Financial Fundamentals Workshop Part Two

Name: Financial Fundamentals Workshop Part Two
Uploaded: 2025-12-03T00:42:05.333Z
Duration: 47 min 20 s
Channel: Invest Insight
Description: #Finance #PesonalFinance #InvestInsight #FinancialFundamentals #Workshop #PartTwo

Invest Insight

8 followers

5 Video Views·Dec 3, 2025 #Finance #PesonalFinance #InvestInsight

#Finance #PesonalFinance #InvestInsight #FinancialFundamentals #Workshop #PartTwo

So, good morning, bonjour, and my name is Taryn Basson. I'm the Marketing and Communications Coordinator for the Northern Ontario Angels. We will begin this workshop by acknowledging that we're meeting virtually on Indigenous lands that has been inhabited by Indigenous peoples. We acknowledge all of the treaties and traditional territories on which all of you gathered today. So, thank you so much for joining us for part two of Financial Fundamentals. Just a small recap on the Investor Ready program since there's some new faces here. It's an entrepreneurial training program designed to equip participants with the skills, knowledge, and tools required to create compelling business propositions and attract potential investors. And this program is a joint effort between Link North and the Northern Ontario Angels. I'm going to go ahead and introduce Ian Lane, Executive Director of Northern Ontario Angels. Morning. Thanks, Taryn. Yeah, so as Taryn mentioned, Ian Lane, Executive Director with NOAA and Northern Ontario Angels. I'm in Sudbury. Taryn, our good friend, is in Timmins. And our other colleague, Kimberly Wahama Deshane, is on the call here as well based in Sudbury. So, those are two of our chapter communities. We have six others across the region. So, we are a pan-Northern Ontario organization and we're really meant to foster connections between entrepreneurs and businesses that are looking to scale with accredited investors predominantly in Northern Ontario, but many of them live outside of the region as well too. And so, we connect with partners like Ross and Al with Link North in Timmins and help provide complimentary services to folks that are looking to grow their business. So, I'm thankful for this partnership and looking forward to hearing from Al within today. Awesome. Thanks, Ian. Now I'm going to hand it over to Ross McDonald, Business Development Specialist at Link North. Thanks, Taryn. So, welcome everyone to our final workshop of our final Financial Fundamentals series and also our final workshop providing you with the information and guidance that you need to develop your business model in Canvas. So, I just want to remind participants and maybe the new ones that are here, as participants in our Investor Ready program, you can access Link North's free business advisory services to help you understand and develop your business model in Canvas. I'll provide our contact information and a little bit more info on Link North in the client chat box. Finally, I hope to see those of you who live in and around Timmins at our Investor Ready networking event to close off our program. That'll be at Full Beard Brewing the evening of Thursday, November 23rd, three weeks from now. I think this event will give, you know, feature a lot of great food, entertainment, and provide you with some opportunities to network with like-minded entrepreneurs, organizations, and investors. Thank you. Amazing. Thanks, Ross. So, just some webinar disclaimer and etiquette. If you haven't done so already, if you could please mute your audio channels to avoid interference unless you have a question. And this presentation is being recorded and it will be available after the call. Now I'm going to hand it over to Al Paquette. Excellent. Thank you, Taryn, Ian, Ross, for the introductions. So, this is part two, part two of Financial Fundamentals. So again, we do have some new people on the call, so I'm going to give you a little bit of a spiel on our expert, which is myself for today. So just to give you a bit of background on myself, as you may be thinking, you know, why is a business advisor an expert in Financial Fundamentals? Well, prior to joining the Link North team, I was a small business banker as well. As a commercial banker for nearly seven years. So over the years, I've reviewed my fair share of financial statements and I've dealt with various sizes of businesses. So whether it was your small kind of mom and pop shops or your large scale manufacturing companies, I really had a chance to see a lot of different types of businesses. So financial literacy is important and I've come across businesses that think they have it all on track, but on paper, they may need some help. So this particular session, we'll review some of the items I've seen, I've come across regularly, some small, but some helpful tips that my customers have appreciated. One thing that I'd like to note, so I'm not an accountant, I'm not a bookkeeper. So please keep, you know, your bookkeepers, your accountants and your bankers are people that you want on your side and they work for you. So at the end of the day, you pay them for these services. So don't be shy to ask them questions. So again, just a brief recap on the program schedule. So you can see that today we are going into workshop number six. So after today's session, there are still two workshops that you're able to attend and of course, our exciting closing networking event. So today, as previously mentioned, is financial fundamentals part two. Starting next Thursday, we will begin our intellectual property and trademark workshops where you'll get two angles on intellectual property, one from a lawyer's perspective and then one from our Canadian intellectual property office. So be sure to register for those upcoming workshops as well and of course, the Investor Ready closing event. So if you haven't seen yet, we recently