First Financial Coach

Article by Stan Prokop

Film, television, and digital multimedia financings are always a challenge to Canadian based productions, but recent trends in the industry allow for a number of new and aggressive ways to finance your ongoing productions. For many participants the playing field is somewhat complex, as it is a mixture of industry, government and private sector financing that ultimately bring financing and cash flow to the success of your work. No one seems to be disputing the tremendous growth in the industry, particulary in Canadas major entertainment centres of Toronto, Vancouver, and Montreal.

Canadian content is king when it comes to financing strategies. As the industry if financed on a much larger scale in the U.S. there is always a challenge for Canadian productions in all entertainment sectors to find both short term working capital and significant long term capital and equity. The support the industry is getting from both provincial and federal sectors continues to be quite overwhelming.

The financing of tax credits in film, tv, and digital media, either through the Scientific Research and Experimental Development program, of the various other supported programs is one of the strongest ways to achieve interim working capital and help to balance your debt/ equity investments in any particular production. The good news is, that with the experience of a trusted and credible financing advisor in this area even accrual financing can be applied to these sorts of tax credits. That only means one thing of course – getting your funds immediately, and not waiting for the ultimate tax credit refund under the particular program under which your production is domiciled.

We are often asked if Canadian chartered banks play a role in these types of financing, and the answer is – yes, but very selectively. We have met and worked with specialized personnel from the banks in the area, and they clearly are ‘ boutique functions ‘ of the bank as a whole. Naturally though access to funds themselves is not a problem, as Canadian banks continue to be a world leader in liquidity, tier one capital levels, and access to funds.

So how do entertainment entrepreneurs access this capital. We simply believe that you must seek and search out experienced, trusted and credible advisors in this area. Financial people tend to be somewhat unable to predict ‘ hits and misses ‘ in the entertainment and media sector, we’ll let the creative type do that, but if there is access to financing available through areas such as tax credit financing, gap financing, accrual financing, etc its safe to say lets let the financial people handle that!

In our experience tax credit financing tend to be a minimum of 200k+ and up in Canada, and can of course go into the millions of dollars, so access to capital and who you are working with is very important. Naturally since out tax credit system and the financing of those credits infers a ‘ Canadian content ‘ ‘Canadian Equity ‘ requirement the additional pressure of having to finance just in Canada by virtue of the tax restrictions places just a bit more challenge of financing.

When does tax credit financing work best – In our opinion its when current programs are maximized and monetized simply from a timing perspective, accessing your capital now, not at some later point in time.

Your ability to discount now that future receivable or revenue stream is one of the greatest tools you have in financing prodcutons and content from a debt perspective. Actually its not even really debt, because you are simply monetizing or discounting an asset such as a tax credit receivable. You are raising cash flows against current receivables.

In Canada there is several billion dollars of tax credits awarded annually to the industry, so the ability to monetize these prior to final approval and audit, subject of coruse to your certification eligilbility, is one of your greatest assets from a financing and cash flow perspective.

