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February RetireDREAMS Newsletter

Wed, 01 Feb 2012 00:00:00 -0800

Alternative Financing From Canadian Business Lenders . Special Loan Takeouts Or Growth Challenges

Mon, 30 Jan 2012 00:00:00 -0800

We're fairly sure that most Canadian business owners and financial managers don't equate Canadian business financing with ' shopping ', although truth be told we do hear the term ' shop around ' quite a bit when talking to clients about alternative financing via bank or non-bank ( mostly non-bank!) lenders .

Unfortunately many of these firms are forced by necessity to do their shopping because they find themselves in the ' Special loan ' section of the bank, due to any number of events that have triggered a default situation. The bottom line, turnaround financing is required.

Let's examine some aspects of alternative finance solutions in Canada, as well as a re - focus on key issues within that damaged bank relationship.

It's no real secret that bank rates for commercial business financing are at all time lows .Even bank fees associated with business lines of credits are not all that unreasonable .

A special loan ' scenario unfortunately seems to often tied to ' personalities , i.e. the human side of business. Clients sometimes feel that Canadian banks or their own banker specifically does not ' understand ' their business. In fairness to Canadian bankers they are sometimes just challenging a client and should often be viewed as a ' sounding board for challenges your business might face

A real challenge that drives many Canadian borrowers to alternative financing is the fact that the Canadian banking industry has a limited number of players, unlike the U.S. which as different tiers of commercial and business banking, with hundreds if not thousands of individual players.

Those Canadian business people that have ' been around ' (I guess thats us also!) know that industries and even specific firms fall out of favor at certain times. We've met numerous clients of the years that have felt that their commercial bank has been almost looking for a reason to end the relationship. With all due fairness to there being two sides of the story who cannot commiserate with the Canadian firms who suddenly find their total future and destiny in the hands of a third party.

Probably the best advice we can give a client is to choose a banker that is relationship oriented and had internal credibility within her or his bank. Our belief - all banks are the same; all bankers are not the same.

So if that banking relationship is in fact over, what are the alternatives? The good news is ' there are a lot!) . Using our ' shopping analogy ' there's some decent choices. They include non regulated asset based finance firms, equipment lessors who specialize in sale leaseback and refinancing of assets, and subsets of asset finance which include receivable financing ( factoring ) , inventory financing, and combinations there of .

More esoteric solutions such as purchase order finance and tax credit monetization are also readily available. Firms that are either on the verge of entry into a ' special loan ' category, or who find themselves there already have ample room to re-exit under the right conditions.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with achieve refinancing success.

Wondered How The Canada SBL Government Business Loan Works?

Mon, 30 Jan 2012 00:00:00 -0800

Although the majority of Canadian business owners and financial managers have heard of or have some knowledge of the ' SBL ' , aka the government business loan most do not fully comprehend how this financing program works.

Although the word ' government ' is sprinkled liberally through all the jargon and conversations we hear about the program the reality is that you have essentially no direct involvement with any government personnel or the perceived bureaucracy that we as Canadian business owners associate with the program.

We're going to assume you're taking that as good knows, although we've got nothing against the good folks in Ottawa.... (When they are doing things properly!)

Industry Canada is the department that sponsors, administers, and to some extent markets the program. They are committed to getting businesses like yours capital, via Canadian chartered banks, that you need to grow and operate your business.

The government in effect guarantees your lender. Since the inception of the program Billions of dollars have been funded under the program.

In general terms the program is designed to help your business secure equipment, land, and leasehold financing for long term needs. Unfortunately many business owners in Canada misinterpret the SBL government business loan as a potential cash or working capital loan. That is 100% not the case; it finances assets and real estate.

When you fully understand the program you comprehend that your local lender, predominately Canada's chartered banks are the ones that actually spur financing growth under the SBL. So if you have a need tor debt that falls under the program parameters you fund your transaction locally.

Understanding the lending parameters of the program is key to your success in completing the financing in a timely manner. Oh, and by the way the program has a lending cap of $ 350,000 ($500,000.00 on real estate), which we think takes the ' small ' out of the small business government loan. That's not chump change!

The essential loan parameters of the program are as follows - 5-7 year amortizations are typical, giving you ample time and low monthly payments. Rates are 3% over Canadian prime, and a small admin fee is assessed by the government as part of the application. (You can often have this admin fee financed as part of your transaction!)

Banks in Canada of course typically evaluate loans on the basis of personal credit, income and collateral. Under the SBL you do in fact need a respectable personal credit history, but even if your firm is a start up with no historical cash flow info available you are still 100% eligible for the financing. Here's where a slick business plan or executive summary comes into play quite nicely - simply demonstrate how future cash flows will repay the loan.