confirmed Paul Sebalge, local musician as live entertainment, as well as we've hired the services of Fusion Grill that will be catering our event. So make sure to sign up for a fun and free evening of networking at Fullbeard Brewing as we wrap up our Investor Ready program. All right, so the agenda for today. So what is the purpose of part two of financial fundamentals? So this week's purpose will go into what the banks or investors are looking for from a business financial statement. So a financial statement shows a lot of useful information that can really paint a picture of a business. So last week, we went over the definition of cash flows and provided some key tips that would help you manage your financial statements and also some items to watch out for. Again, with keeping the purpose of the Investor Ready program at the forefront, which is to get entrepreneurs ready for investment, I thought it would be good to review what the investors are looking for in your financial statements, provide some key tips on some credit application processes and provide a quick and brief overview on some financial products that might be important for your specific business. So close your browsers, I don't want anybody cheating as I'd like this to be as interactive as we did last week. So last week, the level of engagement was really great. So again, we'll be asking you for your thoughts. I don't know why I put certain slides up and would love to get your feedback. So please get ready to chat in the chat box, make sure you have your chat box open. So let's get started. So what does a bank slash investor look for? So what is the bank looking for? So I won't get any feedback here, but if you have any comments, feel free to put them in the chat as we move along here. But when it comes to running a business, the bank or your investor should be a partner or even considered an extension of the business. So when you look at the success stories of businesses that are on Shark Tank or the Dragon's Den, or even when you watch the show, you can see that the investors normally want to invest their money, but they are likely to have a good say on how the business moves forward. Why? Well, odds are because they have the experience, the network and the contacts to get those businesses to the next level. And they are more than willing to help because this will only help them, only help their investment in the long run. So when it comes to growing your business or just running the day-to-day operation of your business, it's great to have a great working relationship with your bank slash investor. I know sometimes dealing with banks or investors can be scary, even frustrating at times, but I can assure you that they want to work with you because at the end of the day, that's how they make their money as well. They each have their own products and services, so it's really up to the individual business owners to find what suits them best and that can serve as the type of, or that can serve as their particular type of business the best. So that being said, what do they look at when they get approached by a business? So I've outlined three key items that I think are real important when approaching banks or investors. So I'll open it up for a minute here before moving on to the next slide. So if you don't mind typing in the chat, what do you think the next three items would be? So what are the three key things that you think that I might've put up there or even that you think might be the most important things that banks or investors look for when you approach them for investment or for a loan or for whatever, you can put as many ideas as you want. So Cody's got comments there. So a bank investor will try to invest resources in order to get their own return on investment. They will be looking to ensure that their investment is for something that is profitable or there are assets that can be used as backup. Excellent, excellent comment, Cody. Being reliable from justice, absolutely. It's definitely kind of goes in hand and we'll definitely see that kind of come up as we move along in the presentation. Suit, shoes and smile. You know what? Suits are so overrated nowadays. I was mandated to wear suits back in the day in my banking days and I just hated it. Now it's gone a little bit more casual. So the ties at least seem to be going away a little bit. And that was always one thing as well. It's kind of know to your audience. So when I was in the banking world, you go see a farmer, you go see something. If you were to show up in your shoes and your pretty shoes, you might as well just say goodbye to the business. So you'd actually show up in work boots and jeans and know to your audience. Value proposition, definitely. Business plan, cashflow, who you are, what project, how much funding needed, can you repay it? Oh, Jason, character, capacity, collateral trading and worthiness. All right, so lots of good comments there. So thank you again for participating and being engaged. So obviously the first one we're going to pull up is cashflow. Obviously this ties in directly with the presentation last week, which was strictly on cashflow and cashflow management. So obviously the investor's first train of thought when they're doing any loan or any investments is to ensure that the people or business can repay them. So how do they get repaid? Well, they're going to look at how they're going to get repaid and of course, that's via the business's cashflow. So can the business make the payments? Does the business have a strong understanding of their cashflow? Is the business managing their cashflow properly to service the additional debt requested? Those are several examples or a couple of examples that they'll be asking themselves. So it's important for the business to be able to show to them that they are ready. They