How Much Will A Business Franchise Loan Cost When Financing A Franchise In Canada ?

The cost of a business franchise loan is often the first questions clients ask when talk to us about financing a franchise in Canada.
5.5% is the answer. So that’s it – end of story – you have your answer! Of course we're being a bit facetious because what we are referring to is simply the current interest rate on the most popularly utilized loan vehicle for franchise financing in Canada. Cost is of course one thing, getting approved, executing on your franchise financing properly, and finally not entering into the wrong type of financing strategy is another issue altogether.

Let’s examine the challenge and the reality of franchise financing as it relates to costs, methodology, and, as we said, doing it right.

If you aren’t aware of the specialized methods of franchise financing in Canada and that most popular loan vehicle we discussed then you certainly are a poorly informed and at risk entrepreneur in the franchise environment . Simply walking into a bank and asking for a franchise loan in Canada does not work , as the bank views a new franchise, as it does any other business frankly, as totally based on the 100% collateral and credit worthiness of you the borrow .

If that’s the case then, our clients ask, why have they heard that thousands of franchisees in Canada get bank financing? Good question! It’s simply that the majority of financing in Canada is done under a specialize program called the CSBF /BIL program, which is under the auspices of the government and administered by the banks. That key word is administered by the banks.
So what is the cost of that loan? In terms of a pure what is the interest rate? Question the answer is 3 over prime rate, which currently in Canada would bring the transaction to the 5 1/2% range. (As prime changes this rate might fluctuate).

But if you as a franchisee are looking for a business franchise loan and financing a franchise properly the other features of this specialized loan are even more compelling - they include a limited owner guarantee, a loan size of up to 350,000.00, and other enhancements. That cost, when financing a franchise in Canada is clearly the best deal in town if you accept that a franchise is a new business - which of course it is, but we acknowledge the franchise is of course built on a successful business model of the franchisor.

Remember also that the cost when financing a franchise in Canada is based on the amount you borrow - unfortunately it cant be 100% because business finance dictates it is both prudent and required that you put some of your own equity in the deal - the more you have invested personally the less financing cost you have, that’s understood of course .

In the U.S. We are told there are specialized tax strategies to take money out of RRSP type accounts without being taxed, to finance your business - that really doesn’t work in Canada and your cost of a business franchise loan will go up considerably when you add in the tax penalty bite of collapsing your savings vehicle.

So. in summary financing a franchise in Canada is achievable - however its specialized, and some of the programs utilized by franchisees are highly specialized to the industry . Finance your new business properly by speaking to an expert is strongly recommended - seek a Canadian business financing advisor who is experienced, credible, and trusted who will help you solve the cost dilemma of financing a franchise in Canada .

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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 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.parkavenuefinancial.com/business_franchise_loan_financing_a_franchise.html

Looking for Business Financing methods? Tap into asset based lending in Canada Today – 1 2 3 You’re Saved!

There is one question we always seem to get from clients - ‘what are some business financing methods we might not be aware of?' ; and our answer is always the same : asset based financing lending is one of those alternatives that we can almost bet you have not heard of - and if you have heard the term we will bet a nickel that you aren’t fully aware of what it is or how it works.

Let’s examine asset based financing from the viewpoint of it being an alternative to a bank line of credit facility. Another way of describing this type of facility is to view it as the full service offering that is directly comparable to a Canadian chartered bank facility, commonly called an operating line of credit.

These types of facilities are of course not long term debt of term loan type scenarios. Can we put it any more simply than its your day to day business credit facility that facilitates payment to suppliers, employees, etc.

What we could call the ' full service ' asset based financing lending model is a facility that is usually a non bank financing arrangement with an independent finance firm that specializes in this type of facility .

It monetizes your current assets, which are typically receivables and inventory. However , there is often what we could describe as an upside kicker to the asset based line of credit because it can also easily margin, from a working capital perspective any unencumbered equipment and real estate that you have . Did you ever thing you could get working capital and cash flow financing and margining on equipment and real estate - we are pretty sure you didn't.

In discussing this financing alternative with clients we point out that the alternative to the full service type of facility (which is typically for larger firms) is an asset based financing lending facility that we call a working capital line of credit. It is generally under 250k and typically just finances receivables. Our favorite and in fact preferred type of facility is one in which your receivables are financed directly but you retain billing and collection control. More about that on another day!