The government guarantee is for the majority of the loan and can only be invoked if your business defaults on the loan, so the risk is jointly shared by the bank and the government, but mostly by the government.

Understanding how the SBL government business loan works is key to a successful financing. And by the way, getting approval is half the battle, you also need to have an understanding of how the loan is administered, so thats worth some time investment also.

Speak to a trusted, credible and experienced Canadian business financing advisor on ensuring you understand the process, due diligence and financing of this program which will finance billions of dollars this year for your competitors, and hopefully you!

7 Guaranteed Ways To Fail In Canadian Franchise Loans. Franchisee Financing Done Right !

Mon, 30 Jan 2012 00:00:00 -0800

At one point or another Canadian companies of all size realize that financing new or existing assets via leasing companies in Canada works far better than buying those assets; in effect they have mastered and understood the lease versus buy decision.

It's never hurts for us to cover the basics with clients, so we constantly re-enforce the fact that equipment leases and loans allow you to stay ahead of the technology curve in your industry - in effect you have the ' latest and greatest ' with which to compete .

Conservation of capital is also a key point at the top of our list; in effect you dont have to service a bank term loan for the asset. Bank loans for assets also have related issues that can significantly impact your firm, such as reduction in your overall borrowing arrangement, etc. It's no secret then that 80% of all North American businesses lease some assets they need for their firm.

Your monthly payment of course is dependent on the asset size and the structure of your lease or service agreement with leasing companies in Canada.

Innovation in financing via a lease often comes from the type of lease you enter into. In Canada two primary offerings are on the table - the capital lease, aka ' lease to own ', and the operating lease, which we can effectively call the ' lease to use'.

Innovation abounds in operating lease financing. Its the ultimate solution for investments you make in areas such as technology, telecom, etc. Most borrowers, (and we definitely dont agree with their focus) tend to hone in on the monthly payment. In an operating lease the monthly payment is significantly lower, anywhere from 5-20% depending on the asset size and type.

At the end of the term of your operating lease the equipment is not fully paid for. Dont worry, thats a good thing, because a properly structured operating lease via Canadian leasing companies allows you to at that point consider purchasing, returning, or continuing the arrangement. Those options are standard in a properly structured operating lease.

While payments on a capital lease are higher dont forget that you own the equipment at the end of the term. This of course can be a double edged financial sword! , given that the equipment might have either significant value, some value, or no value. On balance we would say that the majority of companies that enter into a capital lease scenario do so mainly because they want to conserve cash flow.

We referenced the ' lease versus buy' decision. Thats the term referred to as the Canadian business owner or financial manager tries to decide whether he should lease or buy an asset.

Is any financial decision always 100% right? Of course not, so when it makes sense buying an asset gives you ownership of the asset, plus your ability to control the ultimate use and residual value. In some cases your accountant might be able to show you buying is less expensive than lease finance.

We tell client that in the financing decision process they should consider things such as the final monthly payment, related services to the asset that are financeable, their purchase options, as well as the cash flow effects of the transaction . Oh and by the way, most busines owners quickly realize that lease financing is easier to obtain and receive approval for. Leasing companies in Canada are thriving and want your business.

Speak to a trusted, credible and experienced Canadian business financing advisor on how innovative financing from Canadian leasing companies might make sense for your firm. You'll have mastered the lease versus buy decision!

2.5 Things You Need To Know About Franchise Loans ! Money And Funding For A Business Loan In Franchising

Mon, 30 Jan 2012 00:00:00 -0800

2.5? Actually we'll round that one up to 3. We're talking about franchise loans in Canada. As a potential franchisee you're looking for money for franchising the entrepreneurial dream. Let's cover off some key points in funding that loan and ensuring things are done right.

Point # 1 - Is it possible to go it alone? While it may be possible for you to cover off all aspects of your purchase, including selecting your chosen business, validating it, planning for it, and ensuring it's financed properly we certainly don't recommend that. We remind clients that even some of the largest companies in the world with all the smarts they might have internally, solicit help from their advisors, lawyers, bankers, peers, etc.

In many ways the Canadian franchisee is even putting more ' on the line' than a large corporation, as he or she is pledging personal assets, collapsing some level of savings and investments, and waiving their rights to explore other career or job opportunities by virtue of selecting a franchise.

We think most clients think that a lot of the advice and assistance might be costly. Not necessarily, many franchise consultants who assist firms in fact are compensated by the franchisor, not you, as an example. And the unbiased and professional advice you might get from a franchise lawyer is quite often many times worth the price of admission.