Article by Stan Prokop

Producers and owners of Canadian content in the areas of film, television, and animation credits are not always aware that they have the ability to monetize or cash flow their Canadian tax credits in Canada. The three types of productions that we have referenced are provided with solid financing assistance from the federal and provincial governments in Canada. Your ability to monetize these tax credits, and turn them into cash flow at time of filing, (or in some cases before) can make or break the overall financing success of your venture. Successful results can be achieving by working with a credible, trusted and experienced finance partner for your tax credit financing in Canada. The financing of these tax credits creates, in effect premium additional cash flow to allow you to enhance your initial equity and debt and gap financing strategy. Let’s use a simple example wherein a Canadian produce in film, TV, or digital animation is financing a venture through equity and debt, and let’s say it’s a 50/50 proportionate relationship. The non equity portion of these ventures is often balanced with some sort of distribution agreements in Canada or elsewhere in the world. One strategy you could consider is to of course ensure prior to commencement and production that you qualify for and are eligible for the maximum amount of tax credits related to your venture. Let’s say our example consists of a 1 Million dollar independent film, and there is a 500k equity and debt component respectfully. In our example, if properly qualified and document the film owner, producer, etc can qualify for a tax credit that might easily come into the 200k-250k range. Is that the end of our example? Absolutely not – what we are saying is that you can immediately finance that claim, either at time of filing, or in some cases earlier, and utilize that cash flow for all sorts of purposes related to your venture / production.As Canadian production and content continues to play a hefty role in the producing of Films, direct to video, pay per view, and digital products the ability to finance these ventures is always a challenge. Very few of Canada’s banks and large financial institutions play a role in this type of financing; we therefore recommend to clients that they seek out the expertise of a credible, trusted and experienced advisor in this area. Maximizing your claim value and eligible cash flow are of course the rewards of working with the right party. Larger and well known studios require financing also, but the true challenge is for independent producers and their investors who have budgets that are often ten million dollars and under, sometimes quite significantly under that threshold we just referenced. The reality also is that the industry seems to be breaking all records in areas of growth and economic activity and new forms of content and distribution. The bottom line is that as demand increases and distribution structures improve the need for financing and tax credit financing in Canada is also increased.If a production can be properly pre-sold and distributed, and tax credit financing utilized as an integral role in initial production cost financing – well, that simply creates a perfect formula for financial success. To be successfully financing a production must have the proper amount of leverage, different exit and distribution strategies, and the proper utilization of tax credit and tax credit financing.Working with the proper parties can often achieve 50-75% immediate financing of your tax credits in Canada. The remainder is of course simply a buffer for the lender to allow for financing costs themselves, and any time lapses in the final approval and cheque from federal and provincial players that regulate the new generous tax credits. Tax credits are increasingly generous in Canada – just in the last year or so a number of enhancements have been made to the various programs at various levels of government. Take advantage of these credits, and further investigate monetizing those credits at time or filing of prior to maximize the cash flow and overall financing strategy of your film, TV, or animations projects.

Article by Stan Prokop

Can you please explain asset finance, or asset based lending to me? Is a common question we get from clients who want more information about Canada’s newest business financing solution? They keep hearing how this solution has solved the problems of their competitors and want to know more.So is it a difficult concept to understand? Hardly. Asset based financing, often called ‘ABL’ by those in the industry, is simply the method of obtaining the maximum working capital you need from your assets, which include typically receivables, inventory, and in many cases some equipment and/or real estate. That’s as simple as it gets. It is a little different when we explain how the whole process works, but simply view it as your ultimate working capital tool for financing your business.Although it’s been in existence for many years, in the past asset finance or asset based lending (we also call it a ‘working capital facility “) is coming into vogue. It doesn’t take rocket science to understand when, given traditional financing almost totally collapsed in the 2008-2009 global meltdown, and customer began searching for options and alternatives to their business financing needs.Lenders like asset based financing simply because they are using their expertise and knowledge in your assets to help you cash flow your business.Although many companies turn to asset based lending when they cant access traditional bank financing the reality is that this type of financing has some unique characteristics that allow you to utilize the financing for major expansions, acquisition of a competitor, or even more common, a ‘bridge ‘financing prior to re structuring your firm and accessing the traditional capital markets again.As we stated, it’s very simple for us to explain to clients what an ABL facility is, it’s a bit more complicated to get them to understand how it works. The best way to explain it though is to simplify it all and say that you should consider asset finance via a working capital facility as simply a ‘ revolving line of credit around all your business assets ‘. Can that be anymore simply to understand? We don’t think so.Typically the process is as follows – After the traditional ‘ application ‘ process there is an agreed upon value put on all your business assets – as we said, 99% of the time the assets under this financing include receivables, inventory, equipment, and in some cases real estate. The most common assets though are receivables and inventory.Your firm provides regular monthly, and in some cases weekly updates on the values of these assets, and you in turn use your regular bank account to draw down on funds, as you need them, to run your business. Similar to a bank revolving line of credit facility your asset based financing facility fluctuates everyday as a dollar of capital flows through your business – you purchase product, you generate a receivable, you collect your receivable, and of course the process repeats itself. The beauty of this type of facility is that as your assets grow the line of credit grows with you – you can truly say that you have unlimited financing.Asset based financing, or asset finance in Canada is highly specialized. Speak to a trusted, credible business financing advisor in this area to ensure you understand the options, and of course the benefits, of this unique and creative method of business financing.

