.

Introduction: The Intricacies of Cash Flow and Working Capital

 

In Canadian business financing, "cash flow" circulates like a common currency. Alongside its close companion, "working capital," these terms can be interpreted in myriad ways, often confusing to Canadian business owners.

As a critical aspect of business health, understanding cash flow dynamics is vital for Canadian entrepreneurs and financial managers.

 

Why Cash Flow Matters: The Lifeline of Your Business

 

One cannot overemphasize the importance of cash flow in assessing the financial well-being of your enterprise. Whether you're a startup in Toronto or an established company in Vancouver, operating cash flow is a fundamental metric, second only perhaps to profit, in determining your business success.

 

  

Profit Vs. Cash Flow: Two Sides of the Same Coin - The Cash Flow Paradox: When Profit Doesn't Equal Liquidity  

 

While profit and cash flow are key indicators for Canadian businesses, they serve distinct purposes and are evaluated differently. Net income/profit  may give you an annual overview, but cash flow provides a more immediate picture of your financial state, especially concerning operational challenges as you try and forecast cash flow

 

Have you ever found yourself in a situation where your business is profitable yet lacks cash? This common quandary confuses many, as you'd assume that a profitable operation should naturally result in abundant cash flow. However, that's not always the case. Liquidity depends on your ability to convert sales into tangible cash inflows

 

Navigating Working Capital Challenges in Canada

 

So, what are your options when facing liquidity or working capital issues to achieve a positive net cash position in Canada? Multiple solutions can help you turn your receivables, revenue, and inventory into usable capital. These can be categorized as follows:

 

Working Capital Financing Options In Canada

 

• Receivable Finance: Invoice financing is a  strategic way for the business owner / financial manager  to turn your accounts receivable into instant cash -  Collateral of Personal assets is not required in a/r financing solutions as there is less emphasis on personal credit score

• Inventory Financing: Leverage your inventory for additional working capital.

• Sale-Leaseback Finance: Convert your owned assets via a  leaseback business cash flow loan while maintaining their use.

• Asset-Based Lending: Utilize all your business assets, including machinery and real estate, to secure business loans under a revolving business line of credit or term loan -  Interest payments are made on only funds that are drawn down under the facility at any given time depending on how much cash the company needs

• Confidential Invoice Finance: Maintain client relations while financing based on unpaid invoices. Companies achieve all of the benefits of cash flow factoring with Confidential receivable financing while being able to bill and collect their own invoices

• Tax Credit Monetization: Turn your tax credits into immediate working capital via cash generated from the funding of your claim before or after filing in lieu of waiting for the refund. SR&ED tax credit financing allows businesses to use their sr&ed claim as collateral for a short-term bridge loan their sred claims.

• Working Capital Term Loan: A more traditional route involves securing a term loan to boost your working capital.  Cash flow loans can also be achieved via short-term working capital loans that are readily accessible but come at a higher cost to borrow money - They are also known as an ' MCA" Merchant Cash Advance and are available from online lenders/cash flow lenders offering merchant cash advances based on historical cash flows /sales revenues  - installment loans based on anticipated future cash flows and sales

 

Conclusion: Business Cash Flow Financing & Working Capital Solutions for Canadian Enterprises

 

When navigating the complexities of cash flow and working capital, talking to a  Canadian business financing advisor is prudent when it comes to understanding cash flow lending solutions.

 

They can offer tailored solutions aligning with your circumstances and business goals to eliminate negative cash flow positions

By better understanding and leveraging your cash flow and working capital options, you position your Canadian business for survival and long-term business growth success.

 

Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor

.

  

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

 

  

 

 

What is cash flow, and why is it crucial for my Canadian business?

Cash flow is the net amount of cash or cash equivalents moving into and out of your business. It is critical because it directly impacts your ability to cover operational costs, make investments, and grow your company. Without healthy and positive cash flow, even profitable businesses can face financial distress.

 

How does working capital differ from cash flow?