So let’s get back to our asset based line of credit. What does it cost and how does it work, and, as business financing methods go, is it appropriate for your firm

Depending on the size of your facility pricing for asset based lines of credit can be very competitive to bank rates. Larger facilities take 30-45 days to fully set up properly. It should be no secret to the reader that a typical application would include a business credit application, financial statements, and aged asset lists of receivables and inventory.

How much can we get? Is our next most popular question from clients? The answer is lots. Asset based lending relies on the asset values, so typically receivables are margined at 90% and inventory, depending on your industry , can be margined from anywhere from 25-70% in our experience . Most firms could never get that financing on inventory from a bank.

So whats all the hoopla about this method of business financing. We can summarize it by saying its simply an alternative to bank financing when you cant meet bank criteria , its competitive if you have a solid asset base and business prospects , and it provides you with unlimited cash flow and working capital funding as your business grows . The size of the facility grows with your firm.

Confused? Hopefully not. Interested - hopefully so . Speak to a trusted , credible and experienced Canadian business financing advisor as to what business financing methods might alter your firms success and investigate asset based financing lending as a solid choice or alternative .
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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 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.parkavenuefinancial.com/asset_based_lending_business_financing_methods.html

Where’s the Cash Working Capital and Cash Flow Loans and Finance For Canadian Business

Read all about it! Read all about it! Isn’t that what the newspaper crier says? Today Canada's two largest business newspapers, remarkably co incidental, had similar headings - ' Canadian Business Revving Up ‘, and the other paper - ' Lenders open financing taps to smaller business ' .

We guess it must be true, because it’s in the paper, right? But there must be something wrong with our plumbing because our client’s taps don’t seem to be flowing with cash flow and working capital offers!

Lets looks at what we consider a real world look at some business financing and lending issues around cash working capital and cash flow loans and finance for Canada's small and medium businesses .

A focus on one of these articles was that it was cheaper for small businesses to get business financing in place. Clearly Canadian chartered banks have the lowest cost of funds as well as the best rates and terms for business financing - its just that on occasion you cant get the funding you need based on bank criteria . We have nothing, by the way, against those bank criteria, because they're lending out our savings to your business. But the hard core reality is that bank financing and looser financing terms, as stated in the article, don’t really jive in our opinion.

In fact many of our clients we talk to are looking for alternative solutions to cash working capital challenges. And they are pleasantly surprised to hear from us that some of those solutions , although they have never heard of them exist, and in fact are becoming more mainstream

So can we share some of those ' secret ' solutions that are available to you today . Heard of C I D, or ABL, or even financing your tax credits? Those solutions are available to Canadian business today. C I D is confidential invoice discounting, and ABL is asset based lending. We strong feel that ABL is the wave of the future when it comes to cash flow loans and finance for Canadian business. Where else in the world can you get working capital funding for inventory, A/R, and even cash flow margining of your unencumbered equipment. Nowhere else, we can assure you of that.

We are pleased to hear that the articles we referenced the fact that during the recent recession (it has ended, right?) Many firms in fact looked to ' other sources of financing ‘.

In many cases the Canadian business owner and financial manager intuitively knows they have a working capital solution need, they simply don’t know their alternatives. Business owners must look to help with their cash cycle and balance the investment they have in A/R and inventory with their creditor payables.

There are new alternative solutions to the funding of working capital. So who can provide you with the best information on cash working capital solutions? You could try your bartender or barber or hair stylist, but quite frankly why not consider an expert instead! Seek and speak to a trusted, credible and experienced Canadian business financing advisor who can ensure cash flow loans and finance solutions that make sense are available to your firm.

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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 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.parkavenuefinancial.com/cash_working_capital_cash_flow_loans_and_finance.html

Reasons for Leasing for Business - Why Equipment Financing Works!

Reasons... and facts. That’s what Canadian business owners are looking for when looking for equipment financing. And quite frankly leasing for business has never been more popular, and made more sense.

Let's examine some of those reasons and facts to ensure you are well informed when you are looking to acquire capital assets for your business. And by the way, capital assets sure is a broad term, because it covers technology , plant equipment, business equipment, rolling stock, even your corporate jet .. (We know ' you wish ...').

So why are hundreds of millions of dollars, probably billions of dollars leased in Canada every year under an equipment financing strategy? It all comes down to a common saying among leasing people, which is simply that you generate profits and sales by using assets, not owning or paying outright for them .