Article by Richard Shaw

Shaw Capital Management and Financing tips on Why a Business Asset Based Loan Financing Is the Perfect Solution for Cash Flow in CanadaShaw Capital Management and Financing provide same-day-funding. We can help you meet your cash flow needs immediately without entering into a long term factoring relationship. The money you get for the freight bills we purchase is payment in full. You are a Canadian business owner and financial manager looking for info and guidance on a business asset based loan. What is asset based loan financing, sometimes called cash flow factoring – how does it work, and why could it be the best solution for your firm’s working capital challenges.Let’s cover off the basics and find out how you can benefit form this relatively speaking new form of asset financing in Canada.A good start is to always understand and cover off some basics around what this type of financing is. Simply speaking the facility is a loan arrangement that is drawn down and repaid regularly based on your receivables, inventory, and, if required, equipment and real estate should your firm possess those assets also.By collateralizing your assets you in effect create an ongoing borrowing base for all your assets – this feasibility then fluctuate on a daily basis based on invoices you generate, inventory you move, and cash you collect from customers. When you need more working capital you simply draw down on initial funds as covered under your asset base.Your probably can already see the advantage, which is simply that if you have assets you have cash. Your receivables and inventory, as they grow, in effect provide you with unlimited financing.Unlike a Canadian chartered bank financing your business asset based loan financing in effect has no cap. The alternative facility for this type of working capital financing is of course a Canadian chartered bank line of credit – that facility always comes with a cap and stringent requirements re your balance sheet and income statement quality and ratios, as well as performance covenants and personal guarantees and outside collateral. So there is a big difference in the non bank financing we have table for your consideration.Your asset based lender works with you to manage the facility – and you are required to regularly report on your levels of A/R and inventory, which are the prime underpinnings of the financing.Smaller firms use a particular subset of this financing, often called factoring or cash flow factoring. This specific type of financing is less transparent to your customers, as the cash flow factor might insist on verifying your invoices with customers, etc. A true asset based loan financing is usually transparent to your customers, which is the way you want it to be – You bill and collect our own invoices.If our facility provides you with unlimited working capital then why have you potentially not heard of it and why aren’t your competitors using it. Our clients always can be forgiven for asking that question. The reality is that in the U.S. this type of financing is a multi billion dollar industry; it has gained traction in Canada, even more so after the financial meltdown of 2008. Some of Canada’s largest corporations use the financing. And if your firm has working capital assets anywhere from 250k and up you are a candidate. Larger facilities are of course in the many millions of dollars.The Canadian asset based financing market is very fragmented and has a combo of U.S., international and Canadian asset finance lenders. They have varying appetites for deal size, how the facility works on a daily basis, and pricing, which can be competitive to banks or significantly higher.Speak to a trusted, credible and experienced business financing advisor and determine if the advantages of business asset based loan financing work for your firm. They have the potential of accelerating cash flow, giving you cash all the time when you need it ( assuming you have assets ) and essentially liquefying and monetizing your current assets to provide constant cash flow, and that’s what its all about. Stan Prokop is founder of 7 Park Avenue Financial – http://www.7parkavenuefinancial.com