Don't forget also that your chosen franchisor is probably a treasure trove of assistance, including putting you in touch with other unit owner in their system to share experiences and ' how to ' .

Point # 2- Does getting money and funding for franchising loans differ from any other commercial lending .The short answer we give clients is the proverbial ' yes ' and ' no '. Let's clarify. We firmly believe that franchise funding does not eliminate any of the basics of business loans, as compared to if you were starting or buying g your own business outside the franchise model. The same pre- requisites apply. They include a business plan, cash flow planning, evaluating finance alternatives, and ensuring you have the right amount of debt and equity capital

Where things might differ a bit is that in most cases you don't have the same options as the typical commercial borrower. And quite honestly, no matter low large your franchise might be you are traditionally viewed as a ' small business borrower. The bottom line though is that there are concrete options for financing your purchase, they are just a bit more limited,

Point # 3 - How does the franchisee determine what amount of financing he or she needs? A couple key factors come into play here. First of all the obvious one, the size of your franchise. In Canada you can buy franchises for only a nominal investment, or you can borrow and invest up to a million dollars or more. Thats a broad spectrum! Remember also that franchises that require asset financing are going to incur higher borrowing needs. Asset financing in a franchise consists of leaseholds, equipment, computers an point of sale equipment, etc. Many franchisees we talk to unfortunately also are not focusing on the amount of working capital they needs to grow and operate their business after they purchase it.

As an entrepreneur you want to ensure you successfully attain the Canadian dream of owning your own business. That option is being considered by more business owners everyday. North American stats show that approximately 5% of franchises fail. Use our info wisely to ensure you're in that other 95%. Speak to a trusted, credible and experienced Canadian business financing advisor for guidance on your franchise loans.

Business Cash Flow Financing Problems ? Heres Some Solutions

Mon, 30 Jan 2012 00:00:00 -0800

Nothing is as entertaining to us sometimes as to talk to a new entrepreneur who aspires to ' get rich in business. It's at that time that things just don't seem that complex; a firm just needs to make a product, sell it, and bank the profits. And when you think of it, that's not incorrect, it just exhibits a bit of inexperience in the perception of that simplicity, don't you think.

The only thing that is missing in that analysis is of course those three magic words, the ' cash flow cycle'. It's that cycle that will dictate whether your business cash flow financing problems are normal, or perhaps seriously in need of solutions .

Clients often mistakenly think that negative cash flows, those huge swings from positive to the negative are in fact a sign of failure. That's the farthest from the truth. It simply means you're ' in line . In line? To get paid of course!

But the preparations you make when you are ' in line ' are what will truly make or break your business. Simply speaking you need cash flow financing solutions to cover those deficits. It is at those times that your firm is most vulnerable - because employees, suppliers, and lenders, (what a group!) may in fact doubt your ability to return to positive cash flow.

Canadian business owners turn to chartered banks to cover that deficit, when they can. The bank is in a position, when you qualify, to provide you with a business line of credit that will allow your cash flow cycle to continually repeat itself, from negative, to positive, and all over again.

But what if the bank is an inaccessible option for cash flow finance solutions? In some cases we have seen business owners solve their working capital problem by simply accessing supplier credit in a more aggressive manner. Its not always immediately obvious to business owners that slowing down payables increases your operating cash flow. Of course it's a delicate balance though.

Another issue in working capital and cash flow financing challenges can be the seasonality of your business. Many businesses have very uneven profit earnings; for example they might break even or sustain financial losses during some parts of the year, and thrive at others.

When business in fact seasonal, experiencing the ' bulge ' as we might call it your bank or other lenders have the option of staying the course with your firm, or canceling credit facilities altogether .

We have shown that cash flow challenges are a business reality, spanning all types of businesses and different industries. With proper management and solutions those challenges can be overcome. It always gets back to the issue of cash flow and profits being recognized as different. Bottom line, your profits are on paper only until they are banked.

In Canada business owners have access to a number of business finance solutions for working capital and cash flow. They include traditional banking, asset based lending, receivable finance, inventory finance, P.O. finance, and tax credit monetization.

Speak to a trusted, credible and experienced Canadian business financing advisor who will ensure your business hasn't lost faith in its ability to come up with growth and capital solutions for success.

Dont Tell Anyone But Heres Six Points And Strategies For Dealing With Business Equipment Finance Companies For Leasing Success

Mon, 30 Jan 2012 00:00:00 -0800

Thousands of Canadian business owners and financial managers turn to equipment leasing in Canada for asset financing.

We can safely say that this method of Canadian business finance can be a simple or as complex as you wanted to make it. Our goal is to ensure you consider dont consider an equipment lease simply for the fact that you dont understand both the mechanics and advantages.