will review year-over-year comparables, hence why banks will usually request, banks or investors will probably request two to five years of financial history. They will ask you about any drastic changes on your financial statements. And the more details you can provide on those changes, it would instill confidence and show that the investors are, that you are on top of things and that you have a proper understanding of your cashflow needs for your business. So again, to recap, cashflow, investors are going to want to see that you can pay your debts. So make sure that you have a good understanding and there's going to be changes every year on your financial statement. There's going to be some increased expenses. It could be a decrease in expenses as well. And a decrease is just as important as an increase when you're looking at your expenses. So make sure you have a good understanding because banks are going to look at it, investors are going to look at it and they'll probably question you on it. So if you can answer those questions, it just shows that your business aptitude is there and you have a really good understanding on your business. So next up, the levels of existing debt. So no one really mentioned their debts there in the comments section. So whether you have an existing relationship with a financial institution or if it's your first appointment with the investor or a bank or financial institution, they're going to want to review your existing debts. So your debts are usually outlined in the notes section of your financial statements. So your notes are important to the investor as they will outline the terms of each debt that you have. So from your vehicle loans, from your mortgages, from your equipment financing. So this way it allows the investors to have an accurate calculation when they're analyzing the risk. And we'll go through a few of the ratios and the calculations in a few slides. So there are many instances. So if you do have a business and you're starting up and you're just getting an accountant involved, most of the time or lately, we've seen a lot of notice to reader financial statements. So notice to reader financial statements are basically a balance sheet and an income statement with no notes. So it becomes a guessing game and a lot of work for the business owner to find all their contracts for each of their debts so that their investors can calculate the proper figures. So one of the first questions that'll be when you approach an investor is that did you approach your current financial institution for these funds? Because odds are, if you have a business, you already have a relationship with the financial institution. Sometimes the businesses just want a change of scenery or maybe they have some servicing issues or maybe they were declined from their existing financial institution. So that one question will really give them a lot of answers moving forward. Obviously, the less debt is always better, but sometimes there are ways to consolidate debt or to manage the debt with other products to potentially help with the cash flow of the business. So the important part investors are really looking for here is to see that the businesses aren't leveraged in debt. Pretty straightforward. So another important part of analyzing the level of existing debt is that this gives the investor a good understanding of what they can secure themselves to if they were to move forward with financing. If all your assets have a lien on them, then this may affect the level of security that potential investors might want to secure themselves to. So investors tend to want to be first in line and not second or even third position to realize on their security. So again, just to brief overview on first, second, and third in line kind of thing. So let's say you have a vehicle, it's secured through the bank. You've paid it off, you've paid it down for three years, so then you want to use kind of the equity as security so somebody else goes second in line. So what that means is that all of a sudden you stop making your payments, the bank takes possession of your vehicle, they sell it for X amount, but they're going to pay whoever's first in line first, so pay off that debt, and then whatever is left over for the second in line, they'll get their remainder. So sometimes there's not any left, so being second in line is basically useless. So that's why everybody tends to want to be first in line and they won't take a second or even a third position on security. Good there? All right, so on to the next. I really like this one. Skin in the game. So what do I mean by skin in the game? Well, it's pretty much right there in the slide in the graphic there. So a good definition of having skin in the game is to have a personal stake in a desired outcome. So this means that the business owners have invested some of their own money into the company. When businesses approach investors and have no skin in the game, they're basically saying that they want the investor to take on all the risk. But when a business can show that they've invested in themselves, take some of that risk away from the potential investor. This shows a commitment from the business owner in their own business that they are willing to risk their personal funds to make this a successful business. Investors are meant to be a partner in the business, not holding 100% of the risk. So again, if you show up to an investor and you say, hey, I need X amount, and then you have no personal stake in it and no risk, if you've taken no personal risk in your own business idea, how would that make the investor or potentially the bank think? You know, if they're not willing to take a shot on their own, why would I take a shot on you kind of thing, right? It's definitely something to keep in mind on, and you can definitely find out