Jun 292020

Financing is one of the most pressing needs of many businesses, especially when getting started. A loan could make the difference between you being able to fulfill that big order or keeping the lights on in certain cases. Yet, many business owners have a murky understanding of financing and business credit and are therefore either unaware of the options open to them or wrongfully assume that they’re ineligible. However, there are tons of different areas owners can explore, no matter how long they’ve been in business or the perceived state of their finances. Here are a few of them.

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Invoice Factoring

Invoice factoring is a good option if you’ve been in business for a while and have a good number of accounts receivable. This is also a good choice if your credit situation is shaky, as your debtors’ creditworthiness will be the main determining factor.

With invoice factoring, you can borrow against invoices that haven’t been paid yet in exchange for a fee. This is why your clients’ credit will be more important. If they have good credit, you should be able to get invoice factoring as long as you meet the minimal requirements. These loans are often used by businesses that need working capital or money for things such as inventory or equipment, for instance.

No Money Down Loans

No money down loans are often seen as the holy grail of business loans and can seem unattainable to people with a budding business. However, you should know that while your credit score will be considered, it is not the sole determining factor. You could also find alternative lenders with much more flexible terms.

Some lenders, for instance, will prefer to look at recent financial activity to gauge worthiness. Even if you were on a rocky start, they can assess by recent transaction volume and expenses your ability to repay. So, don’t expect that you need to have stellar credit or deal with a major institution to get a no money down loan. Take advantage of the options that are open to you and go with lenders who are friendly to businesses your size.

Give Away Equity

Another option if you want to finance your business is to offer equity in it. This could be to angel investors, a venture capital or private equity firm, or someone you know.

The ability to find investors will depend on financial activity, but also the field you’re in. For instance, you’ll have a much easier time finding venture capital firms to work with you if you’re in the tech field. In all cases, those who are able to demonstrate value, potential growth, competence, and have a sound valuation will have a better chance. Those who are willing to accept their limitations and offer control will also have more chances of striking a deal.

Financing your business is possible if you have realistic expectations and are aware of your options. Make sure that you consider all of those that are at your disposal, and don’t automatically disqualify yourself based on assumptions.

Jan 162017

There is a lot of misinformation online about personal finance, especially from all those amateur blogs. This is why you should read everything on the internet like you would drink a shot of tequila – with a pinch of salt. 😀 Today I will try to debunk some of the most common financial myths out there.

Myth #1. Credit cards are bad.

Credit cards can make you a lot of money. Fellow blogger Tawcan generates thousands of dollars in passive income through the use of his credit cards. My no annual fee Tangerine Mastercard gives me 2% cash back on most of my credit card purchases. Promotional credit card rates can be used to pay down higher interest debt. There are so many benefits to using credit cards. 🙂


Myth #2. Renting gives you more freedom than owning.

One argument renters use to justify their decision to not buy property is that they can move around more freely. But don’t be fooled by this appeal to popular opinion. Throughout human history, power and financial freedom actually went to those who owned the most resources and assets. Modern day real estate is no different.

Sure, a renter in Vancouver can move to Toronto. But as homeowner, so can I. A renter has to give notice before moving out. But I can move any time I want. I can choose between selling my existing property, or rent it out to make extra income. There are even professional property management services to help me find a suitable tenant. I received this ad in my mailbox the other day.

Everyone has to live somewhere. Being a homeowner simply gives you dominion and veto power over a real piece of land. This gives you more opportunities in life, not less. Anyone who can afford a security deposit can be a renter, including me. So a homeowner has all the same freedoms as a renter. But not vice versa.

Homeowners are generally more financially free. Most can use their properties to secure a low cost loan (HELOC) for major purchases or other liquidity needs. Over 90% of millionaires own their own homes. Meanwhile, not many renters have become millionaires by investing the difference they’ve saved over the years in the financial markets.


Myth #3. You need an emergency fund.

An emergency fund is like an insurance policy. It insures against unexpected financial emergencies. But like any other insurance plan, there’s a cost to having one. In this case it’s the opportunity cost of not doing something more productive with your pile of money. Unless you live in a third world country, consider the probability that you don’t actually need an emergency fund (EF.) I have never created an EF for myself, and I have never run into a financial emergency in my entire life. Most western societies already have generous social safety nets. Frankly, I  can’t think of anything that could possibly happen to me right now that would require me to have 3 to 6 months of expenses saved up.

If we already have proper insurance for ourselves, and stress test our finances, then having a rainy day fund is nothing more than holding a redundant insurance policy. Oh, but wait. I actually do have something prepared for a rainy day!

It’s called an umbrella. 😄


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Dec 162013

An online study by Ipsos Reid for Sun Life Financial interviewed 1,239 Canadians last month about their financial situation this year.

The survey found that overall 57% of Canadians felt they were not any better off than they were a year ago. A disproportionate amount of women and those aged 55 and older (61%) felt this way. Only 28% of those surveyed however did say their finances had improved compared to last year 🙂

Across the country Albertans were not surprisingly most likely to have improved their financial situation, followed by those in Saskatchewan and Manitoba. People in Quebec were least likely, with 63% saying their financial position was no better than a year ago.

“It’s concerning that a majority of Canadians aren’t feeling better off financially than they were last year as we head into a holiday season where we tend to spend more and save less. Canadians can take steps toward feeling better by putting a financial plan in writing and perhaps consider it as a new year’s resolution.” -Sun Life president Kevin Dougherty.

It appears that most Canadians need to take their personal finances more seriously 😕 The survey found that only 36% of Canadians contribute to an RRSP, but for those who felt their financial situation had improved, the RRSP participation rate jumps to 50%.

Tip of the day: To better your chances of improving your financial situation, buy contribute to RRSPs 🙂 Also, TFSAs are really good too, often better than RRSPs actually.

Nov 252011

Happy Black Friday. And hello to friends from Victoria. I’ve only visited once but had a great time. Butchart Gardens was my favorite part.

Image source from www.canada.com

New payroll and employment numbers just came out. On average Canadians make $873 per week, up 1.1% from last year. While that’s better than no growth at all, the inflation rate has been about 3% so in real terms, we are actually losing purchasing power, despite having a bigger paycheck. Trying to beat inflation with wage hikes is not easy, that’s why we need a hedging strategy, which will match the inflation rate, if not surpass it. But not all jobs are created equal. There will always be opportunity out there for those who know where to look.

Growing industries with demand for new workers and increasing wages:
Forestry, logging and support. – Pay = 22% above national average, 10% yearly wage growth
(the world wants our lumber)
Construction  – Pay = 28% above average, 5.2% wage growth
(more buildings for our growing population)
Professional and technical services – Pay =29% above average, 4.6% growth
(lawyers, engineers, accountants, modern society cannot function without these people)

Weaker industries (at least for now):
Manufacturing – Pay = 12% above average, 0.1% yearly wage growth
(many of these jobs are going off shore to cheaper labor)
Finance and insurance – Pay = 12% above average, -5.2% yearly wage contraction
(low interest rates + clients switching from high fee mutual funds to etfs = less revenue)
Educational services – Pay = 5% above average, -2.7% wage contraction
(tighter gov’t budgets)

Wages are based on what companies can afford to pay their employees, so it’s mostly about supply and demand. And when you think about why some industries are strong and others are weak, it should all make sense. You don’t need to study or work harder to get ahead. Just work smarter. Enter a field with less competition. Learn to market yourself. Invest your savings, and you’ll do great.