Not all benefits might accrue to your firm when considering a lease, but you sure want to be able to maximize the tangible and intangible benefits.

It's important to consider the entire lease process as a bit of a ' journey , and when you are armed from start to finish through the whole process. And we can't over emphasize that just by knowing which parties you should be dealing with will give you a more favorable transaction success.

Let's go through a short 6 point check list of what you need to know to address lease financing success.

Point # 1- Be in a position to properly identify the type of asset and its cost when sleeting your lessor. Identifying the manufacturer, model number etc is critical to business finance companies that may or may not specialize in certain types of assets.

Point #2 - Its always best to have a formal quote or pro forma invoice for the lessor. Remember the the ultimate invoice, because you're considering leasing should show that the invoice to is the lease company, and the ship to is in fact your firm. Another key point is that lease firms don't negotiate your final pricing and terms with the manufacturer, you do!

Point # 3- Payment to vendors is a critical issue, Always ensure those payment terms are understood by both your vendor and the lessor. That includes the currency component, and whether any sort of pre - payment prior to shipment is required. Good business finance companies and leasing firms are happy to correspond with your vendor and indicate you have been approved.

Point # 4 - Ensure you have a proper approval timeline in place. In some cases lease and busines finance companies have expiry dates on approvals. Complex assets might require additional time for ultimate delivery to your term.

Point # 5- Equipment leasing companies are asset financiers; its as simple as that. Don't ruin your relationship with such a firm by not clearly identifying where the asset is, both at inception of lease and during the term!

Point # 6 - Here is where the rubber hits the road on benefits of equipment finance. Simply speaking, make sure you understand the type of lease you require. In Canada that boils down to a capital ' lease to own ', or an operating ' lease to use '.

You can spend a hundred hours understanding some of the complexity around tax, accounting, end of term, and financial consequences of each of those lease types. This then becomes a great time to consider the assistance of a trusted advisor such as your accountant, lawyer, a peer/mentor, etc.

Speak to a trusted, credible and experienced Canadian business financing advisor to ensure you are on track, right from the ' get go ' for equipment leasing success.

Heres Your Fighting Chance For Cash Flow Solutions! How To Pinpoint A Canadian Business Finance Solution

Tue, 24 Jan 2012 00:00:00 -0800

Canadian business owners and financial managers are looking for ' fight back' type cash flow solutions for their survival and growth challenges. Let's examine that from two angles understanding and pinpointing the problem, and then implementing a satisfactory business finance solution for your firm, one that makes sense in the here and now!

While clients we talk to are often very focused on fixing the problem weve felt it's just as important to understand how and why they got there. Makes sense right?

If you step back and take a closer look at what's going on in your business you will see that the constant pattern of payments and receipts to your firm dictate the need for Canadian business financing at certain times. The cycle typically constantly repeats itself, your company buys goods, generates a payable, incurs costs in creating your products and services and finally invoice generation to your clients. And then you wait!

That's when we arrive exactly at the crux of the matter as typically at this time your cash shortfall is at its greatest point. All the while your firm of course has payable and creditor obligations, and lets not forget the tax man!

Now we are getting to the core issue, creating cash flow solutions to finance these needs. We now arrive at a point where many companies ' blow it ' for lack of a better word. That's because the obvious solution is ' the bank '. We can't count the number of times clients told us they have approached their bank on what we can politely term a ' short notice'.

Guess what though. Banks don't like to lend on a short notice. Quite frankly they are managing their own cash flow issues! Clients simply often don't realize that at this point in a company's need for a business finance solution that insolvency risk is at its greatest.

The other irony of our situation as described above is that in many cases business has never been greater for your firm. New contracts, new orders abound! Yet history tells us many companies, small and large have gone under when profits and sales were great, but cash has run out.

Solid and savvy Canadian business owners and financial managers will step up to the challenge this time and learn to plan better for short term borrowings. You dont want to over borrow but at the same time you don't want to commit yourself to having excess cash and liquidity. (Although thats a problem clients never seem to have!)

One of the best ways you can monitor your cash flow needs is to monitor on an ongoing basis changes in your assets and debt. Business owners often dont realize that the transfer of funds between those two identify the movement of your cash.

If assets go down cash has been generated from the asset, if assets go up you have in fact invested in this asset, and, guess what, your cash has gone down.

In Canada you have a number of available cash flow solutions for working capital needs. They include properly managed bank debt via a solid relationship and track record. Companies that can't qualify have access to asset based lines of credit, working capital facilities, receivable and inventory financing on their own or together and even monetization of tax credits and purchase orders.