Working capital refers to the operational liquidity available to your business. It is calculated as Current Assets minus Current Liabilities. While cash flow measures your business's overall financial health, working capital focuses on short-term obligations. Both are vital, but they serve slightly different purposes.

 

What options are available for managing cash flow challenges in Canada?

Canadian businesses have multiple options for cash flow financing solutions, including a "cash flow loan", receivable finance, inventory financing, sale-leaseback finance, asset-based lending, confidential invoice finance, tax credit monetization, and traditional working capital loans. The ability to anticipate a company's expected cash flows via budgeting and cash flow forecasting is critical.

 

What risks do I face if I ignore cash flow and working capital management?

Neglecting cash flow and working capital management can lead to liquidity issues, which can impact your ability to pay suppliers or employees, stifle growth, and even result in bankruptcy. A company's expected cash flows should be able to focus on current liabilities on a day-to-day basis via effective cashflow finance solutions -  a cash flow projection is always useful

 

Is it advisable to consult an expert for managing cash flow and working capital?

Companies such as 7 Park Avenue Financial can offer tailored solutions for financing cash flow specific to your industry and current financial state. This expert guidance can help you navigate short-term challenges and strategize for long-term success via a thorough analysis of the company's cash flow statement and  expected sources and uses of funds

 

What are  the Key Components of Cash Flow Statements

Business Cashflow  finance management extends beyond a simple income and expense balance. Your cash flow statement is complex with three critical elements: financing, investment, and operations. Each of these factors uniquely affects your actual and future cash flow, and complications can arise if any one aspect is neglected as the business focuses on positive cash flows and meeting financial obligations

 

What are business cash flow loans?

 

Business cash flow loans offer flexibility to address various cash flow requirements for companies. While not solely based on sales revenue, a business's income holds significant weight in the application process. These loans are for purposes, including acquiring inventory, meeting payroll, expanding the workforce, bridging seasonal revenue gaps, and managing operational costs such as rent and insurance.

Typically accessible through online lenders, chartered banks, or business credit unions, these loans involve a review of a company's financial statements and sales projections to determine the borrowing capacity based on anticipated future sales.

Payment structures vary; they can be in the form of business term loans or credit lines, while some could be structured as short-term working capital loans/  merchant cash advances which are repaid directly from sales. Interest rates and repayment terms differ based on the loan type and lender, with repayment periods generally shorter and interest rates higher compared to traditional business loans.

 

What is invoice finance / aka "factoring"

Invoice financing is a short-term loan option enabling business owners to borrow against their unpaid invoices. Factoring services provide advances of approx. 90% on outstanding invoices, particularly beneficial for businesses facing extended customer payment terms like 30, 60, or 90 days.

Upon invoice payment by the customer, the lender disburses the remaining balance to the business owner after deducting fees. Interest rates typically range from .75 % to 1.5 % per month, plus an additional fee linked to the time taken for customer invoice settlement. Loan sizes depend on the total worth of outstanding invoices.

Unlike traditional credit assessment, eligibility for invoice financing centers on customer payment history rather than the business's creditworthiness. Hence, this option suits companies with limited creditworthiness but good creditworthy clientele.

 

What is the Difference Between Cash Flow Lending vs. Asset-based Lending

 

Cash flow lending and asset-based lending are distinct approaches to providing financial support to businesses. Cash flow lending involves assessing a company's recent financial performance and cash flows to determine the loan amount, while asset-based lending focuses on the value of a company's assets such as accounts receivable, inventory, and real estate.

In cash-flow lending, lenders analyze the company's financial history to decide the loan size, while asset-based lenders evaluate tangible assets to assess risk. Asset-based lending often has higher interest rates and terms compared to cash-flow lending and unsecured bank financing.

The application process for asset-based lending is typically more intricate due to the need for a proper assessment of the business's asset values in areas such as receivable, inventory, fixed assets, and commercial real estate if the latter is being considered.