how much skin in the game you have, and we'll go over some of these calculations very shortly. But you can see that from your financial statement. So next up, this is how I personally kind of learned credit or the ins and the outs of credit. And it's kind of the easy way to remember three key factors when it comes to credit. So I'm going to ask, can anybody tell me what the three Cs of credit? So again, the three Cs of credit, three words that start with C. And maybe somebody did some research after my teaser at the end of last week's presentation, but if anybody can chime into the chat there and see capacity, collateral, character, see Norbert did his homework. There you go. We have it there anyway, so congrats, Norbert. Bonus points for you, gold star. So the three Cs of credit. So pretty straightforward. But again, it's just something simple to keep in mind when you're looking at your financial statement and you're getting ready for an appointment with an investor or with a bank. So again, capacity. Does the business have the capacity to repay the loan? Again, this ties into cash flow that we reviewed last week and that I even mentioned earlier. They're going to review your financial statements and do their analysis to see if you can afford to repay the loan or the ask that you have from either the bank or from your investor. So what do they analyze? Well, there is probably 13 or 14 different ratios that they calculate. I'm not going to go through every single one of them, but two that are fairly easy for you guys to calculate from your own financial statements or even your projections. I will go through two of them. So they are aligned in this tab here or in this slide. So you can see on the left, we have the debt-to-equity ratio. So again, the debt-to-equity ratio is calculated by dividing the company's total debt by the equity of its shareholders. Again, going back to skin in the game. So an idea of a good debt-to-equity ratio is usually between one and one and a half to one. You tend to not want to be over two to one. So if you are one to one for debt-to-equity, this means the company's total liabilities are equal to the shareholder's equity. If you are at one and a half to one for debt-to-equity, that means that the company is using one and a half dollars of debt for every dollar of equity. And when banks or investors are looking at that, they technically want to probably be between one and one and a half to one when it comes to your debt-to-equity. As soon as you start getting into the two to one, then you might be a little bit over leverage or they tend to shy away a little bit. Again, every lender is different, but this is kind of a standard kind of rule of thumb. Can you please list all 14 ratios? I didn't get that ready, but if you'd like, I do have your email and I can forward that off to everybody as well. There is probably even more than 14 to be honest, but there is a lot of different ratios that are calculated. And from my experience in business banking and commercial banking, a credit application can probably be 20 to 25 pages. It's a very long application. There's so many different ratios, liquidity ratios, current ratios, so many of them that it would take probably a course on its own to go over them. But like I said, we're trying to keep this kind of basic, but I can definitely provide that to you on a one-off if you want or if anybody wants it, we can definitely go over that. The second one that I wanted to bring up is your debt service ratios. So this is calculated by taking your net operating income and dividing it by your total debt service. So your total debt service is your annualized debt obligation, which means all of your monthly payments added together. So if you have five car loans or whatever, you basically add up your five monthly payments and you would annualize that amount. So a debt service ratio of one to one, so meaning that your net income on your financial statement is basically equal to your annual debt obligation and indicates that the business exactly has it or has exactly enough operating income to pay off its debt. A debt service ratio of two to one is considered very strong ratio and it shows the business can cover two times its debt. Banks minimum and debt service ratios tend to be in the 1.15 to 1.25 range. So that's usually what the banks like to see. So you don't have to be at that two to one, but you have to show that you have obviously enough income to meet your annual debt obligations. So another item that they'll calculate that I kind of put in the slide here as well is that when they're doing their analysis is EBITDA. So can anybody tell me what EBITDA stands for? EBITDA, EBITDA, EBITDA, EBITDA. Earnings before interest, taxes, depreciation and amortization. Jason's got it. Jason's got the experience in the banking industry as well. So that's exactly what it means. So EBITDA there, so earnings before interest, taxes, depreciation and amortization. So that's a financial metric that some financial institutions use to measure a company's operating performance and cashflow generation capability. So EBITDA is calculated by adding back interest, taxes, depreciation and amortization to that net income. So if you have your net income, you can basically add back a lot of those expenses that are on your financial statement to give you an actual idea of what your real cashflow is. They use that a lot when it comes to debt consolidations and stuff because it's kind of shown there twice. So by calculating the EBITDA gives them a good idea as to the business's cashflow capability. So again, a little bit of an overview on capacity. So again, capacity meaning can the client repay the debt? The next one is collateral. So as previously mentioned, so a quick definition of collateral. So a collateral is the asset with a value that