The good news about leasing for business is that the key word is flexibility - credit approvals are more flexible, cash flows can easily be structured to meet your needs, and various balance sheet and tax benefits accrue to companies who lease.

We find in talking to clients looking for innovative lease financing options that we can talk all we want about off balance sheet, tax benefits, depreciations strategies, etc - but, at the end of the day they are simply concerned with getting credit approval and conserving cash. Otherwise of course these assets must be purchased out of bank lines that have already been tightened by your bank.

When we talk to companies that are using effective equipment financing strategies we find, more often than not, that they are simply ahead of their competition in innovative assets that drive revenues and profits. That’s simply of course because there is no huge outlay of capital when acquiring these assets, which more likely than not are depreciating anyway.

Don’t forget also that taxes are paid as part of your monthly installment when are leasing for business assets - a classic working capital conservation strategy. The bottom line is that your firm can grow when you have the ability to conserve cash flow and use it for operating needs and further re investment.

It sometime is difficult for business owners to determine who the right leasing partner is. There are hundreds of firms, many are in fact not Canadian, and all firms have different credit, deal size, and interest rate policies related to how transactions are structured. If you are looking for a quick way to navigate the entire equipment financing marketplace in Canada speak to a trusted, credible and experienced Canadian business financing advisor who will assist you in completing a transaction that makes sense and achieves the approval and benefits your firm is looking for.
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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 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/equipment_financing_leasing_for_business.html

How The Right Factoring Firms in Canada Can Provide Financing Factor Facilities Confidentially

You've heard about it - You suspect your competitors use it, you think it might work for you; it’s just that you don’t fully understand what it is! We're talking about factoring firms in Canada, and why financing factoring in the Canadian factor marketplace gains traction daily among small and medium sizes businesses all across Canada.

Let’s help you examine what this type of financing is, why it is grossly misunderstood by many business owners and financial managers, what it costs, and how it works. That’s a mouthful of information!

Financing factoring is an option you have to financing your business - it’s as simple as that. Clients are usually concerned about two things, how it works, and what does it cost?

Those are typical questions, in addition to wanting to understand the benefits of this type of Canadian business financing.
At its basic core the factor firm is a buyer of your receivables. The good news is that when you sell them you get immediate cash - we are talking same day cash. That brings to bear one of the largest misconceptions about this type of business financing, because the use of factoring firms in Canada you have eliminated the need to wait for the collection of your receivables. Typically these days clients are waiting anywhere from 30 ( you wish !) to 90 days, sometimes longer to collect their cash and generate cash flow and working capital back into their firm .

The cost of financing factoring in Canada generally is in the 1-3% per month range - while that initial information is often perceived as high to many clients the reality is they are spending that much, and more by carrying those receivables 90 days, and being further unable to utilize that cash to sell more and generate more profits.

So you can quickly see that with the right type of factor facility in Canada you have the ability to generate huge amounts of working capital and then in turn sell more, maintain relationships with suppliers on a better basis, and, as we said, create more profits, hopefully So that is what factoring is and why it can work for you.

But here's the biggest secret we can share - by working with the right factor firm or Canadian business financing expert and advisor you can actually create a facility that one ups your competition . That is because the factoring they are utilizing invoices the factor firm verifying billing and collecting with their clients. What you should actually be striving for is a confidential invoice financing facility that allows you to collect and bill your own receivables, with you in control, not the other factoring firms in Canada.

So, in summary, if you are carrying receivables, short on cash flow and working capital, financing factoring is clearly an option and solution. The optimal facility is the C I D - Confidential invoice discounting. Speak to a experienced, trusted, and credible Canadian business financing advisor who can assist you in putting together a facility that works.

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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 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/financing_factoring_factoring_firms_canada_factor.html

How To Raise Money For Film Financing via Ontario and BC film grants and Tax Credits

Can your film financing (television and animation also by the way) via Ontario and BC film grants and tax credits be the final piece of your project financing puzzle. We'll let you decide but we can’t imagine you not entertaining any financing, that is non repayable, that might cover 30 -45% of your entire project budget.

In order to achieve financing success you need expert help and information on how the tax credit and film financing area works in Canada. Two of the most common regions for film, production, and therefore tax credits are Ontario and BC ( British Columbia ) , but not everyone is aware that pretty well every Canadian province, in conjunction with Revenue Canada ( for you Americans that’s our version of the IRS !) has a robust film tax credit program.

Only when you master the techniques and processes around film financing and the use of the generous tax credits will your project be properly financed - That’s of course unless you're a major studio, but that’s not the clients we're addressing here.

