Guess what? Whether you are a start up, an established business, growing like crazy, or just trying to survive and stay competitive - you need business working capital financing. That is why one solution might be accounts receivable factoring in Canada.
We hasten to point out that while receivable factoring, factoring accounts due to your firm is often used by firms that are unable to get traditional financing that some of Canada largest corporations utilize this method of working capital financing to grow . Larger more sophisticated firms might call it securitization, or make it a component of an asset based lending facility, but, bottom lines it is still called factoring.
Canadian firms gravitate to the benefits of factoring as they are significant relative to financial resources they might be otherwise unable to obtain. At the core of the factoring accounts solution is simply the ability of your firm to get a predictable cash flow in place that is, in essence, unlimited. Why is that? Well it is because as your sales grow you create receivables and if you cant financing those receivables with traditional bank lines or working capital term loans you have the option, using receivable financing, of turning those receivables into cash flow at your discretion. So you can factor one receivable, all your receivables, or some of your receivables – you make the call!
Another way you can view this type of business financing is simply that it’s a mechanism to link your sales to your cash flow immediately. Although some view the cost of this type of financing as a deterrent we can say , after discussions with many clients, that most business owners and financial managers don’t understand the true costs of factoring, or , an even better way to put it that they don’t understand the costs of not being able to discount their receivables .
One other critical aspect of factoring is simply that it’s not debt – you are not adding debt to your balance sheet – you are simply monetizing one of your largest and most liquid assets, your receivables. In some cases if we term this type of facility a ‘working capital ‘or ‘asset based lending’ facility an inventory component can also be considered for financing, thereby even further increasing your overall liquidity.
As we said before the true beauty of this type of cash flow financing lies in the fact that it is applicable for companies of all size and type of business. As a result if your business is experience challenges, has tax or lien problems, etc you can still be a solid candidate for this financing.
Understand the basics. That’s what we tell clients when they ask us how factoring work, what are the different types, and how does a business assess the costs. Let’s recap some of those basics. If you have a bank line of credit your receivables are owned by your firm, but they are assigned to the bank, which finances them. In factoring accounts receivable are sold, giving you immediate cash , almost same day, in fact usually the same day . You are then in a position to grow sales and extend credit to customers.
Costs and they way factoring works on a day to day basis should be understood also. Invoices are typically funded in the 90% range, meaning you get 90% of funds for the invoice immediately, the rest is held back. Factoring fees in Canada vary from less then 1% per month to 2-3% per month. Factor firms in Canada don’t view this as an interest rate; they call it a discount fee. We point out to customers that they have potentially the ability to recoup a huge part, if not all of that fee by using funds to take supplier discounts and negotiate better pricing. The biggest bottom line is the elimination of your working capital worries.
In Canada things get confusing because there are many factor firms, some are foreign based, some are Canadian, some are large, some very small and unable to services your needs from a viewpoint of capital you require . In many instances the factor firm will bill and collect your receivables, we are not in favor of that method and strongly suggest you maintain account and customer control by negotiating a facility that allows you to bill and collect.
You have now seen many of the advantages of receivable factoring, and should understand now the basic of ‘how it works’. Speak to a trusted, credible an experienced business advisor in this area to determine how you can be in control of your working capital and cash flow needs.
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Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:
http://www.7parkavenuefinancial.com/accounts_receivable_factoring_canada.html
Our blog highlights Canadian Business Financing solutions via receivable finance , equipment finance, working capital financing, asset based lending, business acquisition financing,franchise finance, and tax credit monetization via SRED and Film Tax Credits. Our goal is to educate and assist Canadian businesses with their financing needs. You Are Looking For Canadian Business Financing! Welcome to 7 Park Avenue Financial Call Now ! - Direct Line - 416 319 5769
Monday, September 13, 2010
Sunday, September 12, 2010
Financing Independent Movies Via Tax Credits For Indie Film financing
A recent article in the Canada’s business paper, the Globe and Mail, may have caught your attention – it read ‘American Actors – Canadian Movies’. That is an appropriate segues into why that title becomes more of a reality every day – and we have the 3 word answer to one of the major reasons that is currently the case. What are those three words? ‘Film tax credits ‘!