a borrower can pledge to the lender as security for the loan. So that the loan agreement is not followed, this allows the lender or the investor to take possession of the collateral in hopes of recuperating the funds to pay off the loan. So the collateral really reduces the risk for the investors. So collateral can be held as real estate, equipment, or in some cases, cash can even be used. So at the end of the day, it's all about risk. So this will, so the banks will want to reduce their expenses or their exposure, sorry, to a certain extent. So depending on the type of loan, the percentage of collateral can be different. So when it comes to inventory, usually it's about a 50% threshold. Equipment, you can potentially get up to 100% value on your collateral. Real estate, you can potentially get up to 100%, depending on the risk. But all have different values depending on the investors and several different factors are involved which we'll go over at the end. Jason, with regards to your question, do you have any info around the add backs? Basically, you know, on your expense, on your, in your expenses on your financial statements, you'll basically see a line for interest, you'll see a line for amortization, you'll see a line for depreciation. So whatever those amounts that have been allocated for that specific year, you can just add them back to the net income and that'll give you your M&A calculation. If that's clear, let me know. If not, then we can talk about it offline. But basically, yeah, so your interest here, your interest, your taxes and all that is all on your financial statement. So you just take your net income and you add them back in. And last but not least, so the third C in this three Cs of character, or the three Cs of credit is your character. So again, last but not least, character. So who is the bank lending to? So this really goes back to the individual ownership of the business. So who are the owners? They will, so most likely, the investors or the banks will research who you are. Likely, they'll want a personal net worth statement, which will be requested to review the ownership's personal financial situation. So they'll review the individual's personal credit history. So they will ask questions about your experience in the industry, your background. Sometimes a resume is always handy to show that you have the experience necessary to get into this type of business. And it also gives them comfort in your business acumen. So you really have to sell yourself as well because you are the person that they're relying on lending that money to. You are the leader of that business. So if your personal credit history is not good, then it tends to show the inability to manage money and that could carry over to the business side of things. My question to you guys is that would you lend money to someone that's been bankrupt three times, that hasn't made a payment on time in three years, or has nine personal credit cards that are all maxed out? So again, you just got to put yourself from the lenders or the investors side of things and understand that your personal credit history is a good indication of the type of person that you are. And sometimes, don't get me wrong, there's nasty divorces that happen, there's different things that happen as well. You just never know, right? So there's always different situations, but it's a good reflection on that character piece when it comes to the credit writing. So now that you have a little bit of an idea on some tips and tricks to be ready for for that investor meeting, let's have a look at a few options as well for financing products that are available for businesses out there. So again, financial products or mortgages. So obviously, when a mortgage is on, odds are the most expensive kind of purchase a business does, especially if they have a storefront or if they even have an office or something like that. It's usually one of the highest expenses on a financial statement. So a mortgage is obviously a good way to protect that cash and finance a really big project. So business mortgages or commercial mortgages are different from your standard personal or residential mortgage. So commercial mortgages tend to be riskier for both the borrower and the lenders. So this usually results in higher interest rates and fees. The main reason for the additional risk is that commercial property tends to be harder to liquidate. So the loan to value on commercial property tends to be much lower than your standard residential mortgage. If you didn't know, so commercial lenders or investors usually will vary from a 65 to 75% in loan to value. Some may go higher, if it makes sense. But this basically means that if your building is valued at a million dollars, so they will finance 650 to 750,000, meaning that the difference you have to come up with as your down payment. So again, this is a million bucks, so it might be a little bit less for a little bit smaller scale business, but it's still a large 25 to 35% down payment that you'd have to come up with. So that being said, some lenders can be creative depending on the strength of the business and the real estate. So make sure to shop around and look at all of your options. And another thing to keep in mind as well when it comes to a commercial mortgage or business mortgage, there are several fees that are involved that some people are sometimes unaware of. So for a business mortgage, one of the fees is an application. So the application fee can vary from 0.5% to 1% of the total borrowing. So again, if you're looking at a million dollar mortgage, you can be looking at a 1% fee of that. So you have $10,000 application just to get an application with the potential investor or bank. Appraisal costs. A commercial appraisal is far more complex than a residential appraisal. A commercial