  

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

Business Cash Flow Financing & Working Capital Solutions for Business |7 Park Avenue Financial

The Funding Solution You've Been Waiting For: ABL Financing

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From Collateral to Cash: How Asset-Based Loans are Revolutionizing Business Financing in Canada

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Unlocking Your Business Potential: The Power of  ABL Finance Loans | 7 Park Avenue Financial

 

Beyond Banks: Discover the Flexibility and Power of Asset-Based Lending Canada

 

  

Introduction :  

 

ABL financing is distinct from traditional bank lines of credit and offers unique advantages to businesses, particularly regarding creative financing via  collateral and liquidity 

 

The arrival of asset-based financing is a significant change in Canadian Business financing - with this method of funding a business's working capital needs becoming more popular every day.

 

Conventional business financing relies heavily on a company's cash flow, which suits many firms. However, businesses possessing valuable assets can explore an alternative asset-based lending (ABL) approach for expanded financing opportunities with fewer restrictions for companies unable to meet traditional financing requirements demanded by banks.

 

  

Comparing Cash Flow-Based and Asset-Based Loans:  

 

1. Secured Nature: Both cash flow-based and asset-based loans are secured, offering collateral for lenders. That collateral is documented and secured in a different manner when assessing ABL facility financing versus traditional bank loans.

2. Loan Underwriting Factors:

   • Cash flow-based loans: Banks evaluate a company's cash flows for loan terms.
   • Asset-based loans: The ABL lender considers balance sheet assets for determining loan terms.

3. Suitability of Cash Flow-Based Loans:

   • Ideal for companies lacking significant assets, such as service-based firms.
   • Suitable for entities with higher margins. Canada does not have an ' ABL  bank ' per se- the role is filled by a commercial finance firm - some banks have ABL divisions

4. Advantages of Asset-Based Loans:

   • The asset based loan is beneficial for companies with strong balance sheets but narrower margins and cash flow from operations
   • Suited for businesses with unpredictable cash flow patterns.

5. Credit Management Efficiency:

   • Both loan types are secured and offer competitive  credit terms based on overall credit quality
   • Suitable options for businesses aiming to effectively manage credit costs.

 

ABL allows businesses to leverage various assets, such as accounts receivable, real estate, intellectual property, and even brand names, as collateral. This facilitates access to essential capital. If a business has substantial assets, ABL offers significant financing possibilities with a flexible structure that permits better decision-making than other loan types.

 

Innovative setups like "first in, last out" (FILO) tranches can enhance borrowing potential via asset based lenders and the abl loan agreement

 

Choosing ABL depends on factors like a company's requirements, business nature, current status, and future plans.

 

  

Key Elements of ABL Financing:  

 

ABL financing has two crucial elements: collateral and liquidity. Collateral refers to the assets a business uses to secure the loan, while liquidity refers to the availability of cash or readily convertible assets. These elements make ABL financing stand out from traditional bank credit lines.

 

Asset Base: ABL financing revolves around the value of a business's assets. The quality and quantity of these assets determine the credit facility that can be obtained through asset-backed funding - the assets determine a borrowing base that adjusts with sales and assets as the business grows.

 

The process of obtaining ABL financing is different from the more familiar cash-flow financing.  ABL lenders focus on asset value, which acts as collateral for the loan.

 

Accounts receivable are the first assets considered, typically prioritizing recent ones (within 90 days of invoicing or no more than 90 days overdue). Other assets, including inventory, machinery, real estate, and intellectual property can be bundled into the facility.

 

ABL  borrowers undergo due diligence to assess their assets to determine their quality and quantity. The due diligence and potentially required appraisals establish eligible collateral and the corresponding advance rates.

 

ABL offers an advantage by reducing the constraints typically seen in cash-flow lending, such as mandatory debt service coverage and leverage levels. Unlike cash-flow lending, where a drop in sales could trigger financial covenant breaches, ABL's asset-backed approach minimizes lender concerns about defaults based on the borrowing base of assets.

 

Businesses need only maintain a basic liquidity level to avoid specific financial covenants when they choose asset-based lending.