Tax credits and tax credit financing has quickly become one of the cornerstones or underpinnings of any indie film financing. We always also point out to clients that these same tax credits are applicable to televison and digital animation projects in Canada also.
Certainly funding for film, TV and digital animation projects has never been more of a challenge. In the U.S. the overall economic landscape still makes it difficult for owners and financiers to generate the type of funding they need on a project.
In a manner of speaking the Canadian available tax credits compete with themselves on a proving by province basis, with Ontario and B.C. being probably the most popular. However when you consider Canada as a whole many U.S. owners or co owners realize that the economic uncertainty they might be facing on projects can be significantly removed via film tax incentives and the financing of those incentives.
The actual tax credits themselves are very clearly defined by organization such as OMDC in Ontario Canada as an example. So there is never any mystery surrounding the qualifications and per cent ages grants within the various tax credits. What actually becomes a challenge, or shall we say, a requirement is the fact that you need to put a solid finance plan and budget in place – Best guess efforts hardly count in film tax credit incentives and their financing. Careful attention is paid to your budgets and finance timelines.
There are numerous arguments in place as to whether the Canadian film, tv and digital animation industry is flourishing because of the growing quality and bench strength of the productions, or has everyone simply jumped on the Canadian tax credit bandwagon similar to how they behaved in the 1970; s and early 1980’s when film financing was in large part accomplished by complex tax shelters that led to what many call a feeding frenzy of B type productions.
The bottom line is that the industry is quite flourishing and we can argue all day about what part tax credit incentives play – but why don’t we simply take advantage of them, including the ability to finance these credits for valuable working capital. Many feel the greater reality is that as an owner outside of the studio system independent film financing has to be assisted by foreign financing to some degree, and maximization of the tax credits available. Independent financing for U.S. films has been a challenge and Canadian producers and owners have focused on the ‘real money ‘that is available in film tax credit financing.
Your strategy in financing your production should be simple and clear - ensure that you qualify and have access to the tax credits available – ensure you can finance them to ensure you have valuable working capital and cash flow, while at the same time retaining more equity ownership in your production since you have monetized your tax credit. Naturally at the same time you have to focus on your other components, such as pre sales and distribution, etc.
Sometimes what might seem as the most boring aspects of film finance, i.e. budgets, budget adherence, and good payroll systems and production accounting are in fact the key elements that will make the eligibility and financeability of your production a success.
Speak to a trusted, credible and experienced film tax credit consultant and advisor on financing your film, TV and digital animation credits for the purposes of working capital and cash flow for your productions.
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Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details;
http://www.parkavenuefinancial.com/financing_independent_movies_indie_film_financing.html
Tax credits and tax credit financing has quickly become one of the cornerstones or underpinnings of any indie film financing. We always also point out to clients that these same tax credits are applicable to televison and digital animation projects in Canada also.
Certainly funding for film, TV and digital animation projects has never been more of a challenge. In the U.S. the overall economic landscape still makes it difficult for owners and financiers to generate the type of funding they need on a project.
In a manner of speaking the Canadian available tax credits compete with themselves on a proving by province basis, with Ontario and B.C. being probably the most popular. However when you consider Canada as a whole many U.S. owners or co owners realize that the economic uncertainty they might be facing on projects can be significantly removed via film tax incentives and the financing of those incentives.
The actual tax credits themselves are very clearly defined by organization such as OMDC in Ontario Canada as an example. So there is never any mystery surrounding the qualifications and per cent ages grants within the various tax credits. What actually becomes a challenge, or shall we say, a requirement is the fact that you need to put a solid finance plan and budget in place – Best guess efforts hardly count in film tax credit incentives and their financing. Careful attention is paid to your budgets and finance timelines.
There are numerous arguments in place as to whether the Canadian film, tv and digital animation industry is flourishing because of the growing quality and bench strength of the productions, or has everyone simply jumped on the Canadian tax credit bandwagon similar to how they behaved in the 1970; s and early 1980’s when film financing was in large part accomplished by complex tax shelters that led to what many call a feeding frenzy of B type productions.