Looking to better understand what business finance solutions makes sense for your firm, and why? Speak to a trusted, credible and experienced Canadian business financing advisor to determine your firms best course of action.

Why The SBL Government Business Loan Bridges The Gap Between Banking And Canadian Business Financing You Need Today

Tue, 24 Jan 2012 00:00:00 -0800

We're talking about the gap today. It's the gap that is the bridge between a Canadian government business loan and the traditional banking term loan. So how does SBL financing help you or your firm bridge that gap. Lets examine.

So what's the ' scoop ' on SBL loans? They are term loans from your bank with Industry Canada, i.e. the federal government guaranteeing 90% of the loan.

So whats the goodness in all of that? Simply that it is a great financing vehicle for start ups, small, and medium sized businesses who are looking for loans they will repay from future cash flow that they might otherwise not be able to obtain from the traditional Canadian chartered banking system. Additionally they might not have the collateral to collateralize the loan in a manner that most banks require.

It's prudent at this time to recap what mainstream chartered banks in Canada require for this same type of financing. Typically a company such as your will be required to have substantial equity in your company or the transaction in question.

Banks in Canada are very focused on what commercial lenders call the 3 Cs of lending. Those 3 C's are the banks interpretation of your character, your company's capacity to borrow ( i.e. repay!), and the quality of collateral you can offer up, The bottom line all that then ... the bank must feel comfortable with your business - its sales, cash flows, and any external issues relating to the current economy, your particular industry, etc.

So that brings us back to ' the great divide '. Its the gap that the government business loan delivers on Canadian business financing for those firms that can't meet the requirements of Canadian business banking in the traditional manner we think of.

Don't forget also that bank loans come with commitment fees, prepayment penalties, covenants, and extreme default measures when things go awry.

So we have come full circle to a proposed solid alternative, SBL financing, thats 'SBL ' as being the acronym for what most people call the ' government business loan '.

How does it fill the gap then? It sure is obvious to us. It allows you to repay a loan out of projected cash flow when historical cash flows are insufficient or simply not available. That's because thousands (yes thousands) of firms that utilize the program are in fact start ups, pre-revenue firms that are looking to build and grow a business.

In many cases the assets of the business otherwise would not allow you to complete a financing.

Is there enough money go around in the program? Thats a typical client question. The answer is a resounding yes! In 2010 alone over 7000 businesses borrowed billions under the program. And yes, that's billions with a ' B'.

Uses of the program are equipment financing, leasehold financing, computer and software financing, and even real estate.

The cost of the program is very appealing to business owners in Canada. Rates are competitive, there is no prepayment penalty, and even the owners personal guarantee is limited to 25% of the loan. Try and get that deal under more traditional financing - we bet you will find it difficult!

Is it challenging to acquire such a loan? Not if you understand the requirements and create a streamlined process and follow documentation and application details properly and efficiently.

Speak to a trusted credible and experienced Canadian business financing advisor today on Canadian SBL financing. Bridge the gap!

Is The Guarantee Of The SBL Canada Small Business Loan Really Guaranteed? Increase Your Chances For Government Loans

Tue, 24 Jan 2012 00:00:00 -0800

A pretty basic question. Is the Canada small business loan, i.e. government SBL loans, really ' guaranteed '? Two points here, first of all the loan is guaranteed by the government to your lender, but you are certainly not ' guaranteed of approval! But with the right knowledge, and the right preparation you can dramatically increases chances of approved funding.

Let's examine how you can ensure your business is approved for financing under this program. Some of the techniques and info we share we could almost characterize as subtle, and some are simply a key requirement to get the job done. Its not hard to take guesswork out of the program and increase the odds of financing approval.

You must be able to at least understand the lenders language, even if you dont speak it everyday.

At the end of the day its about some basic organization around your information, dealing with the right party, and being able to clearly demonstrate that your business is the right firm with which to have a borrowing/lending relationship.

Doesnt it make sense that if certain information is required for the Canada Small Business Loan that you are able to provide it? That info that's required is hardly ' rocket science' by the way; its actually a short laundry list. The essence of that info is a business plan, quotes or invoices on what you want financed, a cash flow forecast, and information about your self with respect to assets and liabilities and your personal credit history.

You want to be able to demonstrate how the financing will assist your business, whether its a new business, a franchise, or assets required to operate and grow your company. When we listen to clients who say they have spent far too long in getting approved for government loans we can usually demonstrate they have responded properly to the financing info request.

We're fond of an expression called ' deal fatigue '... that's simply when enthusiasm by you and your lender hit an all time low on your transaction. So by putting a package together with all the info, including a positive attitude and approach, you are able to present a strong picture of your capabilities and experience.

