Geothermal Handbook: Planning and Financing Power Generation ...
THE CANADIAN BUSINESS FINANCING HANDBOOK
-
Upload
sapphire-ilithya -
Category
Documents
-
view
67 -
download
1
description
Transcript of THE CANADIAN BUSINESS FINANCING HANDBOOK
![Page 1: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/1.jpg)
Financing Solutions in a Challenging Environment: Taking the next step with confidence,
by Gary A. Fitchett, CA
![Page 2: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/2.jpg)
THE CANADIAN BUSINESS FINANCING HANDBOOK
• Professional reference service
• Published by CICA
• Updated half-yearly
• Published in 1992
• 2,500 pages
![Page 3: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/3.jpg)
FINANCING OVERVIEW
• How to arrange financing
• Where to go
• How to go
![Page 4: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/4.jpg)
IMPACT OF GLOBAL ENVIRONMENT
• Shortage of credit
• High uncertainty
• Interest rates
• High prices
• Recession
• Stock market crash
• Unstable currency
• Unemployment
![Page 5: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/5.jpg)
AUTO SECTOR
• Shrinkage of sales
• Inefficient operations
• Labour and legacy costs
• Impact on supply base
• Consequences to infrastructure
![Page 6: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/6.jpg)
IMPACT THROUGHOUT SECTOR
• Financing for auto purchases
• Incentives diluted market
• Guarantee warranties
• Support parts sector
• All “stakeholders” support
![Page 7: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/7.jpg)
LOOK INSIDE FIRST…
• Accounts Receivable
• Inventories
• Redundant Assets
• Accounts Payable
• Operating Costs
• Restructuring (Proposals)
• Cash Flow Planning
![Page 8: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/8.jpg)
EXTERNAL FINANCING OPTIONS
• Bank
• Term Loans
• Mezzanine Debt
• Equity
• Government Funding
• Leasing
• Factoring
• Trade Finance
![Page 9: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/9.jpg)
OTHER BANKING ALTERNATIVES
• Schedule 2 banks
• Credit Unions
![Page 10: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/10.jpg)
BUSINESS IMPROVEMENT LOAN
• Canada Small Business Financing Act
• For every business, up to $5 million in sales
• Maximum loan $250,000
• Government guarantee – 85%
• High ratio capital – 90% of cost of fixed assets
• Limited personal guarantees
![Page 11: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/11.jpg)
MEZZANINE DEBT
• Quasi-equity
• Sometimes called:• Subordinate debt
• Participating debt
• Junior debt
• Suited to predictable cash flow
• Compensate by:• Royalty• Fee• Share of profit• Options/ warrants
![Page 12: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/12.jpg)
BUSINESS DEVELOPMENT BANK
• One-stop shop
• Working capital
• Conventional term loan
• Mezzanine debt
• Guarantees
• Venture capital
• Consulting
![Page 13: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/13.jpg)
GOVERNMENT SUPPORT
• Assistance vs. Incentive
• Every tough deal
• Focus on jobs
• National Research Council
![Page 14: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/14.jpg)
FACTORING
• “ Invoice Discounting ”
• Sell Accounts Receivable
• Costly, but allows to achieve objectives
• Average cost – 6% of invoice
• Complementary to bank
![Page 15: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/15.jpg)
EQUITY
• Key foundation for business
• Reflects personal commitment
• People Power:
![Page 16: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/16.jpg)
EARLY STAGE FINANCING MODEL
![Page 17: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/17.jpg)
TAPPING PEOPLE POWER
• Royalty Units for leasehold alterations
• Preferred shares for ladies wear shop
• Angels invest profit sharing bonuses
• Royalty units for art production
![Page 18: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/18.jpg)
OTHER KEY SOURCES
• Employees (ESOPs)
• Customers
• Suppliers
• “Angels”
![Page 19: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/19.jpg)
FIVE C’S OF CREDIT
Character
Capacity
Collateral
Capital
Conditions
![Page 20: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/20.jpg)
FIVE IMPORTANT QUESTIONS TO ANSWER
• How much do you want?
• How long do you want the money for ?
• What are you going to do with the money ?
• How are you going to repay the money ?
• What are the alternative sources of repayment in the event of something going wrong ?
![Page 21: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/21.jpg)
THE BUSINESS PLAN
• Executive summary
• Business description
• Products or services
• Market analysis
• Marketing strategy
• Operations
• Management and organization
• Timing schedule
• Financial information
• Funds required
![Page 22: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/22.jpg)
HOW TO DEAL WITH DIFFICULT CIRCUMSTANCES ?
• Litigation
• Bankruptcy
• Bad credit history
• Divorce
• Medical problems
• History of poor decisions
• Flashy taste
![Page 23: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/23.jpg)
RESPONDING TO THE LENDER’S OBJECTIONS
• The business is under-capitalized…
• The business has not earned a profit yet…
• The proposed loan is too much money…
• The business is too risky…
• Your business strategy is not sound…
• Not enough collateral…
• The financial forecasts are unreliable…
![Page 24: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/24.jpg)
REJECTION !
• No, but ...”
• “No, unless ...”
• “I cannot say yes, because ...”
• “Not yet ...”
• “No, because the bank ...”
• “Hell no…”
![Page 25: THE CANADIAN BUSINESS FINANCING HANDBOOK](https://reader033.fdocuments.us/reader033/viewer/2022061612/56812cfe550346895d91d3b0/html5/thumbnails/25.jpg)
QUESTIONS?