Currency Swap as a source of Corporate Finance
Thursday, October 13th, 2011Currency Swap as a source of Corporate Finance
organizations, both profit and non-profit. often need funding for many reasons, expansion, growth, consolidation, paying dividends and many more reasons. At times these funds can not sit idle in some bank vault on their behalf, but is borrowed. While there are sources of funds, both short and long term, companies are always in the market for cheaper sources of funds. Apart from the low interest rates a cheaper fund attract firms can also use it for a significantly long time, without feeling the pinch. For companies in the market for foreign currency for investment purposes in a foreign country or any other reason, a currency swap is usually a good source of cheaper funds .
Currency exchange, one of the basic tools of financial derivatives, involves private negotiations between the two parties to a certain payment obligations in one currency denominated for a payment obligation in another currency denominated swaps. For example, swapping dollars (U.S. Dollars) for Euros
Currency swap came as a result of foreign exchange restrictions imposed by countries on the amount and cost of obtaining foreign currency. Currency swap is a very good method of bypassing these restrictions. The main advantage is providing a cheaper source of funds for the relevant companies. For example it would be easier for a U.S. based corporation USD as a European corporation to gather, and so it would be easier for a European corporation euros in the hands if a US-based. It bypasses also limitations imposed by the governments of foreign currency.
currency swaps plain vanilla currency swap or interest rate swap agreements. Plain vanilla currency swap involves the exchange of principal and interest in one currency for principal and interest in another currency. The principal sums in the two currencies exchanged is equal to each other
currency swaps initial set involve costs such as agent fees and the cost of finding and between interested parties who may be high be. Since swaps Over-the-counter (OTC) contracts and private negotiations, they carry the risk of default. It can not be compared EXCHANGE TRADED relatively safer instruments. It is left to the companies involved to cost and other related expenses to fully analyze the use of the currency swap foreign exchange to gather, to justify. If the cost is not justified, then another source must be considered.
Franchise Financing Canada – Canadian Solutions
Sunday, October 9th, 2011Franchise Financing Canada – Canadian Solutions
article by Stan Prokop
Franchise Finance in Canada remains both a great opportunity and a challenge in obtaining the right financing, the right amount of funds, and most importantly the price, terms and structures that will give you an opportunity as a franchise entrepreneur maximize. It is clear that the concept of ownership of these issues in an already successful and proven business model is appealing to many of the Canadian business men and women equal
When clients come to us for franchise help they focused on a number of different key areas relating to the acquisition and financing 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 for a successful franchisee. Therefore we encourage all franchisees of the board of a credible, experienced and trusted advisor to seek funding that can lead them through the process of franchise financing
So what’s the prospective franchisees looking for? They are looking for the right amount of funds to finance their business to the extent that their profit expectations based on their personal financial contributions, and of course the borrowed funds to meet
The age old phrase “character / Capacity / Capital “shall apply to all loans, franchise finance, and certainly is no exception. The financier will be able to reputable lenders who are willing to make some kind of contribution of their own to create a financial perspective. Credit quality of the borrower is one of many factors in franchise financing. It is certainly not impossible to get financing if you or a low net worth or a tarnished credit rating, but it is definitely more challenging.
If you want a quick turnaround in franchisee financing component of your new business. Our experience is that if the owner is properly prepared, with a proper business plan and all the various documents required that a franchise financing can generally within 2-4 weeks of study. Several documents that are part of the entire financing process includes your personal financial information (net worth, etc.) and items such as your running franchise agreement, a certificate 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 lease premises. Your premises lease must match the term of your loan, it’s just common sense. If there are no premises, no business, so there is no mortgage payment. Again, just common sense. franchises in Canada are financed in different ways, the main method for a specialized loan program CSBF program described. Additional financing is done through term loans for working capital, equipment financing for hard assets. And generally with an operating loss line of credit at the opening of businessIn today’s challenging financial and economic environment. We believe that 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 and repayment ability of the collateral involved. Very soft costs such as franchise fees really can not be financed, so they often franchisees own investment portion of the total company
As a general rule it is a bit easier to purchase finance an existing franchise than the assets, cash flow, and the total value of the business is more established
This makes some important bottom lines look back at franchise financing –
– Run your financing. discussions and preparation early in your business
– Determine what mix of funding you need, which will be combined with your investment
– Make sure you have a proper presentation and business plan – as you do not get one done by a an expert
– If you do not have a financial background seek the advice of an experienced franchise finance advisor who can work with you and the franchisor does not have the best total overall financial franchise solution for your proposed new business, with regard to price and term structure and any collateral required
This is a successful strategy for the franchise.
About the authorStan Prokop’s founder 7 Park Avenue Financial – http://www.7parkavenuefinancial.com Originating financing for Canadian companies that specialize in working capital , cash flow and asset-based financing, the 6 year old company in more than $ 45 million of financing for companies of all sizes completed. For information and free consultation on the Canadian finance company and contact details see: