Government Guaranteed Business Loans : Comparing SBL Canada Loans To Traditional Bank Financing In Canada

There Are No Design Flaws in the Industry Canada Gov’t Small Business Loan

OVERVIEW – . Information on ‘ SBL ‘ loans in Canada . New changes in government guaranteed business loans make this method of financing in the SME sector very attractive to business owners and entrepreneurs



Government guaranteed business loans in Canada are unique and are important from a viewpoint of providing financing to small businesses in Canada. (The program defines ' small ' as any new business with fewer than 5 Million dollars of actual or projected revenue)

Recent changes to the program are intended to ' enhance' the level of attractiveness to the program, eliminating some of the ' design flaws' that have been associated with the program in the past.

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

The successful funding of start up and smaller existing businesses in Canada is a cornerstone of the success of the program - with anywhere up to approximately 8000 businesses being funded annually. The government, via the Industry Canada ' CSBF ' program is a guarantor of a large part of the financing you receive under the loan proceeds.

A part of the challenge with respect to being successfully funded under the program is the fact that our banks tend to interpret the loan guidelines differently. So finding an experienced banker or Canadian business financing advisor is key to success.

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.

SBL loans in Canada are structured as term loans. Amortizations are generous and are typically in the 3-7 year range. Rates under the program are only 3% over prime rate - which provides an attractive alternative to those firms seeking alternative financing which would come at much higher rates typically.

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

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

Positively approaching the loan submission helps guarantee financing success. You or your advisor should ensure a business plan or exec. summary is available, along with info on mgmt, an opening balance sheet, and a cash flow projection. (Loans are repaid from cash flow!)

Don't forget also that you may buy a complete existing business via SBL Canada loans.

When traditional bank or commercial financing is not attainable seek out and speak to a trusted , credible and experienced Canadian business financing advisor with a track record of success
who can assist you in eliminating those ' design flaws ' of financing to ensure loan success.




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 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.

Info re: Canadian business financing & contact details :

7 Park Avenue Financial = Canadian SBL Loan Expertise





7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Phone = 905 829 2653



Email = sprokop@7parkavenuefinancial.com




















Stan Prokop

The ABL Asset Based Bank Loan Facility : Your Entitlement To A New Business Line Of Credit

Is an ABL bank loan facility a kinder, gentler type of business borrowing in Canada? Why the asset based line of credit provides a solid commercial credit alternative

Information on the ‘ asset based line of credit ‘ for business borrowers in Canada. How does this revolving bank loan type facility work and why is it one of the two alternatives for revolving credit facilities in Canada.





An ABL Asset Based Line of Credit for Canadian business is in some ways a solution to the ' entitlement ' that business owners and financial managers feel around the necessity to access commercial credit. In some ways its access to a ' kinder, gentler'

method of getting approved for revolving credit to run your business. Let's explain.

When we talk to clients about their needs and challenges around accessing business credit it's surprising to hear that many owners/managers have not even heard of ABL business loans / credit facilities. Why is that? Actually one can be forgiven simply for the fact that it’s a newer method of financing in Canada that gains traction everyday.

Approval for business financing revolves of course around a companies ' credit rating ‘, not dissimilar to that same rating that follows us around as consumers. That business credit rating revolves around quality of financials, ability to meet obligations to suppliers and lenders, character and capability of management, and, more specifically cash flow and profit generation.

But what happens if the new or challenged firm can't access the tremendous rates and flexibility offered by our Canadian chartered banks? Business still needs access to credit - enter stage right

‘ABL’ business lines of credit.










Simply speaking they are revolving loans to businesses that are secured by A/R, inventories, and, uniquely, fixed assets. Thats the ' big difference ' relative to a bank business credit line - simply that the focus is on the current and fixed asset collateral, not the unique emphasis that our banks place on ratios, covenants , and secondary sources of repayment such as outside personal collateral, etc.

Because Canadian banks, and rightly so we believe, are highly regulated they can't take the additional risk that is posed by ongoing management of receivables, inventory, fixed asset valuation, etc. That’s where the ABL facility excels, simply by the fact that if you have assets and revenues those ratios become almost meaningless.

While it’s a bit of an unadvertised secret that banks in Canada, or at least most of them, offer ABL facilities the reality is that more often than not they are not unlike traditional bank borrowing - but that's a subject for another day.

The asset based credit line approval amounts fluctuate and are geared toward the constant growth and change in the sum of your A/R, inventory and fixed asset values. In almost all cases a strong assessment of these values will be made to ensure you've got maximum borrowing power.

If you want to be sure you have access to business credit that otherwise might not be attained from Canadian banks seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you in your borrowing needs.




Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :


7 Park Avenue Financial = Canadian ABL Business Line Of Credit Expertise





Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

Without Business Credit Lines Or An ABL Line Is Your Company Failure Rigged : Commercial Credit 101

Are Business Credit Lines The ‘ Secret Sauce ‘ Of Growth For Your Company

OVERVIEW – Information on business credit lines in Canada . Bank commercial credit facilities or an ABL line play an important role in the growth and financial success of any business – here is how .. and why






Business Credit Lines in Canada are often the ' secret sauce ' that helps propel a company to financial success. Whether it’s a non bank commercial credit ' ABL ' line, or a Canadian chartered bank line of credit it's a fact that financing your working capital properly is often the differentiator in success or failure. It's one of the ' Secret Sauces ' in business success. Let's dig in.

As your business invests more funds in the products and or services that you deliver the need for commercial credit financing of some type increases. The very simple reason for that is the fact that your customers don't pay you the same day you deliver products or services, and quite often the gap in even getting to your invoice stage is significant.

Revolving credit facilities in Canada can be broadly grouped into two areas: bank lines of credit and non bank commercial asset based lines of credit. (In truth there are some subsets of Asset based lines of credit - they might include A/R finance only, inventory finance, leveraging equipment assets, or combinations thereof!)

Your ability to finance your current assets properly will deliver solid cash flow as your company grows. The gap between different industries is significant. We can only envy the internet retailer who gets paid before they even deliver product! Conversely a firm in another industry might take on a project that takes a month or two to deliver on, and another month or two, or more !.. to get paid. That’s the working capital challenge.

Knowing the value and the timing of your assets is key to financing business credit lines. Once the business owner/financial manager have a handle on the working capital cycle of a company the solution becomes a lot more achievable.

Having access to business credit for cash flow allows you to constantly stay ahead- its better to be planning growth than reacting to cash flow shortages in your operations. Simple very basic trends can be determined by having regular monthly financials and charting your trends in A/R, inventory, sales, etc.

Term lenders that you might have in your business (term loans, equipment leases, etc) want to rely on the fact that your cash flow from operations can retire your monthly obligations.

It should be pointed out also that if your business is ' capital intensive ‘for fixed assets, etc you simply require more access to commercial credit business lines.

Bank or ABL lines will finance on an ongoing basis the value of your A/R and inventory. In the case of ABL your fixed assets are also thrown into the mix, allowing you to borrow on a revolving basis against the value of those assets, together with inventory and receivables.

While bank pricing is lower and more flexible companies that are growing quickly and can’t access ' traditional ' financing should consider Asset based lines of credit.

If you are looking for the ' secret sauce' deliverable in a business credit line seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in achieving working capital and cash flow success.




Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :

7 Park Avenue Financial = Canadian Business Credit Line Financing Expertise





Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?
CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Office = 905 829 2653

Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

Franchise Financing In Canada : Franchising Business Loans Comes In Different Shapes And Sizes

Visualizing Franchise Loan Success In Canada ? Owning A Franchise Comes With Financing Challenges

OVERVIEW – Information on franchising business loans in Canada . Franchise financing challenges require expert navigation of different loan and finance strategies to successfully complete entrepreneurial ownership for the potential franchisee


Franchise financing success in Canada is visualized by the potential franchisee - it's the end of the road in their journey as a new franchisee. But the reality is that attaining that goal is dependent on information and experience often not fully recognized by the borrower. Let’s dig in.

Franchise opportunities in Canada are diverse, many of them offered by franchisors that are both Canadian and also U.S. origin. It's not secret that finance loans for a franchise are somewhat more plentiful in the U.S. with diverse lenders participating in this high growth economic sector.

In Canada, as we have stated, franchisee loans come in different ' shapes and sizes'. Let's explore the who and the how.

The borrower must also be prepared to spend some time to distinguish between the types of finance package he or she is looking for. That might be :

A turnkey acquisition opportunity

A re-purchase of an existing franchise ( ‘ Refranchising ‘ )

Financing for a multi - unit transaction

Master franchise scenarios

Working Capital

Asset and Leasehold improvement


The amount invested in the business by the franchisee is one of the key determinants of loan ' shape and size’. In Canada this can range anywhere from 10- 50% depending on franchise lender requirements. Franchise loans are typically secured by the assets, tangible or otherwise, of the business. It's fairly rare for franchisee personal assets to be attached to a franchise loan.

That above scenario therefore mandates that franchising business loans need to demonstrate they can be repaid out of cash flow. Here's where a solid business plan, cash flow and opening balance sheet will go a long way to reflect loan approval success. The borrower, or his advisors are well recommended to ensure some type of contingency financial modeling also occurs - if only for the reason that Murphy's law

is everywhere in all aspects of business!