 

  

Traditional Bank Perspective:  

 

Traditional banks often focus not just on assets but also on a business's financial health, income statement, ratios, and covenants when they fund unsecured loans and bank lines of credit.

On the other hand, secured loans via  ABL financing prioritize the value and liquidation potential of the company's assets.

 

  

Suitability for Different Business Stages Of A Business:   

 

ABL loans via asset-based financing are suitable for various stages of a business, such as startups, periods of hyper-growth, financial recovery in a turnaround, or times of crisis management. This versatility makes ABL financing an appealing alternative for a total working capital solution.

 

Determining  The Credit Facility Size: The amount a business can borrow through ABL financing is based on the true value of its assets. These assets may include more liquid assets such as accounts receivable, inventory (raw materials, work in progress, finished goods), and fixed assets/real estate if applicable.

 

Asset Valuation and Liquidation Expertise: ABL financing providers are experts in valuing and liquidating assets, distinguishing them from traditional banks. This expertise can significantly increase borrowing capacity.

 

Example of Increased Borrowing Capacity: An example is provided where a wholesale client leveraged a modest bank line of credit into a much larger borrowing facility using the expertise of the ABL lender to assess the actual liquidation value of inventory. Inventory Financing has traditionally been difficult to finance.

 

 

Cost and Long-Term Viability: 

 

ABL loans can vary in cost compared to traditional bank facilities. Long-term viability is a common question. ABL financing is often presented as a bridge solution that could be used for a year or two before transitioning back to a traditional financing structure.

 

  

The Flexibility of ABL Financing:   

 

ABL financing is lauded for its flexibility in handling special situations, seasonality, over-advances on a revolving line, and different credit qualities. It is also used to finance acquisitions. Talk to the 7 Park Avenue Financial team to determine why ABL finance might suit your firm's working capital business needs.

 

 Key Takeaways: 

 

1. Asset-Rich Companies: Businesses with substantial assets, even if experiencing cash flow variations, that require significant capital for growth and operations are solid candidates for asset finance

2. Diverse Range of Businesses: A broad spectrum of companies can benefit from ABL due to their asset-rich nature.

3. Manufacturing Businesses: Companies like commercial truck trailer manufacturers facing economic slowdowns that impact demand. Capital is essential to navigate volume dips and modernize production.

4. Distribution Businesses: Wine and liquor wholesalers experience seasonal sales fluctuations. Having a line of credit helps manage inventory gaps and provides flexibility for stocking up before peak seasons.

5. Retailers with Inventory: Retailers possessing valuable inventory but facing earnings volatility. ABL becomes valuable during unforeseen disruptions, such as the COVID-19 pandemic, offering liquidity beyond standard cash flow financing based on asset values

6. Enhancing Online Presence: ABL assists retailers in funding operations and online improvements during challenging times, bolstering their ability to adapt.

7. Liquidity and Flexibility: ABL provides a welcome bonus by enabling businesses to access their line of credit without prior lender approval. This flexibility proves valuable for strategic moves like acquisitions, joint ventures, and dividends, as long as payment conditions are met.

 

 

CONCLUSION -

 

Asset-based lending offers numerous advantages for businesses, including the flexibility to support various growth initiatives. Whether you're looking to diversify services, launch new products, enter new markets, or maintain your team, this financing method provides quick and adaptable funding based on your company's sales revenues and tangible assets.

 

Unlike traditional bank loans that focus on cash flow stability, asset-based lending allows you to leverage assets like accounts receivable, inventory, and equipment to secure a loan, giving you greater freedom to use your credit for business growth. Talk to the 7 Park Avenue Financial team, a trusted, credible and experienced Canadian business financing advisor who can assist you with your business loan and cash flow needs.

 

  

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

 

What is asset-based lending, and how does it differ from traditional bank financing?

 

Asset-based lending (ABL) is a financing option that uses your business's assets as collateral. Unlike traditional banks, which focus on your financial picture, ABL lenders assess the value of your assets and their potential for liquidation, resulting in increased borrowing capacity.