appraisal, for example, can be over 100 pages long. A commercial appraisal can vary from $2,000 to $5,000 depending on the type of property. So a lot different than your standard residential mortgage where you'd be looking at 400 or 500 bucks kind of thing can be done in a couple of days. So a commercial appraisal, you have to be AACI, I don't want to say approved or designated, designated AACI. And I believe we only have one locally here in Timmins. And she is just recently AACI approved for the long, long, long time. Timmins didn't have anybody. So it'd be outsourced to other areas like Cochrane or Sudbury, which would in turn create delays in getting deals done because we had nobody to do the appraisals. Another thing to keep in mind as well is for environmental reports, especially when it comes to mortgages. So these reports are also rather expensive. These can vary in the thousands of dollars as well, but the borrower is on the hook for these costs. So again, these can vary depending on the type of reports needed, but standard is a phase one. And then sometimes the banks or investors might look for a phase two. And again, that is just to protect their collateral because they need to ensure that there is no environmental concerns. And we know what the government is, is very tidy when it comes to ensuring that the grounds and stuff like that are clean. So that's very important. So again, between the environmental reports, the appraisals and the application fees, you could be looking at several thousands of dollars. So again, just a reminder to keep that in mind and put that in your financial predictions if that's a goal that you want moving forward for your business. Some people just don't realize that there's these kind of hidden costs there. So we want to make sure that again, that we're letting people know that that's what's out there. And make sure you have a discussion paper in hand with set terms prior to ordering these reports. So a discussion paper is basically a document which outlines the investor's commitment to you and outlines the fees, the conditions and the terms of the credit product. Some of the conditions will be a satisfactory appraisal or an environmental report, as we've previously said. But at least if you have a discussion paper in hand and you bring forward the appropriate satisfactory information and you satisfy the conditions that are outlined, they shouldn't be able to go back on their deal assuming that you meet the terms of the discussion paper. So again, instead of getting your appraisal, because sometimes you can order appraisal for yourself, great, but then you need a letter of reliance or a letter of, yeah, I believe it's a letter of reliance in order for the appraisal to be issued to the bank, which is again, another couple hundred bucks just for them to issue a letter. So before ordering and spending thousands and thousands of dollars on these reports, make sure that you have a commitment from the bank saying, hey, yeah, you know what, we'll advance you this mortgage or we'll get you these funds for this mortgage, assuming that you have a proper appraisal that comes in at X value and that the environmental report is clean. And obviously you want to do that to protect yourself as well. You want to protect yourself to ensure that your property is clean and that your building is worth what you think it's worth. And again, just for timing purposes, a standard turnaround time for a commercial or a business mortgage can vary from four to eight weeks, sometimes even more, but that's usually coincides with the availability of getting an appraisal or an environmental report done. Because like I said, those are really long reports, especially environmental, so there's a lot of samples tested and stuff like that. So it could take some time. So if you have an offer on a building and you're expecting to get your conditions waived in five days, likely not going to happen. So again, something just to keep in mind when you're planning things out and approaching your investors. So next up is our lines of credit. So obviously a line of credit is probably the most valuable tool in my opinion. Again, if used properly to ensure that the business has access to resources to meet their day-to-day capital obligations. So again, a line of credit is very similar to a credit card, but tends to offer a lower interest rate. So the purpose of a line of credit is not to finance large expenditures like equipment purchases or mortgage or large asset purchases. It's meant to be used to manage your day-to-day operations. So for example, you have your accounts receivables and your accounts receivables is very high and you might not see payments for 30 to 60 days. Well, if you have your line of credit as a backup, this will help you cover your payroll, make your other overhead payments as needed as you wait for your payments. Again, line of credit is meant to fluctuate. So there's a good opportunity. So there also might be a good opportunity to purchase potentially some additional inventory at a low cost. And of course, that has to make sense. But you're waiting on payments because your accounts receivable is so high. Well, you have your line of credit to help you take advantage of that. So again, if you're going through a slow time, the line of credit can help bridge that gap until things pick back up. A lot of businesses are kind of seasonal and stuff like that. So you'll see those kind of peaks and valleys as their line of credit goes up, but then as it gets busy, then it'll go down and then go back up and down. But that's what it's meant to do. It's not meant to be a loan that stays here and then just kind of flat lines. You obviously want to see it go up and down. So a line of credit is not meant to be a loan. It's meant to fluctuate up and down. But the intent of a line