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.
Thursday, June 1, 2017
Everything You Need to Know in Negotiating a Term Loan
As simple as it may seem, the business owner has to think like the banker - that allows one to reverse the negotiation stance to some degree. Also, it's all about 'strategy'.
We would point out also at the outset that there are a number of banks, and an equally larger number of independent finance firms that offer term loans. The business owner should ensure he is aware of the market players, and who offers what. The goal tends to always be the same though - get the largest loan at the best rate. Not easy to achieve!
Business people as we have said, should have a solid strategy in the entire process, and believe me it's a process.
Borrowers can benefit by doing research into the banks current market and objectives in commercial finance. There will be issues and objections raised by the bank on the owners submission - they should be dealt with in a manner that keeps the loan submission positive in nature. Thousands of books are written on the art of negotiation, and no business owner can expect to reasonably get the full amount with all terms that he or she asked for.
Term loans are generally for long term assets. They are paid by future cash flows and earnings. That bring two bear two key source of information that should be properly prepared - what has the business done financially, and what has it he potential to achieve - i.e. a forecast.
Banks focus on cash flow - so they will want to carefully look at what the risk is to those future cash flows. Business people should be prepared to talk thoroughly about their own particular industry, many industries are currently out of favor - example: automotive; many are sought and in favor: 'Green' industries - (solar, et al).
The owner should anticipate what risks the bank or other lender will perceive in their industry - they should be prepared to talk to those risks. Owners should also remember that although they need this term loan now for this asset, that the bank will also want to look into what else they might need in the future, which might have the ability to restrict the cash flow somewhat.
Unfortunately more often than not the lender looks to historical cash flow to reflect future cash flow - therefore is a company has lots of changes in sales and profits over the years the why's and wherefores around these need to be discussed and presented.
While the focus is definitely on cash flow the balance sheet will definitely come under scrutiny. Weaknesses in the balance sheet need to be tabled and discussed.
Banks love 'ratios'. We have called them 'number relationships' in previous articles.
It is highly recommended that the business owner review and understand some of those 'ratios 'which will come under scrutiny. Typically those are liquidity, operating, and fixed asset coverage ratios.
In summary, all banks and other finance firms have very similar and basic analysis models around term loans - they involve industry and financial statement analysis, focusing as much on the past and future as the present. It behooves business owners and financial managers to understand some of those metrics used by banker, which should, in the long run, limit loan restrictions and get the business owner the capital he or she needs.
7 Park Avenue Financial :
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations .
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.
Article Source: http://EzineArticles.com/expert/Stan_Prokop/432698
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