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Traditional & Alternative Commercial Business Financing

Business Loan & Asset-Based Lending & Cash Flow Solutions

You've arrived at the right address! Welcome to 7 Park Avenue Financial

( Division of 6169899 Canada Inc. )

Financing and cash flow are the biggest issues facing businesses today

Unaware / Dissatisfied with your financing options?

Call Now! - Direct Line - 416-319- 5769 Information/Sales: 416 - 702 - 5487

Let's talk or arrange a meeting to discuss your needs

Direct Email Address /

Stan Prokop -

sprokop@7parkavenuefinancial.com

Looking for Government Small Business Loans / Asset-based lines of credit / Receivable Financing (factoring) / Franchise Financing / SRED tax credit financing / Leasing and Equipment Financing / Purchase order Financing?

Traditional Versus Alternative Financing Solutions In Canada

Traditional Financing:

Source of Funding: Traditional financing typically involves obtaining funds from established financial institutions, such as banks, credit unions, and mainstream financial lenders. These institutions have a long history of providing financing to businesses in Canada.
Regulation and Oversight: Traditional lenders in Canada are subject to strict regulations and oversight by government agencies, such as the Office of the Superintendent of Financial Institutions (OSFI) and the Financial Consumer Agency of Canada (FCAC). This regulatory framework is designed to protect consumers and ensure the stability of the financial system.
Application Process: The application process for traditional financing is often rigorous and may require extensive documentation, including detailed business plans, financial statements, credit history, and collateral. Lenders assess the creditworthiness and financial stability of the borrower.
Interest Rates: Traditional lenders in Canada typically offer lower interest rates compared to many alternative financing options. These lower rates are a result of the established nature of these institutions and their access to low-cost sources of funds.
Repayment Terms: Traditional financing options in Canada typically come with fixed repayment terms and schedules. Businesses are expected to make regular payments, including principal and interest, over the life of the loan.
Security Requirements: Traditional lenders often require collateral, such as business assets or personal guarantees, to secure the loan. This collateral provides a safety net for the lender in case the borrower defaults on the loan.

Alternative Financing:

Source of Funding: Alternative financing encompasses a wide range of non-traditional sources, including peer-to-peer lending platforms, online lenders, crowdfunding, angel investors, venture capitalists, and private equity firms. These sources are typically newer and less conventional than traditional lenders.
Regulation and Oversight: Alternative financing sources may not be as heavily regulated as traditional banks, which can lead to more flexibility in terms of lending criteria and structures. However, this also means that borrowers should exercise caution and perform due diligence when engaging with alternative lenders.
Application Process: Alternative financing platforms often offer a more streamlined and quicker application process compared to traditional lenders. While some may still require business plans and financial information, the requirements are generally less stringent.
Interest Rates: Interest rates for alternative financing can vary widely depending on the source. Some alternative lenders may charge higher interest rates to compensate for the perceived higher risk associated with non-traditional financing.
Repayment Terms: Repayment terms for alternative financing can be more flexible, with options like revenue-sharing agreements, equity stakes, or interest-only payments. This flexibility can be attractive to businesses with irregular cash flows or unique financing needs.
Security Requirements: Alternative financing sources may have different collateral requirements or may not require collateral at all. Instead, they may focus on other factors, such as the business's growth potential or the founder's vision.

In summary, the key difference between traditional and alternative financing in Canada lies in the sources, regulations, application processes, interest rates, repayment terms, and security requirements. Traditional financing offers stability and lower interest rates but often comes with stricter criteria and documentation requirements. Alternative financing provides flexibility and quicker access to capital but may involve higher costs and varying levels of regulation and oversight. The choice between the two depends on a business's specific needs, risk tolerance, and financial situation. It's essential for Canadian businesses to carefully evaluate their options and choose the financing approach that best aligns with their goals and circumstances.

A Receivables Financing Counterpunch – Making Factoring Cost Work For Your Company

Speak to that trusted, credible business financing advisor we spoke of, he or she will guide you through the receivable discounting maze and set you on course with the right facility at a price that makes sense to you.

About 7 Park Avenue Financial:

We are located in the Toronto area, but we have financed customers all over Canada, from B.C. to Quebec in the east.

Financing solutions from 7 PARK AVENUE FINANCIAL can improve cash flow, enhance key operating efficiencies, strengthen working capital and enhance revenue, and improve production capabilities - Ask us how!

You are a business owner who wants options and alternatives and the right financing for your business. Commercial financing can be complex - we will make it simple for you.

GOVERNMENT SMALL BUSINESS LOANS:

7 Park Avenue Financial is an expert in small business loan financing. We finance the big guys also! If you are looking for a small business loan in Canada (typically under $1M$ ) the Canada Small Business Financing Program is for your firm. Our firm originates those loans for your company. Equipment, credit lines and financing for leasehold improvements are available under the program. A limited personal guarantee is required under the program as well as the requirement for a 2% registration fee -Companies with less than 10 M in gross annual revenues can apply for funding.

FRANCHISE FINANCE -

7 Park Avenue Financial has developed strong expertise in the area of franchise finance -

Since 2004 we financed almost 20 Million dollars of this type of business - working with some of the major 'brand' names in the industry - Several major franchisors use 7 Park Avenue Financial exclusively for their franchise financing; Franchisees who have selected this method of business acquisition benefit from our PROVEN expertise in this area... Franchise financing is specialized and we originate unique financing structures for our clients.

The Canadian franchise market is different than the U.S. market - primarily because our franchise market is smaller and more fragmented. Generally speaking, the franchise finance area is viewed as higher risk, so business owners and prospective franchisees should ensure they are working with a proven expert in the field.

There are a number of creative options available that will allow the franchisee to fully fund his or her business.

COMPUTER AND TECHNOLOGY LEASING ( IT EQUIPMENT LEASING):

Many companies are not aware of the significant benefits related to acquisition financing in computers and technology segments.

The proper term for this type of financing is 'Technology lifecycle management'. Most business owners simply consider the following question: 'Should I buy or lease my firm's new computers and software and related products and services?'

Two old adages related to leasing still ring true when it comes to the technological aspect. That is one should finance something that depreciates, and one should buy something that appreciates in value. Most business owners and consumers as well know very well that computers depreciate in value. Systems we paid thousands of dollars for years ago are now hundreds of dollars. Walk into any 'big box' retailer and see the dramatic moves in technology.

Business owners who finance technology demonstrate a higher level of cost-effectiveness. The company wants to reap the benefits of the technology over the useful life of the asset and, importantly, more evenly match the cash outflows with the benefits. Leasing and financing your technology allows you to stay ahead of the technology curve; that is to say, you are always using the latest technology as it relates to your firm's needs.

Businesses that lease and finance their technology needs are often working better within their capital budgets. Simply speaking they can buy more and buy smarter.

Many companies that are larger in size have balance sheet issues and ROA ('return on assets') issues that are compelling. They must stay within bank credit covenants and are measure often on their ability to generate income on the total level of assets being deployed in the company. Lease financing allows those firms to address both of those issues. Companies can choose to employ an 'operating lease' structure for their technology financing.

This is more prevalent in larger firms but works almost equally as well in small organizations. Operating leases are 'off balance sheet'. The firm adopts the stance of using technology, not owning technology. The lessor/lender owns the equipment and has a stake in the residual value of the technology. The main benefit for the company is that the debt associated with the technology acquisition is not directly held on the balance sheet. This optimizes debt levels and profitability ratios.

At the end of those operating leases, which are usually 36 months long, the customer has the option of:

1. Returning the equipment

2. Buying the equipment (not likely though)

3. Negotiating an extension of the financing for continued use of the computers, technology, etc.

Companies that have recently acquired computers and technology can in fact negotiate a sale leaseback' on those same assets. This financing strategy brings cash back into the company, as the firm has employed a leasing and financing strategy building on our above-noted theme - using technology, not owning technology.

Key Benefits Of Lease Financing

* The company can stay ahead of the technology curve

* Computer leasing and financing has significant balance sheet and income statement benefits

* The firm has flexibility with respect to buying new product, returning existing technology, and generating cash flow for purchases already made

Many of the benefits we have discussed relate to leasing in general. However, technology and lease financing are very perfectly suited to the business financing strategy of leasing.

SOFTWARE LEASING / FINANCING - by Stan Prokop

Many businesses, both small and large do not realize that software can be leased or financed. Although software financing is unique in some manner, in general, it has many similarities to equipment leasing.

It is also proper to ensure that the right finance firm is utilized, as many lenders are somewhat risk-averse to financing this asset. However, many others are looking for business in this area!

Contrary to popular opinion software as an asset in many cases has more value than a depreciating hard asset. It has also been confusing for lenders when it comes to the registration of collateral under Canadian PPSA (PERSONAL PROPERTY SECURITY ACT) legislation.

In its broadest term the financing or leasing of software that can't be transferred to another user. The business owner does also of course not own any development rights in the software. Software financing is treated as a financing mechanism, it is not a true lease per se.

Some additional key points around the technicality of software leasing/finance are as follows :

The right of a customer to use the software gives the company no right in the intellectual property surrounding the developer's rights in the software code. The best example of this is when we look at our EXCEL spreadsheets that we use in finance and home matters. We use the software, but Microsoft of course owns it.

The problem in the past around the financing of software revolved around the fact that lenders did not know how to collateralize and register their security. Under current PPSA legislation, intangibles and software can be collateralized. Therefore the software financing lender/lessor can be very confident that the software can be collateralized.

At the heart of the software financing issue is the true value of the software to the business owner. He runs his business on it, i.e. CRM programs, office software, manufacturing software, etc. Software lease payments tend to be made since the asset is indispensable to the value and ongoing concern of the business. Unless companies are liquidated in total bankruptcy most lessors and finance firms recover fully on their software leasing - Source - Journal of Equipment Leasing

In many business bankruptcies, the software lessor or lender is treated as a secured creditor.

Also, key to the software financing issue is that many software firms offer maintenance, support, and updates around their product. This enhances the lender's asset as it is used for longer lengths of time, and often constantly upgraded. Quite frankly it becomes less obsolete than computer hardware!

Many software lessors and lenders also finance the service and maintenance contracts associated with their customers' software acquisition.

We do acknowledge in this article that it is more difficult to finance customized software although it is possible based on the overall credit strength of the borrower. Many customized software deals are done with only investment-grade borrowers where credit risk is minimal. Many smaller ticket lessors and lenders however do now lease software. In general, these transactions are full payout capital leases.

In summary, software lease financing is available and should be considered by every business owner in the same context as a capital equipment finance transaction. The computer hardware industry has grown with leasing, and the software industry is doing that too. The same considerations an owner gives to lease vs. buy apply to a software finance acquisition.

BUYING AND SELLING A BUSINESS -

10 Advantages of Buying an Existing Business vs. Starting a New Business

1)       The business is up and running from day one, the "new business" costs and frustrations are bypassed.

2)       Established customers/clients and suppliers are in place from day one

3)       You have the opportunity to review actual financial statements rather than projected financial statements.

4)       Trained employees, equipment, inventory, chattels, fixtures, systems and processes are in place from day one.

5)       The seller of the business will lend support during the transitional stage into business ownership which for many is exciting yet may be overwhelming. The seller can act as your business coach.

6)       More financing options are available either through financial institutions or even the seller directly when considering a loan amount

7)       Higher chance of success - the "start-up" business guessing game is eliminated

8)       Reputation, credit, trust, respect and business name/brand are established from day one.

9)       Your focus and energy can be spent on improving efficiencies and profits

10)    A formula for success is already in place

Business Buyers

*       Choose a business that really interests and excites you - passion is a key ingredient to success.

*       Determine the best plan for loan approval to finance the purchase of a business.

*       Determine the market value of your business - ideally by a professional business valuation specialist - Source - www.manetwork.caFAQ

Talk to the 7 Park Avenue Financial team, a trusted, credible and experienced Canadian business financing advisor for the business advice you need to run and grow your business.

FAQ

What is business financing, and why is it essential for Canadian businesses?

Business financing refers to the funding options available to businesses to support their operations and growth. It's essential for Canadian businesses because it provides the capital needed for various purposes, such as expansion, working capital, and equipment purchases.

What types of business financing options are commonly available in Canada?

Common business financing options in Canada include bank loans, lines of credit, commercial mortgages, equipment financing, invoice factoring, and government grants and subsidies.

What is the difference between equity financing and debt financing for Canadian businesses?

Equity financing involves selling ownership stakes in the company in exchange for capital, while debt financing involves borrowing money that must be repaid with interest. Equity financing doesn't require regular repayments, but it dilutes ownership, while debt financing involves fixed repayment terms.

What are the eligibility criteria for obtaining a business loan in Canada?

Eligibility criteria for business loans in Canada typically include a solid credit history, a well-developed business plan, a positive cash flow, and collateral in some cases. Lenders may also consider the industry and business's track record.

How can Canadian businesses improve their chances of securing financing?

To improve their chances of securing financing, businesses in Canada should maintain good financial records, have a well-thought-out business plan, build a strong credit history, and explore various financing options tailored to their needs.

What are the government financing programs available for Canadian businesses?

The Canadian government offers various financing programs, including the Canada Small Business Financing Program, which provides loans for purchasing equipment and real estate. Additionally, there are regional and provincial programs that offer grants and loans to support business growth.

What is invoice factoring, and how can it help Canadian businesses manage cash flow?

Invoice factoring is a financing option where a business sells its outstanding invoices to a third-party company at a discount in exchange for immediate cash. This helps Canadian medium-sized and small businesses maintain a steady cash flow by accelerating the receipt of funds.

Are there alternative financing options available for Canadian businesses aside from traditional banks?

Yes, alternative financing options like peer-to-peer lending, online lenders, and private investors have gained popularity in Canada. These options provide more flexibility and quicker access to funds compared to traditional banks.

How does the Bank of Canada's interest rate policy impact business financing in the country?

The Bank of Canada's interest rate policy affects the cost of borrowing for businesses. When interest rates are low, it can be more affordable for businesses to take out loans and finance their operations. Conversely, rising interest rates may increase borrowing costs. Borrowers can utilize a business loan calculator to determine financing costs.

What should Canadian businesses consider when deciding between short-term and long-term financing?

Canadian businesses should consider their immediate needs and long-term goals. Short-term financing is suitable for working capital needs and short-term projects, while long-term financing is ideal for major investments, such as purchasing real estate or equipment. Careful consideration of interest rates and repayment terms is crucial when choosing between the two.

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