of credit is for the balance to revolve back to zero every once in a while, usually twice a year. Some banks will even monitor that to make sure that it revolves back to zero to ensure that there's proper fluctuation. So if your line of credit doesn't fluctuate or if it stays maxed out, then that's a sign that things can be reviewed. And another kind of good little tidbit here. So a good indicator or a little rule of thumb is that a business should be able to operate with a line of credit of approximately 15 to 20% of their total revenue. So let's say you have $100,000 in sales, 15 to 20% would give you a 15 to $20,000 limit on your line of credit, should be sufficient to manage your day-to-day operations. Again, depending on the potential seasonality and stuff like that of your business, it might be different. But again, general rule of thumb is 15 to 20% of your total revenues. I think this is an important one as well because some people don't know that this product is out there, but I think it's a very good product for a lot of businesses. And that's obviously the equipment financing. So other than a mortgage, so the purchase of equipment can be some of the biggest purchases in your business. So ideally, we'd all like to pay everything in cash, but as previously discussed, why tie up your cash when you can finance these large purchases? So equipment financing can be for various types of equipment, from tractors, kitchen equipment, technology, software, office equipment, medical equipment, construction equipment, et cetera. Financing these large purchases over their life expectancy can be a useful tool to ensure the business's success. So similar to mortgages we discussed earlier, a down payment can be standard. However, the loan to value tends to be a little bit higher and can potentially be up to 100%. So if you have a $100,000 piece of equipment, odds are that they can potentially, or odds are that they can potentially finance up to 100% so you can get the full $100,000 minus any taxes, because unfortunately they don't finance the taxes. To finance equipment, you basically just need an invoice or a quote along with your financial information, so your financial statements, to review your capacity as discussed in the previous slides. So some banks may be able to offer revolving equipment financing, meaning it's a limit that stays on your business. So as you pay it down or you pay it off, the available limit goes back to the original limit, meaning you don't have to do another credit application on your next purchase, so which makes it a lot more easy and flexible. Basically, you would just show up to your bank and you provide them with an invoice or a quote. You basically set the terms and off you go, so it offers a much quicker turnaround time. So again, from my experience in the business world and the banking world, those are kind of the three most common financial products you'll see. You can obviously add credit cards in there as well, but with the high interest rates, I would try and stick with the lines of credit. That being said, a credit card with a rewards program or even a cashback program and used properly can be a very good tool as well. So yeah, so have a look at the cashback rewards and if you can use it properly, it may be worth it as well. So chiming back to Jason, I see his crazy appraisal costs on commercial properties. Yeah, so minimum 2,000 bucks. And when we used to bring them in from out of town, you'd be looking at four or 5,000 bucks. You'd be looking at four week waiting periods, plus an additional four weeks for them to actually do the report. So it's very, very, very cumbersome as well. Well, this one took a little bit shorter than the previous one. So we're about 10 minutes ahead of time here. So that was basically a wrap on part two of financial fundamentals. So again, the purpose of these presentations is to be as broad as possible. But as always, if anybody would like to sit down and take advantage of our business advisory services, please don't hesitate to reach out to myself or to Ross McDonald, who you heard from earlier in this presentation. So next week is the start of our two-part series where we shift our focus to intellectual property and trademarks. This is something that is becoming more and more relevant in our day and age, and having Bearskin Park provide your knowledge on how to protect yourself and your business will be a huge asset to your business. So be sure to register. So other than that, everybody, that's it from me. So I'll field any questions. If anybody has any questions, feel free to unmute yourself or jump into the chat. I know one takeaway is I'll review some of those interests, or not those interests, those ratios. Maybe I'll prepare a little document for everybody to kind of look at the key ratios as well. So we'll make sure to send that off to all the participants. You're welcome, Dean. If there's any questions, feel free to unmute or get into the chat. Can I ask one? Yeah, go ahead. So we're clarity counseling services, and we deal with mental health. And some of the, following up, I guess, on our conversation from last week about cash flow, with some of our providers through, like, let's say, Jordan's Principle, and we're starting to build some new service agreements as well, but we have concerns about their own payment terms that we're hearing sometimes that it takes like six months to get payment from them for our services. When you have a government organization, how can you negotiate, let's say, a more attractive payment terms? How do we keep them accountable for that? My gut tells me you're gonna say, do your own risk assessment, and then do it or don't do it. But I'm interested to hear that from you. Yeah, obviously, you can get into a contract or an understanding or an agreement with a government