Are ABL Business Collateral Loans The Future Of Canadian Financing – Why An Asset Based Loan Works

Every once in awhile something comes along in business that is a bit ' disruptive ' to how things are currently done. We think that ABL business collateral loans for working capital and operating financing is clearly the new ' disruptive' in business financing in Canada - an asset based loan that makes sense, and works!

Inevitably we spent large amounts of time with clients reviewing the differences between ABL (asset based lending) lines of credit and bank operating facilities. There are huge differences.

In ABL finance its all about cash flow and working capital. Your current assets, primarily receivables and inventory are monetized, pretty well to the max. Clients tend to think of this as a ' loan ', and they can be forgiven for that for we often use that terminology also , but its not a loan, term debt per se, simply the cash flowing and monetization of your assets, converting those asset values into a long term daily operating line of credit .

Borrowing capacity on business collateral loans, i.e. your ABL revolving line of credit is determine primarily, with major emphasis on you r assets. Those amounts are determine up front - we can typically say that receivables are financing at 90% of your total a/r, and inventory typically comes in at the 40-70% range , depending on the nature of your product.

We can also safely say that you can increase these percentages with your asset based loan lender after some solid historical experience on the facility is in place. Surprising as it may seem in some cases you can actually achieve an over advance on assets, either on a bulge or seasonal basis, or simply on an ongoing permanent basis. When was the last time you got more that the asset was worth in any other type of Canadian business financing?!

ABL business collateral loans are managed very similarly to a bank facility in Canada. Monthly borrowing base certificates are in place, and this pertains to both inventory and receivables. It’s a question of ' eligibility ' and a lot of discussion takes place up front on the general nature and quality of the assets that underpin your facility.

In certain cases companies who do progress type billings are also in a position to have these receivables monetized under the same facility... its been our experience that many companies have had numerous challenges when they sell and bill via contract, progess payments, final acceptances scenarios, etc.

If we had to sum up why ABL asset based lines of credit as a ' disruptive' form of business financing we would simply safely say that it maximizes business credit, is generally easier to obtain, and provides long term working capita growth as your asset base grows .

Picking and structuring the right facility can be a challenge for novices to ' ABL ' business collateral loans. Speak to a trusted, credible an experienced business financing advisor who can help you achieve the facility you need.


7 PARK AVENUE FINANCIAL

CANADIAN BUSINESS FINANCING

http://www.7parkavenuefinancial.com/business_collateral_loans_asset_based_loan_abl.html

Heavyweight Canadian Invoice Finance Funding – C I D Credit Financing & Factoring For Your Firm

Thousands of small and medium sized businesses in Canada have gravitated to invoice finance funding as a solid alternative to their needs for working capital credit and financing. But what if, just if you had access to a facility that was a notch above those thousands of firms who use traditional factoring?

Conceptually factoring credit and financing is immediately attractive to Canadian business owners and financial managers. It provides an immediate line of credit based solely on a percentage of your receivables. Solid facilities will usually advance 90% of the total of your receivable based... most business owners are aware that banks advance against a 75% under 90 day formula .

Reporting and qualifying for your draws on receivables couldn’t be much easier - it involves simply submitting an aged A/R listing which allows for your drawdown and credit financing availability.

Since the majority , ( about 99% ) of companies and firms providing invoice finance funding are not banks clients are always asking us how facilities work, if its not a bank arrangement . It's actually quite simple. Your funds and draws against your receivables are deposited by your funding and factoring firm into your regular bank account. Payments received by your firm, from your clients, are put into a separate account in the name of your finance partner. These funds, when received from your clients, reduce the amount you have drawn/borrowed on a daily basis. The bottom line, it’s your revolving business line of credit.

Now, let's get into C I D. That's the term we use to demonstrate how you can be a winner in one of the key issues around factoring and receivables credit financing in Canada. This is the practice surrounding the key issue in standard (dare we say ' old school') invoice finance funding that came to Canada with a wave of U.S. and U.K. firms that dominate the industry.

If your competitors or peers in your industry are using this traditional method here’s what happens... your end user cusotmer is notified that you have entered in a factoring arrangment - this allows the finance firm to somehow feel safer they will get paid we guess, which is understandable .

But our choice or recommended solution for firms such as yours considering this type of financing is C I D - confidential invoice discounting. Your clients aren’t notified of your financing arrangement and there is no extra charge for this method of financing.

There are of course other key issues around understanding this type of financing - the advance rate on your receivables ( i.e. how much you get .. 80-90% is standard) , actual discount fee of financing charge on your entire facility, and our desire to ensure you understand how any miscellaneous items are charged .


So whets our bottom line then? Simply that there are some true ' heavyweight' alternatives that give you both advantage and comfort when you're considering invoice finance funding and credit financing for your receivables . Speak to a trusted, credible and experienced Canadian business financing advisor in this niche area of working capital finance.