The SBL small business loan is actually administered by Canadian banks on behalf of the government department, Industry Canada. There isnt a day that goes by when we dont hear the comment ' banks arent lending ', or ' banks are only lending to their existing client relationships'.

We tell clients they will never be in a position to change the way banks do business in Canada (God knows we've tried that ourselves!) but you can take advantage of programs that clearly are meant to finance and grow your business.

Many clients are too focused on rates on all types of business financing - Thats our opinion. The reality is that using a 100k loan as an example an interest rate difference of, say 5% will only mean a monthly payment difference of a few hundred dollars. And the reality is that rates on government loans are fixed anyway. Bottom line; dont focus all your efforts on rates when any new business financing can help your business grow.

The Canadian SBL program provides millions of dollars of financing to businesses like yours. It helps your business achieve financing it otherwise could not obtain. As a borrower you need to deal directly with both the positive and negative aspects of your loan, and you must be able to project positive future performance. That's not hard to do by the way.

You can successfully achieve financing by working with an advisor or banker that both understands the program and can ensure your financing is fast tracked to success via the right information presented in a positive manner.

5 Reasons To Consider Canada Government loans . How To Use the SBL Federal Loan Program

Tue, 24 Jan 2012 00:00:00 -0800

We're big supporters of the Canada government loans, commonly called the ' SBL loan . Why? This federal loan (youll soon see its not as federal as you think ... it's more local ...) can be used for a variety of solid business reasons. What are those uses then? Let's explore.

Canada government loans are the ideal financing solution for a business start up. SBL financing compliments significantly your own equity contribution to the business. A large amount of outside collateral is in fact not required for the federal SBL loan. Traditional financing via Canada's chartered banks and other lenders often make it difficult to achieve any proper level of start up financing.

Amortizations are available that make sense for your start up. You are trying to minimize monthly payments and maximize cash flow. There isn't a day when we don't talk to an entrepreneurial client who doesnt feel their resolve to start and succeed in business isnt tested, so the federal small business loan is a solution to the testing of your resolve!

Our second category or use of this financing is ' Equipment. When you are looking to purchase assets to grow and maximize your profits government loans make a tremendous amount of sense.

Your equity contribution, i.e. the down payment that you would typically associate with a lease financing is low, the 5-7 year term amortizations make sense, and the bottom line it's a classic use of matching your new assets useful economic life to the term of a loan.

Use # 3 for Canada government loans. Buying a business. Funding from our proposed financing solution allows you to purchase an existing business.

We caution clients that the requirement for purchasing a business using the SBL vehicle requires that the seller agree to an asset sale, as opposed to a share sale. Almost any industry can be financed in this manner, as long as there are assets in the business that you are acquiring.

The good news here is that the emphasis on the financing of your proposed purchase is focused on the previous success of the business, as well as your ability and experience to run and grow the business. The SBL loan can also finance real estate as part of a business purchase - in this case the traditional limit of financing actually increases to $ 500,000.00.

Potential use # 4 for the Federal small business loan - refinancing! If you or your firm incorporated or otherwise have purchased assets within the last 6 months they can be refinanced under our proposed program. This generates working capital that can be put back in your business. In certain cases an appraisal might be required on the asset, but that is a very modest expenditure relative to the benefits of the financing received that come back into your business cash flow.

Finally, use # 5 for Canada government loans. It's buying and financing a franchise. Entrepreneurs in Canada finance thousands of franchises each year under the program, which in many ways is perfectly suited to the challenges of a franchise.

There you have it, 5 solid uses for the utilization for the federal SBL Loan. As we noted federal denotes Ottawa and government, but Canadas chartered banks administer and fund the program under federal auspices. Speak to a trusted, credible and experienced Canadian business financing on how you or your business can utilize this valuable Canadian business financing vehicle.

Receivable Cash Flow Financing .The Only 2 Times To Consider Canadian Factor Funding

Tue, 24 Jan 2012 00:00:00 -0800

Ancient Chinese proverbs and receivable cash flow financing and factor funding. A connection? We thought so, as we were taken by one we heard the other day. It went something like this, ' the best time to consider planting a tree is 20 years ago, the 2nd best time is now '.

Timing is everything in business... Canadian business owners and financial managers know that .That is why we think a strong case can be made to turn our same proverb towards consideration of receivable financing , something you maybe should have done already, or perhaps start considering now . Let' explain.

When business owners look at financing alternatives they are usually looking at their current situation. As the Canadian economy seems to seesaw back and forth these days between good news and bad news its Canadian business that is caught in the middle, experience continual frustration for obtaining their financing needs.