 

1. Stable Small and Mid-Sized Companies: Typically, small and mid-sized companies possessing valuable physical assets are frequent users of asset-based borrowing.

2. Large Corporations as Occasional Borrowers: Even large corporations might turn to asset-based loans for short-term requirements due to specific circumstances and the need to maximize borrowing capacity

Reasons for Large Corporations' Asset-Based Borrowing:

1. Cost and Time Constraints: The expenses and extended duration associated with issuing new shares or bonds in capital markets may deter large corporations from those options.

2. Urgent Cash Needs: Immediate cash demands, like funding significant acquisitions or unexpected equipment purchases, drive large corporations towards asset-based borrowing. Time sensitivity plays a crucial role in these cases.

 

 

Can ABL financing benefit my business during different growth stages?

 

Absolutely! ABL loans cater to diverse business phases, whether you're a startup experiencing rapid growth or dealing with financial challenges. The flexibility of ABL financing ensures it's suited for your unique situation.

 

How is the borrowing amount determined in ABL financing?

 

The borrowing amount in ABL financing is based on the actual value of your assets, including accounts receivables, inventory, and fixed assets. This approach maximizes your borrowing potential and allows you to tap into the true worth of your business assets.

 

 

Is ABL financing a short-term solution, or can it support long-term growth?

 

ABL financing can be both. While it can serve as a bridge solution for a year or two, it's important to note that ABL is increasingly becoming a "new traditional" financing option. Many successful corporations use ABL as a long-term solution to unlock growth potential.

 

How does ABL financing's expertise in asset valuation benefit my business?

 

ABL lenders are experts in valuing and liquidating assets. This expertise enhances your borrowing capacity, as it considers the actual liquidation value of your assets, often resulting in significantly higher credit limits than traditional bank financing.

 

Can my business qualify for asset-based lending if it doesn't have tangible assets like real estate or inventory?

 

Yes, asset-based lending considers various types of assets, including accounts receivable and machinery.  Unlike cash flow loans, If your business has valuable receivables or equipment, inventory and other assets you are eligible for ABL financing.

 

What industries typically benefit the most from asset-based lending?

 

 Asset-based lending can benefit many industries, including manufacturing, distribution, retail, and services. It's not limited to any specific sector and is more about the value of your assets than your industry.

 

 Are there any risks associated with asset-based lending that I should be aware of?

 

Like any financial arrangement, asset-based lending has considerations. One potential risk is maintaining asset value, which directly impacts borrowing capacity. It's essential to work with experienced lenders to ensure proper management. Many challenged and troubled companies utilize ABL as part of their turnaround plans.

 

 

How does the application process for asset-based lending differ from traditional bank loans?

The application process for asset-based lending typically focuses heavily on the value and quality of your assets. Traditional bank loans often place more emphasis on credit history and financial statements. ABL lenders evaluate your asset base to determine creditworthiness.

 

 

Are there specific reporting requirements when using asset-based lending?

 

Asset-based lending often requires more frequent reporting on your assets and financials. Lenders want to monitor the health of the collateral that secures the loan. Clear communication and transparency are crucial to maintaining a successful ABL arrangement.

 

 

 

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Why Wait for the Government? Fast-Track Your SR&ED Tax Credits Now

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Double the Benefits: Financing Your SR&ED Tax Credits in Canada

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        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 

 

Double the Benefits: Financing Your SR ED Investment Tax Credits in Canada

 

 

Introduction: Financing CRA ( Canada Revenue Agency )Tax Credits Through Canada's SR&ED Program: A Strategic Guide for Canadian Businesses

 

 

Financing your SR&ED (Scientific Research & Experimental Development) tax credits is a strategic move offering dual advantages to Canadian businesses conducting research and engaging in research and development activities.

This article provides a  guide to securing SR&ED loans, effectively transforming your tax credits into immediate cash flow to fuel your business operations as part of the government's work to encourage Canadian businesses to grow.