7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS FINANCING !

http://www.7parkavenuefinancial.com/invoice_finance_funding_factoring_credit_financing.html

12 Types of Business Financing in Canada - Which Do You Need? Commercial Loans & Cash Flow Finance

Are you serious? We can hear clients asking that already. Can there really be 12 different BUSINESS financing alternatives in Canada available to business owners and financial managers? And are they finance alternatives that make sense.

Actually we're not serious, there are actually more than 12 different alternatives, some are just a bit more rare or esoteric we could say, and not applicable on a daily basis to your company relative to its finance and growth needs.

For small and medium sized businesses in Canada the ability to develop an overall long term strategy and plan is key of course. At the end of the day you want to optimize business assets for borrowing and determine which type of financing works best for your firm .That type of financing is going to come from two areas , clients and suppliers, and of course external finance sources.

When addressing where your business financing is going to come from in Canada you need to determine your optimal level of debt - many business owners don't always realize that certain forms of financing actually don’t bring debt on to your balance sheet, they simply monetize assets.

So, on to what you have been waiting for! Let's do a short highlighting of commercial loans and cash flow facilities that make up our 12 sources of external business financing. (Your profits and suppliers and customers are your other source of cash flow by the way).

12 potential sources of financing in Canada are as follows - confidential invoice discounting , inventory financing, sale and leaseback strategies, equipment financing, purchase order financing, credit card receivable financing, micro loans, working capital lines of credit, bank operating lines, asset based lending, government small business loans, mezzanine and subordinated debt finance.

That's a handful for sure What it really comes down to is determine which type of financing is available to your firms overall credit quality . Often that is tied to what stage of life your company is in - we've referred to that in the past as which stage of life cycle your firm is in. That could be start up, high growth, maturity, and yes, ' distress'.

Unfortunately the larger your company is often plays into the fact that you might have more flexibility and ' wiggle room ' in Canadian business financing alternatives.

Is there a formula or roadmap for that is perfect for any one firm? Unfortunately not, each firm and industry is different. Seek a trusted, credible and experienced Canadian business financing advisor who can ensure you are aware of various solutions that are most applicable to your company... today!




7 PARK AVENUE FINANCIAL
Canadian Business Financing

http://www.7parkavenuefinancial.com/business_financing_canada_commercial_loans_finance.html

The Choice Is Yours – A Canadian Bank Line Of Credit – Or Alternatives To A Business Operating Line

Lawyers, Guns and Money - You need neither of these to ensure you have access to a Canadian bank line of credit. We simply love that term, it’s actually the title of a great song by Warren Zevon.

But you do need to ensure you understand the difference between a business line of credit in Canada, what you need to qualify, and how these facilities work. More importantly, are there alternatives to this type of operating line financing. There are!

Naturally Canadian chartered banks are the first stop in a business owners or financial managers mind when determining a source of operating financing and working capital.

From a banks perspective it’s a very strong focus on your ability to achieve the amount of operating credit you need - secondary to that of course comes your overall collateral.

It's sometime easy to forget why bank credit is sometimes difficult to obtain - we sometime forget to focus on the fact that our banks in Canada have to obtain the right capital base relative to what they lend - they have their own issues relative to profits and maintaining liquidity. That then affects your business, because your collateral, cash flow, collateral and guarantees directly impact your ability to access their credit facilities.

Unfortunately many clients often find themselves placed into a ' non performing' loan status because your financials don’t fit into what the bank considers a performing well loan. The reality is that if your business is growing you are using cash, not generating it, and that becomes a prime challenge in getting the amount of business credit you need.

It's a bit of a balance act at all times of course, the irony is that bank interest rates on a business operating line of credit are absolutely the lowest cost of financing in Canada .

We have often thought that the actual ratios and financial covenants that come with bank credit are much more important than the Canadian business owners need to get the absolutely lowest rate in bank financing - typically that is 1-2% over prime. You never want to be caught in the trap of managing your business because of what your bank covenants say.

For small and medium sized businesses in Canada the issue of personal and even spousal guarantees becomes a large one. Canadian chartered banks want to ensure you maintain that repayment responsibility - unfortunately the guarantee is one way of doing that. Many Canadian business owners therefore take great care to separate their business and personal lives when it comes to assets.

So, if a bank is the absolute low cost financing for a business operating line of credit is there any better alternative? There definitely is and it’s called an ABL (asset based line) revolver .Its specialty business financing, focusing on your firm’s assets, not your cash flow or personal guarantees or outside external collateral.

ABL lending facilities can give you all the financing a bank line of credit then. Rates are often competitive, but in many cases more costly. But at the same time you're managing and growing your business, not reacting to ratios and loan covenants.

Want clarity on a bank line of credit, or its alternative, an ABL facility? Seek out and speak to a trusted, credible an experienced Canadian business financing advisor who can assist you in the completion of either facility.