We should note also that once you develop a process, and have a proper team around that typically an entertainment accountant, a lawyer, and a production accountant) then you can pursue and replicate the same process of funding your projects via Ontario and BC film grants and tax credits for all future projects.

The film tax credits in effect ' bridge the gap ' between your vision of the project, its potential financial success, and your ability to fund and complete the project.

Film tax credits and film financing happens of course everywhere in the world. Where Canada excels is the fact that you have generally uniform process for the entire country and the program is well funded and generally very efficiently administered. It's one of the few times in our business careers where the line ' I'm from the government and here to help ‘makes actual sense!

Lets use Ontario as a quick example of how to raise the tax credit financing you need. The Ontario program is so efficient these days that the applications for financing are actually done online via the government body that administers and approves the tax credit certificates. However, before you get to that stage, as we noted earlier, you need to be in a position to have a proper budget in place that will reflect what the eligible spend is on the items that are being funded by the tax credit.

As a quick rule of thumb you can generally expect your budget to return approximately 35% of your labour expenditures for a production filmed or produced here in Ontario. The reality is that if you film outside of the Greater Toronto Area formulas are in place that further enhances the credits by an additional 10 per cent.

The additional great news we share with clients is that your tax credits are financeable. That dramatically changes a good deal into a great deal because you can receive loan financing on the tax credit either during production as you spend, or when completed and you have your final certificates in place . Naturally for your film tax credit to be financed you need to have a proper legal entity in place (commonly known as special purpose vehicles - SPV) and your tax returns and filings must be up to date.

Raising money for film financing involves 3 components, equity, debt and mezzanine, and tax credit financing. Let Ontario and BC film grants and tax credits be the final piece of your financing puzzle for your project in film, TV, and animation. Speak to a trusted, credible and experience Canadian business financing advisor in the film tax credit area to ensure you maximize this great finance strategy for your project.

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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 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.parkavenuefinancial.com/film_financing_ontario_bc_film_grants_tax_credits.html

Your Company Qualifies For A sr ed tax credit financing - Can you factor sred? Yes you can!

Many companies in Canada taking advantage of the sred program (formally called the Scientific Research and Experimental Development) are surprised to find that they can in effect ' cash flow ' or 'monetize' that claim into the liquid gold business calls cash flow.

So, does sred financing make sense for your firm - by the way, we think it does... and how can you ensure you qualify? Let's ensure we cover off some of the basics around those issues in order for you to determine if sred finance makes sense for you.
If we go back to square one it all comes down to knowing what the program is, ensuring you qualify, and then having a claim to submit. SRED claims are submitted when you file your year end tax return.

If you have never filed a sred claim 2 key points immediately are a focus of discussion when we meet with clients - first of all you have to have the technical expertise to prepare a claim. Secondly, in the last year or so the government has altered the program in order to make submission more expeditious. You of course need to be aware of the new format guidelines, which in effect simplify your preparation and filing process.

In our opinion, and most agree we are quite sure, you want a sred consultant to prepare your claim. These are folks in private industry who specialize in preparing claims, and more often than not they have done work in your industry. We are quite sure we have your agreement than an expert in any industry is better than a rookie.
Technically your accountant could prepare you claim, but we're often surprised to hear clients tell us that their accountant was not even aware of the program!

In order to receive funds for your sred credit - and by the way these funds are non - repayable (yes you heard us correctly) you simply need to file a qualified claim.

Waiting for your refund is what sr Ed tax credit finance is all about. Sred financing is based on the premise that your firm could use the cash flow today, instead of waiting for weeks, months, or even a year in some cases.

So how do you factor, or discount, or cash flow, or monetize that sred claim. (All those terms mean the same thing). It’s a simply process; locate a specialist in Canadian business financing who can assist you in preparing a simply application that includes your sred claim and basic financial application info. Claims are generally financed at 70% loan to value, meaning the 30% is held back as a buffer. No payments are made on the financing and the final cheque from the government is netted against your advance.

In the meantime you can make use of those funds for any general corporate purpose.

So - do you qualify for a sred tax credit financing - if you have a claim you do? Should you consider a factor or finance scenario around your claim - that’s for you to decide and for us to suggest. And by the way, if you don’t need cash or working capital, then don’t finance the claim - but who is in that position these days?

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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 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/sr_ed_tax_credit_sred_financing_factor_sred.html