The bottom line is that the industry is quite flourishing and we can argue all day about what part tax credit incentives play – but why don’t we simply take advantage of them, including the ability to finance these credits for valuable working capital. Many feel the greater reality is that as an owner outside of the studio system independent film financing has to be assisted by foreign financing to some degree, and maximization of the tax credits available. Independent financing for U.S. films has been a challenge and Canadian producers and owners have focused on the ‘real money ‘that is available in film tax credit financing.
Your strategy in financing your production should be simple and clear - ensure that you qualify and have access to the tax credits available – ensure you can finance them to ensure you have valuable working capital and cash flow, while at the same time retaining more equity ownership in your production since you have monetized your tax credit. Naturally at the same time you have to focus on your other components, such as pre sales and distribution, etc.
Sometimes what might seem as the most boring aspects of film finance, i.e. budgets, budget adherence, and good payroll systems and production accounting are in fact the key elements that will make the eligibility and financeability of your production a success.
Speak to a trusted, credible and experienced film tax credit consultant and advisor on financing your film, TV and digital animation credits for the purposes of working capital and cash flow for your productions.
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Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details;
http://www.parkavenuefinancial.com/financing_independent_movies_indie_film_financing.html
Purchase Order Financing and Factoring
Can you relate to the following statement a client once shared with us: ‘Getting working capital financing for my orders and contracts actually is harder than getting the order itself? ‘.
Your firm has the order and contract, now you just need to fulfill it to complete the job and get paid of course. It is the working capital and cash flow that come out of those contracts and orders that will of course help you grow sales and profits.
So how does purchase order financing and P.O. Factoring work in Canada? And is it actually available?! The answer to those two questions follows.
Purchase order financing or factoring provides you with capital for the key elements of your business, i.e. Product purchases, payroll, and working capital to carry receivables. Most clients we meet in the purchase order finance area have what can only be describe as the best and worst of problems – that is to say they have the order , they just don’t have access to the capital to complete the order or project . You also don’t want to strain your relationship with key suppliers, while at the same time you strive to deliver your product or service on an ‘on time ‘basis. Naturally your ability to accept larger orders enhances your overall competitiveness within your industry, and larger orders usually translate (hopefully!) into larger profits.
Canadian business owners and financial managers consider purchase order financing and the factoring of their purchase orders, but at the same time they don’t want to take on additional debt, or give up ownership of their business to an investor / partner.
So how does this type of financing work in the day to day real world. You have a P.O. and contract from a legitimate credit worthy company – More often than not some of these clients can actually be outside of Canada – we see that all the time. The purchase order finance firm provides you with the minimum amount of capital you need to complete the orders. Many times this simply involves making payments to your supplies on your behalf.
Therefore the benefits of this type of Canadian business financing are very clear – your company can complete orders/contracts it might otherwise have been forced not to accept – no business owner hates to turn down business. You can often also leapfrog a competitor of similar size to yours by simply the ability to finance orders the competition might not be able to.
You could enter into long term working capital or cash flow loans, but these typically involve payments that are fixed over 3-5 years. Although purchase order financing is generally quite a bit more expensive than bank financing it allows you to do short term financing without taking on additional debt on your balance sheet.
In some cases the PO finance or P O Factoring firm could be asked to issue a letter or credit to a supplier on your behalf - that is also a common p.o financing and factoring strategy that achieves similar objectives.
Speak to a trusted, credible and experienced business financing advisor who can provide you with information on how PO financing and factoring works, how you access it, and who can also assist you in determining if the cost of the financing meets your business and financial objectives .
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http://www.7parkavenuefinancial.com/purchase_order_financing_and_factoring.html
Your firm has the order and contract, now you just need to fulfill it to complete the job and get paid of course. It is the working capital and cash flow that come out of those contracts and orders that will of course help you grow sales and profits.
So how does purchase order financing and P.O. Factoring work in Canada? And is it actually available?! The answer to those two questions follows.
Purchase order financing or factoring provides you with capital for the key elements of your business, i.e. Product purchases, payroll, and working capital to carry receivables. Most clients we meet in the purchase order finance area have what can only be describe as the best and worst of problems – that is to say they have the order , they just don’t have access to the capital to complete the order or project . You also don’t want to strain your relationship with key suppliers, while at the same time you strive to deliver your product or service on an ‘on time ‘basis. Naturally your ability to accept larger orders enhances your overall competitiveness within your industry, and larger orders usually translate (hopefully!) into larger profits.