Clients often ask what are the ' rates and fees' in Canadian franchise financing. Almost always these transactions are in the single digits, which also reflects the relatively low current interest rate environment.

In Canada the franchise opportunity is financed by either a specialty lender or a combo of financing derived from a bank or a commercial finance firm. This includes lease companies, merchant advance firms, working capital term loan lenders, and the Canadian SBL program. The latter is extremely popular and is suited to a number of franchise opportunities.

If you're a franchisee that can visualize the end to your acquisition journey, but don't necessarily know who to get there seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you in sorting out those different ' shapes and sizes' inside the financing puzzle .





Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :


7 Park Avenue Financial = Canadian franchise financing expertise!




Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653


Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

The Government Small Business Loan In Canada : Skipping Intelligently Through Changes In The SBL

Translating New Rules For Government Small Business Loans Into … Plain English !

OVERVIEW – Information on new rules around the government small business loan in Canada . The good, bad and some ‘ugly’ around SBL loans in Canada

The Government Small Business Loan in Canada , aka the ' SBL ' is undergoing some dramatic changes in the program. Are you up to date on the good, bad and ugly (there’s very little ugly!) and the ' who cares' of this very popular program that finances thousands of new and existing businesses every year? Let's dig in.

Many clients we meet and talk to have not even heard of the program in some cases, so a super quick ' primer ' just might be in order. Patterned similarly to the U.S. equivalent ( there it's called can 'SBA' loan ) this financing was created by the Canadian government many years back to allow Canadian business owners and entrepreneurs to have access to capital where they might not normally access traditional Canadian chartered bank financing .

Although it can be debated how seriously the banks embrace the program the reality is that over the years tens of thousands of businesses have qualified and been approved under the program. The government guarantees a large portion of the loan to the banks in case of default.

If the government guarantees default why wouldn’t the banks fall in love with the program? The main reason is... which you might not believe, is ' paperwork' at the bank level.

Yes, it’s correct that top experts in the field tell us that the ' administrative burden' that come with banks filing for the loan had become too much.


So... enter Change! And while significant, on balance they still in our opinion make the program robust and a solid solution.

So what are those changes? First of all the old program had a personal guarantee scenario that was quite attractive to borrowers, in that they only had to guarantee 25% of the loan from a personal liability perspective. New legislation via INDUSTRY CANADA (the program administrator/manager) allows banks to take a full personal guarantee on the amount. What's our take on that one? Pretty simple actually - since almost 99.999% of all business in the SME financing sector requires shareholder guarantees anyway what’s really the issue here.

Oh, and by the way , under the SBL small business government loan no personal collateral can be taken or secured, which definitely isn't the case for most normal bank borrowers under SME Commercial Finance conditions.

Other changes to the program include small fees to be charged for set up, documentation and registration of SBL loans in Canada. The truth is that in any financing in the SME sector the borrower almost always pays the legals and doc fees anyway, which are often in the several thousand dollar range or more. So the few hundred dollars charged for an SBL loan is somewhat of a moot point, don't you think.

It would initially appear that the old cap of 350,000.00 for equipment and leasehold financing may be lifted. So. Does that mean ' unlimited financing '? Hardly, we think given that new borrowers still have to meet the same equity requirements and working capital requirements of the program.

Rates, terms, and overall structure of these loans still remains the same, and they are ultra attractive in our opinion given the often start up or early stage nature of businesses that apply.

So, while Mr. Dylan

might still be right ( " The times they are a changin' ")
the CSBF program - the ' SBL ' Government Business Loan is still a great deal and should be considered by all borrowers who can't qualify for full traditional financing. Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can guide you successfully through changes to the program.



Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :


7 Park Avenue Financial = Canadian SBL Small Business Loan Expertise!







Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Office = 905 829 2653

Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

Juggling Acquisition Finance Solutions : Financing A Business Purchase In Canada

Fixing Your Business Acquisition Financing Challenge


OVERVIEW – Information on financing a business purchase in Canada . What are the key issues in SME acquisition finance for the owner/entrepreneur . What solutions are in fact available?



Financing a business purchase in Canada often has the business person juggling

various acquisition finance solutions. Which solution makes sense and how do you access that capital properly? Let's dig in.

At the end of the day it's all about a proper valuation and moving forward with a source, or sources of financing that make sense for your transaction.

Suffice to say, but often forgotten by many, it’s critical to start assessing financing solutions for a business purchase well in advance of when funds are needed. The analog we could also use is one of getting ' pre qualified ' for a home mortgage, which then gives the buyer both security and negotiating power when it comes to price, or in our case ' valuation' .