agency. It's obviously a good source of revenue, because odds are they're gonna send a lot of people your way. That being said, their terms, when it comes to government, are very, very kind of cut and dry. It's the government, right? Unfortunately, we've all dealt with different levels of government. They're very quick to take your money, but sometimes they're a little slow to give it back kind of thing, right? So the terms, you know, it'll be tough. It's funny you mentioned Jordan's Principle, because literally my neighbor works for the CRA, and her main project is Jordan's Principle. So it's just super strange that you bring that up. But yeah, if that's kind of your question, Cody, is how do you negotiate with the government, you know, when you're saying that they can potentially take up to six months to pay for some of these services under Jordan's Principle, then I would just reach out to your contact that you have with Jordan's Principle or with the Canadian government, and just let them know your displeasure. Just be like, hey, listen, why is it taking so long? You know, just be on top of them, be annoying. Sometimes it can be from a processing side that they're just a little bit slow processing their invoices and stuff like that. So it makes, obviously, you guys wait for your funds a lot longer. It takes a lot longer for you guys to receive your funds, but that could be a staffing issue. That can be so many different factors. But usually, if you have an understanding or an agreement, I don't know what your agreement says with them, for turnaround times. But if it's taking longer than what's outlined in there, then I would call them out on it for sure. Sounds good. Thank you. You're welcome. Yeah, the government's obviously a good asset, right? They have a lot of different funding agencies and stuff like that that can help your businesses. So make sure to keep an eye on those out there. You know, sometimes they're not easy to deal with, but at the end of the day, they're there to help. But yeah, we all know that it can be sometimes difficult, but yeah, definitely a good asset to have. That would be considered like a grade A, because at the end of the day, sometimes when you have receivables, you have your kind of like your A or triple A and your different kind of rated clients kind of thing. So the government is obviously, you know, number one, because you know you're gonna get your money from them. Sometimes you have certain clients that it could be like, you know, B rated or C rated kind of thing, because you just don't know if you'll ever get paid from them. But you know, government agencies, any big businesses, you know, those are technically, or tend to be your A listed kind of tables or receivables. So they're good to have. But yeah, it's a, yeah, the government's good. Thoughts on presenting your loan requirements to more than one bank at a time. Absolutely. Shop it around. This way it'll set some fire underneath your banker as well, or your potential investor as well to make a decision. Because sometimes it can drag. Seen it numerous times that it can drag. So yeah, like approach different banks. Absolutely. Depending on your loyalties and your preference, but I would definitely go to different financial institutions or different investors and say, hey, listen, this is what I would like. Never say this is what you need, because sometimes your needs and your wants are a little bit different. This is kind of what I would like to do. I find approaching a bank or an investor with a plan is a lot better than saying, here, I need a million dollar loan for a mortgage, or I need a million dollar line of credit, or say, you know what, this is what I want to do. Present your case as to why you want to do it. And you can definitely make that presentation to more than one person. And then you'll probably get numerous phone calls if you're prepared. But yeah, thoughts on presenting your loan requirements to more than one bank at a time. Yeah, just make sure that you're not all pulling your credit history and stuff like that at the same time, because then that can have a personal effect on, or that can have an adverse effect on your personal credit history. But from a business standpoint, like, you know what, if you want to print out a few copies of your financial statements and present your business case to several financial institutions, absolutely. Doesn't hurt to try. And they all have different products and they all have different services and they all have different turnaround times. So you'll be able to make your decision from there on what you like best. Awesome. Did we have any other questions in the chat? I guess we're good. So thank you everybody for participating in our Financial Fundamentals Workshop today. So I'd like to thank our presenter, Al Paquette, for sharing his financial knowledge with us. Just a reminder, a link to this recording will be available after this call. And next week, we are diving into Intellectual Property 101 with our gold partners, Bearskin and Parr, LLP. They're an IP firm operating out of Toronto. So their main practice areas are patent prosecution, trademarks, litigation, copyright, and regulatory slash privacy law. As mentioned, this will be next Thursday, November 9th at 10 a.m. The same Zoom link is being used for all webinars and you should receive a reminder email with this information as well. And then also just a quick reminder, our close event is on November 23rd at Full Beard Brewing here in Timmins to help celebrate the end of the program. So it's free to register and we'll have live music from Paul Sebalge and catering from the Fusion Girls. So it's a great opportunity for those looking to network fellow entrepreneurs and we hope to see you there. Thank you, merci, and miigwech. Thanks everybody, have a great day.