We're talking mostly about small and medium sized businesses , as larger firms always seem to be in a better position dont you think.

So that of course brings us to receivable cash flow financing, one immediate solution that you can access today for cash flow and working capital. It's generally viewed as an ' alternative ' financing but quite frankly in our opinion it's more mainstream everyday as thousands, yes thousands of firms embrace this finance strategy.

That of course just might mean that the time is... well... now for consideration by your firm. The reason you might be considering A/R finance now is simply your inability to collect receivables in a timely fashion, from clients that seem to feel they are forever on extended terms. (Clients tell us they dont remember granting those extensions!) We add also that the ultimate irony sees often to be that the larger firms become a major collection challenge for companies, such as yours, who might be significantly smaller.

Often times your receivable portfolio is a function of your growth strategy. That growth strategy becomes capital intensive, as you are forced to continually maintain an investment in inventory and of course receivables. So while clients tell us they would like to see A/R reduced, to cash of course reality is that it rarely does for the typical SME type firm.

A lot of clients we meet are self financing. That is a double edged sword in that it constrains many businesses from growing. They are also reluctant to take on more debt and increase financial leverage. If sales drop or operating performance decline you can well assume problems are going to occur with respect to your relation with lenders to your firm.

Factor funding reduces leverage. It is not debt; its simply a monetization of your A/R into immediate cash at a cost of 2-3% on a monthly basis.

So when is the time for Canadian business owners to embrace A/R financing? According to our Chinese proverb it was either a long time ago, or today! Receivable cash flow financing allows you to monetize your A/R in real cash flow; you've just given yourself an alternative to bank financing, minimized the emphasis on personal guarantees, and put yourself in control of your daily or monthly borrowing.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in determining when this strategy is right for your term, yesterday, or today!

5 Things You ( Probably ) Didnt Know About Canadian Business Receivable Finance . Cash Flow Financing Via Factoring Clarified !

Tue, 24 Jan 2012 00:00:00 -0800

Clarity and quality of information surely count when Canadian business owners and financial mangers consider business finance alternatives. We've said in the past, and still feel it's true that no other form of finance in Canada is as misunderstood or potentially confusing as business receivable finance. So does this method of cash flow financing have to be confusing? We don't think so, so lets recap 5 often asked client questions with a goal of clarity for you, the Canadian business owner.

Question 1 revolves around the amount of funds you can expect to obtain in Canada. Typical advance rates for most facilities revolve around the 90% mark if you are dealing with the right party. The balance, i.e. the remaining 10% of your receivables is a holdback that is remitted to you immediately after your client pays. Another key question is facility size, and the good news here is that your facility grows as your sales grow. In general there are no credit limits per se, unlike bank facilities, which clearly have a cap .

Question 2 revolves around the process, i.e. the length of time it takes to set up a facility. We generally advise that it takes approx 2 weeks to set up a proper facility - that is a general guideline. You will know, by the way, very early on in the process if you are approved. After that it's simply a question of documentation.

Question 3 is the proverbial hot point. Fees and costs. Various factors come into play here, the credit quality of your firm in general (it does not have to be as solid as you think), the size of your facility, the nature of your industry, etc. On balance a solid business receivable finance fee in Canada is 2-3% if you're billing and collecting on a 30 day term.

Question # 4 revolves around types of receivables that can be financed, The key point here is that only ' business, i.e. B2B a/r can be financed in Canada, so those companies with a consumer a/r base cannot take advantage of cash flow financing .

Question # 5 revolves around the age of receivables that can be financed. As a pretty general rule only A/R that is under 90 days in age can be financed via this method of Canadian business financing. One can safely assume of course that if you havent collected your accounts by that time there is an element of uncollectibility or bad debt in your A/R portfolio.

There you have it. Confusion gone away? We hope so. When considering working capital finance via business receivable financing ensure you've got the right information at hand to make an informed decision. Speak to a trusted, credible and experienced Canadian business financing advisor for your ability to get on track with cash flow finance.

An Unfair Edge ? Offer Customer Financing At No Cost To Your Company! A Financial Program Via Canadian Vendor Leasing Works

Tue, 24 Jan 2012 00:00:00 -0800

Looking for a (legitimate!) unfair edge in Canadian business financing? Who wouldn't want that extra ' secret sauce ' that all businesses strive to achieve when competing within their own market.

We're talking about offering a financial program, at no cost, to your clients, giving you a solid marketing edge, and something the competition may not have, or even know about! Thats why a customer finance program via vendor leasing could well put your company at the head of the pack in your own market.