Management depth and experience is also critical to your financing. Your lender/lenders, whether that is a bank or a commercial finance firm, will want to know the ability you can demonstrate to properly manage and run their business - with their focus on getting repaid! That goes for both traditional and alternative sources of capital, as both of those are used to finance the purchase of a company.

Without getting to technical on some higher level business concepts and jargon it needs to be clear that you understand capital structure and debt and equity. Those later two points are of course your 2 sources of finance to properly execute your transaction.

Debt financing will come from commercial sources such as banks and finance companies. In the case of banks many smaller transactions can be financed under the auspices of the Government Small Business Loan. Major changes to the program, including removal of previous borrowing limits make this option, aka, the 'SBL ' very attractive.

The other side of debt in your transaction is equity. Family, Angel, and private investors, will demand ' shares’, diluting your own ownership. This then becomes the difficult balance act of sourcing the right amount of debt and equity. Naturally if your own investment into the firm, along with debt will cover the transaction no ' dilution' of your investment will be required.

By the way, ' share sales' are difficult, if not impossible to finance given the bank or finance company has no way to liquidate or monetize their loans. Going public is of course a whole different story.

While many owners focus on closing the acquisition they sometimes forget to focus on the working capital and cash flow requirements of the newly acquired business. That’s a recipe for failure.

Debt financing for a business acquisition can come from:

Canadian chartered banks - term loans, operating lines of credit

Asset based lending

Equipment financing

Term acquisition loans from Canada's crown corp. bank

Equipment financing

Mezzanine Finance

Receivable /inventory monetization...


If you're focused on putting the proper' fix' in place for financing a business purchase seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you ‘juggle ‘ those solutions into a successful business acquisition.




Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :




7 Park Avenue Financial = Canadian Business Finance Acquisition Expertise





Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8


Direct Line = 416 319 5769


Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com





' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

Accounts Receivable Funding In Canada : What AR Factoring Can And Can’t Do For Your Business

Putting Cash Flow Financing On Autopilot

OVERVIEW – Information on accounts receivable funding solutions in Canada . When , why and how does AR Factoring work for cash flow finance and working capital needs






Accounts receivable funding , implemented properly, is a great way to put your cash flow financing needs on ' autopilot'. Would AR factoring work for your firm, and more importantly, how in fact does it work? Let's dig in.

In business it’s a lot about sales revenues and cash flow drivers (there’s a couple hundred other issues, but let’s focus on these!) The core of our issue is that your sales, almost never, equals the amount of cash your company has in the bank.

Those two issues also are often key predictors of your current and future business ' health'. Another hard reality is that all businesses, small or large, are not created equal - as such some need a lot more cash on hand than others. A strong example is a capital intensive industry requiring heavy fixed asset investment, versus a service business that might carry no inventory and only requires receivable finance to support growth.

Unless you're a retailer selling on cash your only cash inflows are the A/R collections coming into your firm. (The only other way to get cash is to get outside equity or to sell assets) One of the great ironies of business is that you can be growing and profitable on paper and going broke on a cash flow basis. Ouch!

It's that operating cash that we're focusing on in our discussion - we're not talking about the ' investing' or ' financing' portion of the 3 part cash flow statement. Focusing on operating cash will always keep you business running ' normally.

If your business isn't generating the cash it needs relative to your sales or even how your industry competitors are doing you require AR factoring / financing of some sort.

To avoid small, or large cash flow crunches consider AR factoring as a solution. It's the ' unlocking ' of those receivables and converting them into cash that will put your company into cash flow problem immunity.

While most businesses sell on 30 day terms, most clients these days, small or large (the large clients are the worst?!) tend to pay you in 60-90 days.

AR Factoring, including our recommended version - (CONFIDENTIAL RECEIVABLE FINANCING) allows you to generate cash as you generate sales. Using a 30 day collection period this will cost you approximately 150-200$ on a $ 10,000.00 invoice. The key benefit - no A/R, cash in the bank.

While those financing costs are higher than a Canadian chartered bank facility they do provide you with all the cash flow and working capital you need to run your business, meet your obligations, etc.

While the only reason your firm would consider ACCOUNTS RECEIVABLE FUNDING is its inability to get proper bank financing we point out to clients that many of the largest corporations in the world utilize this same method of financing - they just call it something more fancy, such as ' securitization' etc, and in many cases for larger firms the costs is equal to or less than a Canadian chartered bank facility.

Factors that will affect your pricing and approval include size of your business, the quality and size of your A/R base, etc.

If you're considering a receivable financing solution , and you wish to consider the ' autopilot' features of AR factoring in Canada seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your Canadian business financing needs.



Stan Prokop

- 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :

http://www.7parkavenuefinancial.com/accounts-receivable-funding-ar-factoring.html






Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653


Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop