OVERVIEW – Information on financing a business purchase in Canada. Acquisition loan funding requires specific knowledge and expertise
Financing a business purchase in Canada presents the classic ‘ acquisition loan’ dilemma. Acquiring your targeted company successfully requires some solid up front work and knowledge around valuation and finance. Where your funding comes from is key to a solid business purchase strategy. Let’s dig in.
Of course smaller acquisitions can be accomplished potentially through your personal resources, up to and including collateralizing personal assets such as your home, etc. That is of course a potential slippery slope when it comes to mixing your business and personal finances. In essences the heart of the issue is the classic business conundrum – debt or equity… and how much debt!
But a large majority of clients we talk to are certainly very unclear around who might offer to finance your acquisition given current economic and business credit challenges.
It should go without mentioning (but we will anyway!) that a commercial lender or a bank will of course want to focus on your management and industry experience skills.
The Canada Govt Small Business loan is a solid vehicle to finance business purchases up to 1 Million dollars in value. This financing also works well for the franchise industry .It’s important to note however that these loans only cover the financing of hard assets and equipment leaseholds. The ‘ SBL ‘ loan is not a line of credit of cash flow type loan. It’s critical to understand that after your final acquisition finance loan is in place that other forms of finance should be considered including lines of credit, inventory finance, and potential growth financing.
A significant amount of time should be spent on understanding the receivables, inventory and equipment assets within your targeted acquisition. The turnover of A/R and inventory, coupled with the true value and use in fixed assets should be a key part of your initial investigation. These assets play a key role in any business financing, acquisition or otherwise.
In certain situations it might make sense for you the buyer and the seller to consider ‘ seller financing ‘ often called a ‘Vendor take back ‘ strategy. If this loan is properly documented and subordinated to your ‘ senior’ lenders then that financing plays a key role in your overall finance package.
Actual financial solutions for your business purchase include:
Asset based loans
Unsecured cash flow loans
Business credit lines based on current assets – banks and non bank commercial finance companies offer this financing
Sale leaseback strategies
Govt Guaranteed Small Business Loans
If you’re looking to solve the business purchase dilemma seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your acquisition needs.
Stan Prokop – founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years – Completed in excess of 100 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing. Info & Contact Details :
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Direct Line = 416 319 5769
Office = 905 829 2653
Email = email@example.com
‘ Canadian Business Financing with the intelligent use of experience ‘
ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.
Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.
7 Park Avenue Financial
Canadian Business Financing