Article by Richard Shaw

Avoid scam, learn about Asset Based Financing. Shaw Capital Management and Financing tips on Why a Business Asset Based Loan Financing Is the Perfect Solution for Cash Flow in CanadaShaw Capital Management and Financing provide same-day-funding. We can help you meet your cash flow needs immediately without entering into a long term factoring relationship. The money you get for the freight bills we purchase is payment in full. You are a Canadian business owner and financial manager looking for info and guidance on a business asset based loan. What is asset based loan financing, sometimes called cash flow factoring – how does it work, and why could it be the best solution for your firm’s working capital challenges.Let’s cover off the basics and find out how you can benefit form this relatively speaking new form of asset financing in Canada.A good start is to always understand and cover off some basics around what this type of financing is. Simply speaking the facility is a loan arrangement that is drawn down and repaid regularly based on your receivables, inventory, and, if required, equipment and real estate should your firm possess those assets also.By collateralizing your assets you in effect create an ongoing borrowing base for all your assets – this feasibility then fluctuate on a daily basis based on invoices you generate, inventory you move, and cash you collect from customers. When you need more working capital you simply draw down on initial funds as covered under your asset base.Your probably can already see the advantage, which is simply that if you have assets you have cash. Your receivables and inventory, as they grow, in effect provide you with unlimited financing.Unlike a Canadian chartered bank financing your business asset based loan financing in effect has no cap. The alternative facility for this type of working capital financing is of course a Canadian chartered bank line of credit – that facility always comes with a cap and stringent requirements re your balance sheet and income statement quality and ratios, as well as performance covenants and personal guarantees and outside collateral. So there is a big difference in the non bank financing we have table for your consideration.Your asset based lender works with you to manage the facility – and you are required to regularly report on your levels of A/R and inventory, which are the prime underpinnings of the financing.Smaller firms use a particular subset of this financing, often called factoring or cash flow factoring. This specific type of financing is less transparent to your customers, as the cash flow factor might insist on verifying your invoices with customers, etc. A true asset based loan financing is usually transparent to your customers, which is the way you want it to be – You bill and collect our own invoices.If our facility provides you with unlimited working capital then why have you potentially not heard of it and why aren’t your competitors using it. Our clients always can be forgiven for asking that question. The reality is that in the U.S. this type of financing is a multi billion dollar industry; it has gained traction in Canada, even more so after the financial meltdown of 2008. Some of Canada’s largest corporations use the financing. And if your firm has working capital assets anywhere from 250k and up you are a candidate. Larger facilities are of course in the many millions of dollars.The Canadian asset based financing market is very fragmented and has a combo of U.S., international and Canadian asset finance lenders. They have varying appetites for deal size, how the facility works on a daily basis, and pricing, which can be competitive to banks or significantly higher.Speak to a trusted, credible and experienced business financing advisor and determine if the advantages of business asset based loan financing work for your firm. They have the potential of accelerating cash flow, giving you cash all the time when you need it ( assuming you have assets ) and essentially liquefying and monetizing your current assets to provide constant cash flow, and that’s what its all about. Stan Prokop is founder of 7 Park Avenue Financial – http://www.7parkavenuefinancial.com

Article by Richard Shaw

Shaw Capital Management and Financing sharing information, tips and advice on factoring and accounts receivable financing and factoring to avoid scams and other fraudulent transactions. Information focus on the importance of choosing the right firm and understanding the intricacies of this financing alternative and what pitfalls to avoid.There probably isn’t a day when Canadian business owners and financial managers don’t hear about factoring and accounts receivable financing as a method of financing their business in Canada. Despite its growing popularity and, we can say, relative importance in the Canadian business financing marketplace this financing mechanism is still somewhat understood.What information do business owners need to know in order to assess if factoring, also known as invoice discounting, is a viable transaction? Also, are there mistakes and pitfalls to be avoided when considering this financing strategy?Let’s examine the answers to some of those questions. You can be forgiven for trying to figure out why factoring has increased in prominence from a time when no one had almost ever heard of it! The answer to that popularity is more simply and obvious than you might think, and its simply that Canadian chartered banks are finding it increasingly more difficult to fund accounts receivable (and inventory of course) to the extent that their customers need this financing.When you have a situation where the actual need for financing is acute, and the benefits and flexibility seems significant it is not hard to see the rise in popularity of such a financing mechanism.First of all, 99% of the time, factoring provides your firm with a greater level of borrowing based on your accounts receivable levels. Quite of 90-100% of you’re A/R under 90 days can be financed.So is it all good news? Not necessarily, as we are always meeting with clients that have chosen the wrong type of funding or factoring, and, even worse, find them locked into contracts they cannot get out of. That is uncomfortable for any size firm as you can imagine.As with any newer type of financing the playing field is complex. You can be forgiven for not knowing how many factor firms are out there, how they run, what their own limitations are, and, even to a certain extent, do they in fact themselves have the funding to survive, let along finance your firm. For that reason we cannot over emphasize the need to work with a credible, experienced and trusted professional in this area.Lets talk about some of the nuances, we can call them potential ‘pitfalls ‘also, of picking the wrong factoring partner. For a starter if you choose a firm who itself is not well capitalized, as we said, you might find that the financing commitments made to you cannot be honored. Canadian business has never had to think that the Canadian chartered banks could be ‘out of money ‘but the Canadian landscape is somewhat littered with small and medium sized factor firms that do not have the financial wherewithal to support their funding commitments in all places. That just re – enforces our idea that a trusted industry expert will guide you to the best partner for your firm.Other issues, again, we can call them pitfalls, to look for include:- being locked into a contract- having the total factoring cost, or pricing, not reflected properly in your term sheet- advance rates which don’t make sense relative to the price you are paying for discounting invoices- Excessive notification and intrusion with your customers, which is very prevalent in the U.S. model of factoring (Many Canadian factor firms are branches of U.S. firms)So let’s recap. It’s simply that factoring is growing in popularity. It works because it is providing funding where banks often cannot. If you don’t understand who you are dealing with and the various nuances of this type of financing it becomes a burden, not a solution. Investigate this great financing mechanism, but ensure you know what you are getting into. Talking to an expert always helps – that’s just common senseStan Prokop is founder of 7 Park Avenue Financial. Originating financing for Canadian companies, specializing in working capital, cash flow, and asset based financing, the 6 year old firm has completed in excess of 45 Million $ of financing for companies of all size.