Canadian business owners and financial managers consider purchase order financing and the factoring of their purchase orders, but at the same time they don’t want to take on additional debt, or give up ownership of their business to an investor / partner.
So how does this type of financing work in the day to day real world. You have a P.O. and contract from a legitimate credit worthy company – More often than not some of these clients can actually be outside of Canada – we see that all the time. The purchase order finance firm provides you with the minimum amount of capital you need to complete the orders. Many times this simply involves making payments to your supplies on your behalf.
Therefore the benefits of this type of Canadian business financing are very clear – your company can complete orders/contracts it might otherwise have been forced not to accept – no business owner hates to turn down business. You can often also leapfrog a competitor of similar size to yours by simply the ability to finance orders the competition might not be able to.
You could enter into long term working capital or cash flow loans, but these typically involve payments that are fixed over 3-5 years. Although purchase order financing is generally quite a bit more expensive than bank financing it allows you to do short term financing without taking on additional debt on your balance sheet.
In some cases the PO finance or P O Factoring firm could be asked to issue a letter or credit to a supplier on your behalf - that is also a common p.o financing and factoring strategy that achieves similar objectives.
Speak to a trusted, credible and experienced business financing advisor who can provide you with information on how PO financing and factoring works, how you access it, and who can also assist you in determining if the cost of the financing meets your business and financial objectives .
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http://www.7parkavenuefinancial.com/purchase_order_financing_and_factoring.html
Friday, September 10, 2010
Finance Your Sred Claim Now . Take Advantage Of Your Grant today
Your ability to finance your sred claim (aka ‘sr&ed claim) simply signifies the cash flowing of your non repayable government grant. We think that anytime you can hasten cash from the government and turn that into immediate cash flow and working capital, well... that is a good thing.
SRED grants, (sr&Ed grants) are of course the funds you received from Canada Revenue Agency based on the filing of your Scientific Research and Experimental Development (SR&ED) claim. These funds have never been more generous and many Canadian business owners and financial managers are not aware that the program even exists, let alone their ability to partake in the billions of dollars of non repayable grants issued by this department within CRA Canada. Essentially it is the largest support for research in Canada. Many clients are always asking us if there are ‘government grants and loans ‘. We are of the opinion that the two best programs in Canada to finance your firm are the federal BIL/CSBF loan and of course the SRED program.
Your firm ability to generate a claim immediately turns into a non repayable cash grant. Timing is everything, and you have the ability to finance that claim if you want to monetize those funds and get them working inside your firm. For many early stage and start up firms the ability to finance their sred claim is often the largest receivable the firm has that year. And the beauty of the program is of course that as along as your firm is a private corporation you can partake in these funds.
As companies, and even as consumers we generally use an ‘expert ‘to prepare our taxes and file them. It is certainly no different with SRED and we recommend that you use a sr&Ed consultant to ensure your claim is prepared properly. Naturally using their own expertise, or the governments self assessment tool you want to be sure you are eligible for the grant, given that it takes time to prepare and file the claim.
Naturally after filing a professionally prepared claim you are of course entitled to wait for you cheque – that timeframe can be anywhere from a couple of months to potentially close to a year depending on some key factors as your first time filing, and the due diligence that SRED employees do on the technical and financial aspects of your claim .
So you are eligible for Sr&Ed. You have filed a claim. You have been made aware you can finance the claim, but you are not sure how. In general the banks in Canada don’t finance these sorts of claims – that’s a general statement, but 99% of the time we are pretty sure we are correct in making that comment. Therefore it is strongly recommended you contact a business financing advisor who specializes in sred finance. At that point it’s a relatively simply process, and we encourage clients to view it as they would any business financing, from a lease to a loan arrangement. There is standard application information, and the whole process, up to an including funding, can be completed in a manner of weeks.
