In 2004 I founded 7 PARK AVENUE FINANCIAL. At that time I had spent all my working life, at that time - Over 30 years in Commercial credit and lending and Canadian business financing. I believe the commercial lending landscape has drastically changed in Canada. I believe a void exists for business owners and finance managers for companies, large and small who want service, creativity, and alternatives.
Every day we strive to consistently deliver business financing that you feel meets the needs of your business. If you believe as we do that financing solutions and alternatives exist for your firm we want to talk to you. Our purpose is simple: we want to deliver the best business finance solutions for your company.
Tuesday, February 28, 2017
Asset Based Loan Financing For Business Credit Lines : The Perfect Solution !
OVERVIEW – Information on asset based loan financing as a business solution for business credit lines in Canada - ' ABL' lines are the alternative to traditional bank financing for firms that can't access any, or all the cash flow and working capital they need
Another term for asset financings of this type is ' cash flow factoring ' - in essence you're monetizing your current assets such as receivables and inventory - and turning them into ' CASH FLOW ‘... which we're told is ... king!
So how do the mechanics of this finance solution work? Is it really the solution for your working capital needs?
Let's cover off the basics and find out how you can benefit from this relatively speaking new form of asset financing in Canada. By the way, this method of financing your business is used by startups right up to the largest and most successful companies in Canada - so something must be working.
Simply speaking the facility is a loan arrangement that is drawn down and repaid regularly based on your receivables, inventory, and, if required, equipment and real estate should your firm possess those assets also.
By collateralizing your assets you in effect create an ongoing borrowing base for all your assets - this then fluctuates on a daily basis based on your sales and invoices you generate, inventory you move, and cash you collect from customers.
When you need more working capital you simply draw down on initial funds as covered under your asset base. Simple as that.
The advantage is clear - If you have sales and assets you can get immediate cash. Your receivables and inventory, as they grow, in effect provide you with unlimited financing. Now that's a concept!
The alternative facility for this type of working capital financing is of course a Canadian chartered bank line of credit - that facility always comes with a cap and stringent requirements re your balance sheet and income statement quality and ratios, as well as performance covenants and personal guarantees and outside collateral .
So there is a big difference in the non bank financing we have table for your consideration. But what about those friendly people at the bank - we see them all the time in TV commercials!
Unlike a Canadian chartered bank financing your business asset based loan financing in effect has no cap. Asset based lenders work with you to manage the facility - and you are required to regularly report on your levels of A/R and inventory, which are the prime underpinnings of the financing.
Smaller firms use a particular subset of this financing, often called factoring or cash flow factoring. This specific type of financing is less transparent to your customers, as the cash flow factor might insist on verifying your invoices with customers, etc. A true asset based loan financing is usually transparent to your customers, which is the way you want it to be - You bill and collect our own invoices. We've called that Confidential Receivable Financing, and it works.
The Canadian asset based financing market is very fragmented and has a combo of U.S., international and Canadian asset finance lenders. They have varying appetites for deal size, how the facility works on a daily basis, and pricing, which can be competitive to banks or significantly higher.
Seek out and speak to a trusted, credible and experienced business financing advisor and determine if the advantages of business asset based loan financing work for your firm.
Stan Prokop - founder of 7 Park Avenue Financial –
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Office = 905 829 2653
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.