Article by Vicente Sarabia

Banks receive their funds from depositors like you and me and therefore have a mandate not to take undue risks with the funds they lend. However, there are other options that are available.

The Small Business Administration will guarantee small loans principaly for acquisitions, renovation, or improvement of an existing business on transactions up to approximately ,000,000 (this amount will vary depending on industry and employee size). This type of financing is suitable for deals where the buyer has good to excellent credit and the company to be acquired has good historical cash flows to show ability to cover debt service on the new loan.

Additionally, it is possible to find financing in the form of NON-bank lenders located throughout the country that obtain their funds from the sale of notes and bonds on the global market and through private investors. This enables them to take on more risk and provide financing for tougher transactions that do not necessarily qualify for traditional bank financing.

Typical financing options available through such investors include financing for New projects in the developmental stage, Commercial projects as well as anything from Real Estate Investment and Development, Exploratory and Implementation of Energy Products, the funding of Motion Pictures, Business Acquisitions, Joint Venture Partnerships, Art, Commodities, Equipment Financing, and beyond.

These types of projects are normally funding through the following types of loans: Revolving Credit Lines Purchase Order Financing Motion Picture Financing Acquisition Financing Inventory Loans Secured Bridge Financing Construction Loans Real Estate Financing Mezzanine Financing International Real Estate DIP and Exit Financing Cash Flow Loans Loan Guarantees Conventional Factoring Asset Based Loans Letter of Credit Financing Funding for Health Care Providers

The People and Groups providing this type of finances on higher-risk projects include: Private Investors ? Standard Asset based Lending Companies ? Smaller National Companies ? Wealthy Individuals ? Cash Flow (also known as Mezzanine or Sub-Debt) Lenders ? Construction Lenders for both Domestic and International Projects ? Aircraft and Ship Lenders ? Golf Course Lenders ? Motion Picture Investors ? Regional Asset based Lenders ? Hard Money Bridge Lenders ? Health Care Lenders ? Providers of Import-Export Financing as well as Letter of Credit Financing ? Purchase Order Financing Companies ? Specialty Lenders in Real Estate, Equipment, Accounts Receivable and Inventory ? etc…

The underlying similarity of all these sources is that they will fund transactions that traditional lenders such as banks will not fund. These types of investors will most often provide loans that range from as little as ,000 up to and exceeding 0,000,000, subject to collateral and cash flow considerations.

Of course, as with any financial transaction, fees will apply. Typically, there will be a retainer fee, although one is not always required. The retainer fee normally varies by project and is credited against the closing fee which will typically be between 1 and 5 points. A small transaction of 0,000 would generally warrant a 5-point fee while a large transaction of 0,000,000 would typically call for a 1-point fee. Each transaction is slightly different and therefore would be dealt with accordingly.

In order to obtain these types of financing it’s best to go through a professional who is good standing with several of these types of lenders. Beware of brokers who charge a fee up-front for advice or consultation.

Article by Littlecg123

Let’s take a look into the facts: Housing prices are rising at 10-15% per year clip, rising tuition costs up to 10% of the average of each drop and energy costs – well, the average growth of prices depends on the week happens to be looking at, but double-digit rate increases have been over the past few years. And now, really sad fact: the average wage had poor range between 3 and 4 percent in the last three years. Now what, you ask whether or not it has to do with car finance?