As a general rule it makes sense to finance claims that are over 250k in size, but quite frankly smaller claims can also be financed. There is no challenge to the amount of financing re the size of a sred filing – Claims well in excess of a million dollars can be easily financed.
The key advantage of financing a claim is that you are not undertaking any debt; you are just discounting a receivable that you have – that receivable being the sred claim itself. The sr&ed filing itself is the actual collateral for the financing – and if you want more good news then you should be aware you don’t makes payments on a sred claim finance. The funds advanced are netted out from your final chq from the government. Usually sred claims are financed at 70% of their filed value that leaves a buffer in case part of the claim is downsized when approved.
Cash flow is king, if you have a sred claim be aware that claim is financeable , and your ability to get those fund working again usually puts you in a more competitive stance within your industry , and allows those funds to be used for further research or any general working capital purpose . Speak to a trusted, credible and experienced advisor in this area to ensure you are aware of the benefits of sr&Ed finance – claim those funds!
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Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:
http://www.7parkavenuefinancial.com/finance_sred_claim_finance_sr_ed_claim.html
How You Can Address Franchise Cost and Franchise Financing In Canada
It is of course, understandable that franchise cost and franchise financing can be two major challenges, or worries, that you face when you make the decision to be an entrepreneur in the franchise environment. Let’s look at how you can address some of those issues and concerns with information that will assist you in making an overall solid franchise investment decision.
Franchise financing and franchise cost should never be put near the end of your decision making process. You should address those key areas up front and be armed with the right information on how the industry finances a franchise.Many clients, somewhat mistakenly, think they will receive franchise financing assistance, or even the financing itself from their franchisor. Nothing could be further from the truth – you should simply focus on the fact that the franchisor is in business to sell units and grow their business, not put capital into your venture. That being said we hasten to say that almost all franchisors can be a valuable tool in the franchise finance arena in a number of ways.
So how can you use the franchisor itself as a tool for your financial planning around your venture? Follow a couple basic rules – review the franchise disclosure documents carefully for any financial data that will help you make a better financial decision. Also, ask for franchisee testimonial and contact info – if possible talk to some franchisees in the chain and ask them about their finance strategy hen they acquired the business. Also cover off if the financial expectations they had around the business in fact materialized.In some cases your franchise lender may wish to obtain info on the franchisor and their overall financial status. This generally is not required with well known brands.
In the challenging economic environment we are currently in it is important to deal with an expert to ensure you have the right financial strategy in place – your lawyer or accountant might be familiar with a franchise financing expert in
In order to finance a franchise successfully in Canada we recommend to all clients that you have an appropriate mix of debt and equity – equity is of course the funds you put into the business yourself, and debt is the franchise financing itself . Typically we see clients putting anywhere from 10-50% of the franchise cost in as owner equity. This varies per type of business, and whether the business is somewhat asset based or service based.
You need a business plan and financial projection! We can’t be clearer than that. This valuable tool serves a number of purposes – it shows the lender you have thought out the ‘ financial ‘ aspects of your business – and quite frankly it should solidify in your own mind that you have a solid business opportunity . Carefull attention to revenue projections, costs, and debt servicing should all be a part of that plan. Typically you should have the plan prepared by a professional and we don’t think you should pay more than 750-1000$ for a decent plan.Don’t spend thousands on a business plan – that’s a waste of money in our opinion.
So how is the franchise cost financed in
It is rare that one financing will cover all your total financing. Many of our clients that require some form of asset financing with their franchise investment utilize an equipment leasing or equipment financing option. This makes sense from a variety of reasons – it spreads out your credit so you aren’t concentrated with one lender, it is easier to get approved, and you can use the government loan to cover a lot of the leasehold costs that otherwise might not be able to be financed .
In franchise financing you should categorize your financing needs in three areas – soft costs, hard asset costs, leaseholds. Soft costs might be things such as the franchise fee, hard costs might be signage or POS computers and software, and leaseholds might be painting, pluming, air conditioning, etc.It is absolutely critical to segregate these into separate categories and ensure you have a financing strategy in place for each one. You do not want to finance all your hard assets via the government loan and then find out you can’t get leasehold financing from anyone else.