 

The Working Capital Dilemma in SR&ED Tax Credits

 

Canadian businesses involved in SR&ED activities often grapple with a working capital challenge.

Your SR&ED claim essentially represents locked-up cash flow waiting for government approval. The dilemma often becomes: "Do I wait for the government cheque that could take up to a year, or do I finance my SR&ED claim for immediate cash flow benefits?"

 

The Strategic Importance of Financing Your R&D Tax Credits

 

Investing in R&D activities enhances your competitive edge. By financing your SR&ED claims, you can instantly unlock these funds and put them to work for your business. Whether :

Launching a new product,

Boosting your sales activities,

Investing in more research

 

immediate access to cash gives your business an unparalleled advantage.

 

  

The Mechanism Behind SR&ED Financing  

 

Financing your SR&ED claim essentially means monetizing it, often referred to as "discounting," "selling," or "factoring" the claim.

 

Even if you haven't booked your SR&ED claim as an account receivable, if the claim is legitimate, it stands as a valid receivable that can be converted into immediate cash flow and working capital.

 

  

Financing SR&ED Claims in the Canadian Financial Landscape  

 

Canadian banks and mainstream financial institutions generally don't deal with SR&ED financing, which requires specialized knowledge and expertise.

 

The good news? The entire SR&ED financing process can be quick, often wrapping up within a few weeks. Here’s a simplified roadmap:

1. Verify your eligibility for the SR&ED program.
2. Prepare and file your claim. (Note: Claims can be financed before they are fully filed.)
3. Assess the loan-to-value ratio (usually around 75%) and understand that these loans function as bridge loans, requiring no periodic payments.

 

 

Timing Is Everything: When to Opt for SR&ED Financing

 

The adage 'time is money' couldn't be more pertinent here. If you're close to receiving your government cheque for an already filed claim, SR&ED financing may not be your best option.

 

However, if your claim is still in the pipeline or pending an audit, monetizing your SR&ED claim becomes a strong consideration, especially if you require immediate working capital.

Companies should also consider SR&ED accrual financing, allowing businesses to fund accrued R&D-eligible expenses before they file their sr ed claim and income tax return.

 

  

Utilizing Your SR&ED Financing for Business Growth  

 

By financing your SR&ED claim, you are essentially seizing the opportunity cost of capital. Most businesses can channel this immediate cash inflow towards generating sales, increasing profitability, or re-investing in R&D, thus creating a positive cycle of growth and innovation.

 

Conclusion

 

The SR&ED program is one of Canadian businesses' most lucrative support mechanisms, annually doling out billions in non-repayable grants. Financing your SR&ED claim mitigates working capital challenges and fosters an environment for continuous growth and competitive sustainability.

Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can help you leverage your share of this incredible resource by considering SR&ED financing as a key pillar in your cash flow financial strategy.

 

 FAQ: MORE INFORMATION  / PEOPLE ALSO ASK  

 

 

What is SR&ED Financing?

SR&ED Financing is a specialized financial service that allows Canadian businesses to secure a loan against their Scientific Research & Experimental Development (SR&ED) tax credits under the sr ed tax incentive program. This provides immediate access to cash, which can be used to fuel business operations for work done in areas of scientific or technological uncertainty.

 

How does SR&ED Financing differ from regular loans?

Unlike traditional loans, SR&ED Financing is specifically designed to convert your pending SR&ED tax credits into immediate working capital. These are often structured as bridge loans with no periodic payments, with repayment expected when the tax credits are issued and paid out by the government.

 

Can I finance my SR&ED claim even if it is not yet approved?

 

One of the critical benefits of SR&ED Financing is that you don't have to wait for government approval of your claim.

 

You can proceed with financing even if the claim is still in the filing process, which means you get quicker access to your funds. Some companies choose to reduce their income tax payable via the sr ed credit.

 

How quickly can I secure an SR&ED loan?

 

The entire SR&ED financing process can be completed within weeks, making it a quick and efficient way to boost your business's cash flow. Talk to 7 Park Avenue Financial about fast-tracking your sred funding.