Hey, as simple as it might otherwise be, it boils down to numbers. Interest rate: This is a little hidden killers that can destroy the pension plans and life style during his life time. Car financing is the second most important credit-related decisions you will ever do this before on their home mortgages. So, as an example, suppose you make $ 30,000 a year and are looking for car financing $ 25,000 over five years. The difference between an approved car finance rate of 6% and 16% interest equals $ 130 per month if you take a loan of more than 5 years! And here rivet – 3% annual increase in net pay you an additional $ 900 per year (and before taxes), while saving $ 130 a month for your car financing raises almost $ 1,600 more dollars in your pocket. (And hey, a tax deduction!) Even a few percentage points of margin financing on the car may actually be equal to or greater than lift you from work this year!

I had no idea of the small numbers may add up to so much money! What is my best option to get approved for car finance plan – with the lowest interest rate?

After all, your credit rating and interest rates, this team can make or break you in my life. Car finance is not rocket science, but you really have to be careful with the numbers – if you can pay thousands of dollars to complete more than you have. Your best option to finance approved car will probably be obtained through a bank or credit union. A lot of things about how to finance your car through a bank, you tend to get the best rates, personalized service, and you do not have to worry about the pushy car salesman trying to shove useless add-ons down your throat every five minutes! However, banks and credit union financing of higher car standards, so you have decent credit to consider this option.

But wait – the banks always take forever to process the loan, rather than the distribution of the seller can get me approved in minutes!

This is very true. But there is a price for convenience, there is not? The dealer will almost always offer you a higher rate on car financing – and be ready for them to try and sell you any add-on that you never wanted to take over an hour to complete their documents! This was confirmed by car finance arranged through the distribution can save you during the week of the bank financing – but only a few percent difference in interest rates could easily cost you $ 1,000 more each year in the entire length of your loan. So in the end … how much is that worth to you during the week?

All rights … dealer may be a bad car financing option – but what about those online sites that can confirm for me a few minutes?

In all honesty, that the Internet can be a great place to secure approved car finance. With the ability to hop around and shop in different places, you can really get a decent interest rates, sometimes similar to those offered by the bank – you can also get confirmation within few minutes, and driving a new car within a day or two. So what’s the catch? Well, the Internet has more than its fair share of con artists just want to get your Social Security number and other vital information. If the car financing information falls into the wrong hands … well, you can do math! Plus, the ‘Net can be awfully impersonal at times – but it is still a viable option for approved car finance at competitive interest rates.

Impulsive and poorly made car financing options may cost you just about every new car prices in your life. Validated parking is available to fund a lot of points, and each has its own advantages and disadvantages. However, if you want to be able to afford to actually driving a car somewhere other than home and at work over the next few years, you may want to avoid an inflated automobile financing, and those useless add-ons offered by dealerships.

Article by Stan Prokop

Lease Financing – Canada continues to be challenged, as is the rest of the world, for financing options and alternatives for asset financing and acquisition. Every Canadian firm has probably examined all their financing options over the last year or so., which have been particularly difficult re obtaining proper business credit and financing.

Prudent business owners will examine all their financing options in the Canadian market place. Naturally they are looking for solid rates, terms, and structures for every aspect of their business financing needs. For equipment acquisition that often is a lease financing scenario. The very positive aspect of equipment lease financing in Canada is that is can serve the financing needs of Canadian business at every stage of the business cycle, start up, growth and expansion, and special project needs.

Most leases for business financing of assets in Canada tend to have three to five year terms. The quick questions for asset financing in Canada is ‘ so what can’t be financed ‘ because currently almost every type of asst is financeable based on proper credit and structuring of a transaction. That of course means vehicles, machinery, plant equipment, computer technology and software, etc!

The smartest thing a business owner can do if they are not ‘ lease savvy ‘ is to work with a trusted financing advisor or intermediary who has credibility and experience in this area of finance.

Leasing works best and is most applicable to Canadian business financing when your company has high capital requirements in excess of your ongoing cash and credit lines. In many cases leases represent 100% financing, sometimes it is 100%+ financing as leases can cover delivery, installation, maintenance, etc.

Preservation of working capital is top of mind for most business owners, and leasing fits that challenge nicely.