So whats our bottom line in franchise cost and franchise financing. Its simply do your homework, solicit the help of a franchise finance expert, prepare a solid business plan and segregate your costs so that you can finance them in the right manner. Completing all that should put you in a perfect position to execute on your franchise ownership dream.
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Thursday, September 9, 2010
What Asset Based Finance Could Do For Your Company
Your company is facing a variety of challenges – many of them tend to be business financing related. The challenges can be positive in nature, and some might pose serious threats to your business growth or even existence. How asset can based finance aid your firm in allowing you to generate the working capital and cash flow you need to prosper and grow, let alone survive?
Asset based financed helps your firm in both good time and challenging times. The reality is that most business owners and financial managers in Canada currently don’t think we are in ‘good times ‘and business financing continues to be a huge challenge.
Asset based finance comes in a variety of forms – it is commonly in the industry itself referred to as ‘ ABL ‘ financing, and typically your firm would negotiate what is simply or commonly known as an asset based line of credit . The facility provides you with a revolving line of credit very similar to a chartered bank facility – it might also include a significant inventory financing component, and usually address what we could best call special needs or special situations re: turnarounds, growth, distress, etc.
The best candidate for an asset based finance line of credit is a firm that is experiencing strong growth but can’t attract the traditional capital that is used to finance receivables, inventory, plant and equipment, and even in some cases real estate.
An asset based line of credit can best be described as a ‘creative’ financing solution – that is because it takes your balance sheet and finances it to the desired ‘max’ based upon your different asset components. In some cases even intellectual property or patents might be included in the overall financing, although that clearly is not the norm.
Pricing in Canada on asset based lines of credit is all over the map – We tell clients they can expect to pay anywhere near a point or two over prime up to an including 1.5-2% per month . What defines that huge difference in pricing is what our clients are always asking. The answer is that that there are different what we will call ‘ tiers ‘ in ABL lending in Canada, and the overall size and deal quality of your firm will ultimately drive you to an asset based finance partner that more closely matches your needs and your overall ‘ risk profile ‘.
The reality is that asset based finance has somewhat changed the overall face of business financing in Canada and more and more firms , both large and small are gravitating to this form of finance . Deal sizes in Canada vary greatly – we do not encourage clients who have an under 250k/mo need to explore asset based finance because at a certain point the reporting, costs, etc done make sense for neither your firm or the ABL lender .
Asset based lending margins your assets to the extend of their current market value. Inventory financing is a major component of your facility if you require that, and inventory financing in Canada, from traditional sources, is difficult to arrange.
Is there any downside in asset based lending and an ABL working capital facility? Our clients ask. With relative certainty we can say any downside is significantly offset by upside. The facility gives you almost unlimited working capital, and margins assets that might otherwise not be finance able. And dont forget, this type of facility does not add debt to your balance sheet, you are simply monetizing your hard and in some cases soft assets.
Speak to a trusted, credible and experience advisor in asset based lending who can highlight financing options that make sense for your firm’s survival and growth.
Asset based financed helps your firm in both good time and challenging times. The reality is that most business owners and financial managers in Canada currently don’t think we are in ‘good times ‘and business financing continues to be a huge challenge.
Asset based finance comes in a variety of forms – it is commonly in the industry itself referred to as ‘ ABL ‘ financing, and typically your firm would negotiate what is simply or commonly known as an asset based line of credit . The facility provides you with a revolving line of credit very similar to a chartered bank facility – it might also include a significant inventory financing component, and usually address what we could best call special needs or special situations re: turnarounds, growth, distress, etc.
The best candidate for an asset based finance line of credit is a firm that is experiencing strong growth but can’t attract the traditional capital that is used to finance receivables, inventory, plant and equipment, and even in some cases real estate.
An asset based line of credit can best be described as a ‘creative’ financing solution – that is because it takes your balance sheet and finances it to the desired ‘max’ based upon your different asset components. In some cases even intellectual property or patents might be included in the overall financing, although that clearly is not the norm.
Pricing in Canada on asset based lines of credit is all over the map – We tell clients they can expect to pay anywhere near a point or two over prime up to an including 1.5-2% per month . What defines that huge difference in pricing is what our clients are always asking. The answer is that that there are different what we will call ‘ tiers ‘ in ABL lending in Canada, and the overall size and deal quality of your firm will ultimately drive you to an asset based finance partner that more closely matches your needs and your overall ‘ risk profile ‘.