 

What are the benefits of SR&ED Financing for my business?

 

SR&ED Financing provides immediate access to cash you can invest into your business. This could mean launching a new product, increasing your marketing activities, or funding more R&D. It essentially helps you seize the opportunity cost of capital, aiding in business growth and maintaining a competitive edge.

Are There Any Industry-Specific Limitations for SR&ED Financing?

 

SR&ED financing is not restricted to any specific industry regarding tax incentives. Whether in technology, manufacturing, healthcare, or any other sector, if your Canadian business is involved in scientific or technological advancement via research and development activities in areas of scientific or technological uncertainty that qualify for SR&ED credits, you are eligible for SR&ED financing.

 

What Factors Influence the Loan-to-Value Ratio in SR&ED Financing?

 

The loan-to-value ratio for SR&ED financing typically hovers around 75%, although this can vary based on a few factors. These could include the credibility of your business, the quality of your basic research  R&D activities, and the reliability of your SR&ED documentation. These factors determine the specific loan-to-value ratio for your case.

 

How Does SR&ED Financing Impact My Business Credit Score?

 

SR&ED financing usually has a neutral or positive impact on your business credit score. Since these are specialized loans with an expected repayment from government-issued tax credits, they are often structured to minimize risk, making it easier for businesses to manage their credit score effectively.

 

Are There Any Hidden Costs or Fees Associated with SR&ED Financing?

 

SR&ED financing for Canadian controlled private corporations generally involves straightforward terms, but consulting with specialized financial experts is crucial to understanding potential fees or costs. Always read the fine print to understand the complete financial implications, including any administration fees, service charges, or early repayment penalties that may apply.

 

Can I Use SR&ED Financing for Multiple Projects Simultaneously?

 

You can use SR&ED financing for multiple qualifying R&D SRed tax credit projects simultaneously.

 

Each project must meet the SR&ED investment tax credit program criteria when they conduct research . Your loan amount and terms would then be calculated based on the total value of all qualifying projects, allowing you to maximize your working capital and invest in various business growth opportunities via the sr ed tax credit.

Efforts and expenses in sales promotion quality control and market research areas do not qualify for a SR ED refund, as new or improved material in commercial production. The focus should be on the work to advance scientific knowledge in your industry via systematic investigation. Many firms engaged in software development file sr ed claims.

 

What is Tax Credit Financing In Canada

 

1. Tax credits are financial incentives offered by the Government to eligible corporations.
2. Intended to spur research, market share growth, higher earnings, and productivity.
3. They are divided into refundable and non-refundable tax credits.
4. Refundable credits are available even if a business has no income tax payable.
5. Activities eligible for tax credits include R&D, infrastructure upgrades, digital expansion, sustainability, and market diversification.

How Do Tax Credits Differ from Other Incentives?

1. Tax credits reduce a business's tax liability.
2. Tax deductions lower a business's taxable income.
3. Tax credits are more targeted incentives compared to deductions.

Who Qualifies for Tax Credits?

1. Businesses must meet specific eligibility criteria during the fiscal year.
2. Required to file tax credit forms with year-end income tax return.
3. Option for an Advance Ruling from the Canada Revenue Agency (CRA) to verify eligibility.

How Does Tax Credit Financing Work?

1. Tax credits are typically disbursed annually after tax filing.
2. Financing companies provide financing via bridge loans as early access to these credits.
3. Future tax credits can serve as collateral for financing.
4. Funds can be used for growth and other eligible activities.

Financing SR&ED Tax Credits

1. The SR&ED program is the largest federal R&D tax incentive in Canada for financing cra tax credits  sred financing
2. Provides over $3 billion to 20,000+ claimants annually.
3. Supports analytical and experimental activities and development projects.
4. Canadian-controlled private corporations (CCPCs) can get a 35% refundable tax credit on eligible expenses up to $3 million.
5. Additional provincial tax credits may also be available for R&D activities within specific provinces

 

 

 

 

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