The general rule of thumb in leasing is the old adage, ‘ if it appreciates buy it – if it depreciates lease it!’ When your asset and capital expenditure items will need replacement or will have depreciated significantly in a three to five year period – well… thats the time to consider lease financing.

We believe strongly that leasing is best provided in Canada by independent third party firms who specialize in this type of financing. What the leasing industry likes is that equipment financed via lease earns profit and generates revenues for Canadian firms.

As you contemplate a business financing lease you should ensure that you are addressing and thinking about some key issues – They are basic but important -

1. Your lease term should generally match the estimated life of the asset – bottom line? Don’t enter into a 5 year lease for a personal computer upgrade… they might not last that long.

2. Ensure your monthly payments reflect your repayment and cash flow budget and request seasonal or quarterly payments if applicable

3. Determine what type of lease you need – capital lease to own, operating lease to use and return, it’s that simple

Properly structured leases (we recommend using a lease advisor) can impact in a positive way your financial statements and tax issues. These should be discussed with your accountant, or as noted, lease advisor.

Some equipment leases can float, most quite frankly are fixed rate – Rates currently in Canada are very low and competitive in the 2010 business environment.

In general lease approval in Canada is solely based on your ability to pay, so a proper package should be put together demonstrating you’re historical and future cash flows, etc. Naturally that type of info is required in almost any business financing.

Leasing in Canada – examine the possibilities!

Article by Stan Prokop

Franchise Financing in Canada continues to be both a great opportunity as well as a challenge in obtaining the right financing, the right amount of funds, and most importantly the rates, terms and structures that will maximize your opportunity as a franchise entrepreneur. Clearly the concept of owning ones business in an already success and proven business model is appealing to many Canadian business people, men and women alike.

When clients come to us for franchising assistance they are focused on a number of key different areas relating to the financing and acquisition of their franchise. Many franchisees do not have a financial background – their experience is often based on their career and industry experience in the field they are looking to be a successful franchisee in. Therefore we encourage all franchisees to seek the advice of a credible, experienced and trusted financing advisor who can guide them through the franchise financing process.

So what are those prospective franchisees looking for? They are looking for the right amount of funds that will finance their venture to the extent that it can meet their profit expectations based on their own personal financial contribution, as well as of course the borrowed funds.

The century old phrase ‘character / capacity/capital ‘applies to all borrowing, and certainly franchise financing is no exception. The financier wants capable trustworthy borrowers who are prepared to make some sort of contribution of their own from a financial perspective. Credit quality of the borrower is one of the many factors in franchise financing. It is certainly not impossible to get financing if you have either a low net worth or a tarnished credit score, but it certainly becomes more challenging.

As a franchisee you want fast turnaround in the financing component of your new business. Our experience is that if the owner is properly prepared, with a decent business plan and all the necessary miscellaneous documents, that a franchise financing can generally be completed within 2-4 weeks. Miscellaneous documents that are part of the entire financing process include your personal financial information ( net worth, etc), as well as items such as your executed franchise agreement, proof of deposit, your premises lease, etc. Some clients come to us for a 5-7 year term financing for their new business, but they only have a 3 year premises lease. Your premises lease must match the term of your loan, that’s just common sense. If there is no premises there is no business, and therefore there is no loan payment. Again, just common sense.

Franchises in Canada are financed in several different ways, the major method being a specialize loan program called the CSBF program. Additional financing is done via term loans for working capital, equipment financing for hard assets. And generally a small operating line of credit at the opening of the business.

In the current more challenging financial and economic environment we believe the best franchise financing is achieved by combining several of the above financing options in a structure that makes sense for the business based on cash flow repayment ability and the collateral involved. Many soft costs such as franchise fees cannot really be financed, so they are often taken care of with the franchisees own investment portion of the total venture.

As a general rule it is somewhat easier to finance the purchase of an existing franchise, as the assets, cash flow, and overall value of the business are more established.

So let’s recap some key bottom lines on franchise financing -

- Start your financing discussions and preparation early on in your business venture process

- Determine what mix of financing you need, which will be combined with your own investment

- Ensure you have a proper presentation and business plan – if you don’t have one get one done by an expert

- If you don’t have a financial background seek the advice of an experienced franchise financing advisor who can work with yourself and the franchisor to get the best total overall franchise financing solution for your proposed new business, relative to rate, term and structure and any collateral required.

That is a successful franchise strategy.