The reality is that asset based finance has somewhat changed the overall face of business financing in Canada and more and more firms , both large and small are gravitating to this form of finance . Deal sizes in Canada vary greatly – we do not encourage clients who have an under 250k/mo need to explore asset based finance because at a certain point the reporting, costs, etc done make sense for neither your firm or the ABL lender .
Asset based lending margins your assets to the extend of their current market value. Inventory financing is a major component of your facility if you require that, and inventory financing in Canada, from traditional sources, is difficult to arrange.
Is there any downside in asset based lending and an ABL working capital facility? Our clients ask. With relative certainty we can say any downside is significantly offset by upside. The facility gives you almost unlimited working capital, and margins assets that might otherwise not be finance able. And dont forget, this type of facility does not add debt to your balance sheet, you are simply monetizing your hard and in some cases soft assets.
Speak to a trusted, credible and experience advisor in asset based lending who can highlight financing options that make sense for your firm’s survival and growth.
IT Equipment Leasing – Why Computer Equipment Leasing Makes Sense in Canada!
Let’s get the acronyms out of the way – IT is of course Information technology, and hundreds of millions on dollars of computers, software, and related technologies are acquired by Canadian business every year.
So why is ‘it equipment leasing ‘the chosen method of financing form firms who lease business equipment. The reality is that these assets make your firm more productive and competitive – and equipment financing and equipment leasing simply remove one of the major obstacles to your innovation – that obstacle is the cost of the equipment. Although the cost of technologies seems from a distance to be always going down (thinks PC’s and servers, etc) the overall sticker shock of your total investment is still a huge potential outlay of valuable cash and working capital.
Lets examine why the main advantages of leasing make total sense in the context of it equipment leasing. We’ll also discuss how you can actually get this type of financing in place.
First of all, and we hate clichés, but cash is (still) king! And most firms simply don’t have the cash available to pay for all their technology needs. You also don’t want to be in a position to match long term capital acquisitions with short term working capital availability. So your ability to match the anticipated useful life of the equipment with cash outlays is a considerable advantage. That’s what lease financing does of course.
Canadian rates are very volatile and although they are low they are expected to go up – leasing will often give you the option of fixing or locking in rates.
Whether your firm is large or small you need and have access to bank facility or working capital lines – maybe you are even self financing? A lease for business equipment leaves those credit facilities untouched. Also, and put your hand up if you have any input on this one, but lease financing is usually achieved with a basic business credit application and applicable information such as your financials, projections, etc . It is arguably the easiest way to get business financing approved in Canada.
In general any investment in technology makes you competitive and in many manners allow you to cut costs, simplify processes, etc. Put a financing solution to that technology and business improvement seems like a very solid decision.
The reality is that if you firm requires it computer leasing you quite frankly don’t have a lot of financing options. Bank term loans in general don’t make sense for technology that in general depreciates in value but still have a direct benefit to your firm.
Many computer leases are constructed around the concept of an operating lease. There are essentially only two types of equipment leases in Canada, capital and operating. Capital leases are leases to own, operating leases are leases to use. When financing technology, it, computers, etc you should probably consider the benefits of an operating lease – they have a lower cost, a lower monthly payment, and you have a triple option at the end of the lease term – you can return, purchase, or upgrade. That’s true flexibility!
So if you are focused on technology acquisition consider lease financing – we have show it is a better and more appropriate use of cash flow, it is generally easier to obtain, it hedges you against obsolescence of your acquisition, and may even have some solid tax and balance sheet advantages .
The Canadian lease financing business is both specialized and competitive. We strongly recommend you seeks the assistance and resources of a lease financing and business financing advisor who is knowledgeable, credible and experienced in it computer leasing. Advice you receive on the right lease partner, the best lease structure, and what competitive interest rate you might be a candidate for could save you thousands and tens of thousands of dollars.
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Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details:
http://www.7parkavenuefinancial.com/it_equipment_leasing_computer_equipment_leasing.html
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