Could there be any more common sense attached to the simple concept of

providing your client with a financial solution to acquire your product or service? And, as we noted, that could well be at no cost. As you may have guessed the major auto manufacturers mastered this same concept, about 50 years ago! so it might be time to get on board.

Offering such a program does two basic things:

1. It makes the final purchase decision much easier for your clients

2. It doesnt take you as long to complete a sale - in effect your sales cycle is significantly reduced

Getting back to the competition, doesnt it also make sense that a financial program not offered by your competition puts you in a much better stead of winning the sale . We think so, and we've since it proven time and time again.

Depending on what study you are reading 8-9 out of ten companies in Canada utilize lease / loan financing for their asset acquisitions. If your customer is one of those firms doesnt it make sense that youre simply offering them a financing solution that makes sense with something they are already comfortable with... well you get the drill .. you're one step close to making that sale, and winning over your competition.

How? Thats the next point to ponder in our efforts to make sure clients have that inside edge. How do you as a business set up a program that in effect could cost you nothing? Naturally if you want such k a customer finance program to not be free to your company then feel free to invest hundreds of thousands or millions of dollars into your own captive finance firm. Oh and by the way, hire the right talent and set up the proper infrastructure also, put those at the top of you ' to do ' list. The bottom line is your firm quite probably doesnt have the capital, financial management, and operational capabilities to set up and start your own finance firm.

Not interested in that? We fully understand! That is why the easy and logical solution is to work with a trusted third party that will provide the capital, take on the risk, and work to close transactions, in effect becoming a win/ win scenario for your firm and theirs.

Consider spending some time to investigate a customer finance program that makes sense for your products and services. Speak to a trusted, credible and experienced Canadian business financing advisor who can ensure you have a partnership program with the right party that gives you a clean program, with simple documentation, and the right amount of expertise and capital to give you the ' unfair edge ' in sales and marketing growth .

Working Capital Management Is A Numbers Game When Cash Flow Financing Needs Are Now

Fri, 13 Jan 2012 00:00:00 -0800

Your companys working capital is the amount of funds which is working to solve your short term operating needs. A good way to look at this is to think of all your current assets as your gross cash flow, and if you subtract your current payables and loan payments due, etc you then have a net working capital amount.

How your firm manages those current assets, and the amounts you have invested in that part of the balance sheet will ultimately determine what cash flow financing options are available to your firm, traditional or otherwise. Your ability to turn over those current assets, i.e. A/R, inventory, etc is what impresses a lender, as they view that turnover as ultimately repaying working capital loans, operating facilities, asset based loans, etc.

Most business owners dont see it this way, but your cheapest form of borrowing is actually your short term liabilities such as payables. The challenge though, is that those payables have short timelines with respect to being due, and your firm needs the working capital management solutions to address that need.

The irony that we have always found in working capital discussions is that the often used current ratio is somewhat meaningless. It doesnt do a lot to reflect what is happening now or in the future. Very simply speaking, most accountants or analysts look for a current ratio of 2:1, or more. So is a 4:1 ratio fabulous then?? Not really if your inventory is in work in process and your receivables are slow or uncollectible!

Accounts receivable and inventory are the two main asset classes in your working capital. No surprise there. Your ability to monetize (borrow against) them is ultimately your cash flow financing savior.

So, as we are constantly preaching, its all about the timing of your working capital and cash flow needs. Its that constant pattern of inventory turning to receivables turning to cash that dictates your success or failure in working capital management. A few very basic calculations that every business owner should know are your days sales outstanding in a/r, as well as your inventory turnover. They are simply arithmetic calculations.

Because of those two great assets, A/R and inventory you not only want, but are often forced to consider borrowing against these assets. In Canada this is accomplished in a variety of manners. They include bank lines of credit, non bank asset based lending facilities, receivable financing on its own, and occasionally inventory finance on its own merit. Even your SRED tax credits or purchase orders can be financed if applicable . You make a smart decision when you utilize one of the above solutions with a focus on borrowing what you need and using and managing daily to that need.

The problem we run into all the time is when clients approach us when they need funds urgently, typically when the overall risk is greater because of their current solvency situation. The bottom line is to determine the minimum amount of cash you need, include a buffer or bulge type scenario, and plan your working capital management and cash flow financing in a proactive manner. Some early warning signs of cash flow issues include declining cash balances ( obviously ) , extreme bulges in new orders , supplier payment issues , over 90 day receivables, etc.

In summary, dont over borrow, and dont under finance at the wrong time. Speak to a trusted, credible and experienced Canadian business financing advisor on solutions available today in cash flow finance for your companys needs.

www.bankingconnects.com

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