7 PARK AVENUE FINANCIAL
Canadian Business Financing
http://www.7parkavenuefinancial.com/bank_line_of_credit_business_operating_line.html

Preparing For Financing Accounts Receivables in Canada - AR & Contract Finance Must Knows!

Thinking of diving in? There isn’t a day when we don't get questions about the basics regarding one of the most valuable tools that small and medium size business owners can utilize for financing accounts receivables for the cash flowing of their ar and contract working capital investments.

However, there are many misconceptions about ' factoring ' (that’s the common terminology Canadian business owners use, and the issue of how pricing works for this type of financing is miss-understood by many.

The essence of this type of financing is actually quite simple - how it’s presented to clients and more importantly how it works on a day to day basis is where it gets confusing. But if you have the following basics down we can assure you that you'll be well prepared to both enter into such financing, and, more importantly succeed with it.

As stated, it’s not as complicated as you think - although others do a good job on that one. Factoring of financing accounts receivables is simply the sale of your ar (A/R) and contracts to generate immediate cash as you require it.

This allows firms that are much smaller or who have any of a myriad of financing challenges (high growth, a poor balance sheet, financial losses) to still win at the working capital game.

There are three main reasons you probably want to consider ar finance. The first of which is simply that the cash flow you obtain in this type of Canadian business financing allows you to maintaining daily operations and in many circumstances take discounts with your suppliers terms to your own firm . That inevitably, in our experiences enhances you relationships with your valued suppliers.

Secondly your firm simply might not be able to currently obtain all the financing you need from what we typically call ' traditional' financing sources, aka the banks. The third situation, and most appealing to many clients is simply the fact that you wont be losing sales and revenue opportunities at the expense of your competitors, who either are better financed... or perhaps already beat you to the a/r factoring solution.

Numerous other miscellaneous situations exist to consider this type of financing - they include speed and ease of approval. As well the inherent nature of this type of financing creates no upper limit on the amount of funds you can borrow.

So let’s cover 6 basic that you have to have under your belt to be successful in financing ar and accounts receivable.

First of all, your overall credit policy shouldn’t change because of A/R and contract financing - you are still responsible for any bad debts under a typical recourse agreement.

The most valuable piece of info we share with clients is that there exist a type of A/R financing that allows them to bill and collect their receivable confidentially. 99% of their competitors out there who use this financing are bound to notify your clients when you generate your invoice. We find that intrusive in the Canadian marketplace. We term this type of financing C I D - Confidential invoice discounting.

‘How much can we get?' is the typical client question. The answer is generally 90% of any invoice is advance to you the same day you generate sales. The balance is a reserve or holdback that is paid back to you (less the financing costs) when your client pays.

Pricing! You thought we would never get there, right?! A/R financing and its pricing varies significantly in Canada. Typical rates are 1-3% per month. This is where a trusted and experienced advisor can save you thousands of dollars relative to how a facility is priced, how it works, covering off all the small nuance which can add up both favorably and unfavourabley if not well managed .

Finding the right partner firm is half the battle in ar and contract finance in Canada. And the special C I D facility type we mentioned is worth its weight in gold.

Interested? Want to know more about benefits of financing accounts receivable in Canada? Speak to a trusted, credible and experienced Canadian business financing advisor today.



7 Park Avenue Financial
Canadian Business Financing
http://www.7parkavenuefinancial.com/financing_accounts_receivables_ar_contract.html

Looking For Loan Or Lease For Business Financing ? Finance Your Canadian IT & Industrial Assets

Canadian Business owners and financial managers want to be in a position to benefit from lease for business financing. Whether it’s a lease for industrial or IT (information technology) assets the goal is to achieve or maximize the benefits of the assets via use.

Asset financing in Canada consumes capital - and a lease for business financing simply is your alternative to that capital consumption, it conserves working capital and cash flow.

The good news about asset and lease financing in Canada is that it covers all types and sizes of assets. At the end of the day the collateral value of the asset , including software by the way , as well as your firms general credit quality drive the lease financing decision from the viewpoint of your new business financing partner, the Canadian lessor .

In the 2011 environment equipment financing and leasing is on a roll, and that’s an understatement! The industry is back up off its back, having survived the 2008-2009 recession and global financial implosion. The only decision you have to make is quite frankly to find the right lease partner. That choice in an of itself can often make or break your success in a lease or financing loan. (Sometimes a bridge loan is a solid alternative to an equipment lease financing.)

Quite frankly the challenge many clients face is simply knowing where and how to find the right lease financing solution, whether it be for industrial or IT assets to compliment their asset financing strategies. Lease companies in Canada cover a broad spectrum - some are bank based, some are independent, with either U.S. or Canadian ownership, and some actually are foreign based.

It is highly recommended to work with a lease partner that knows both your industry and is also the type of assets that you wish to finance. This becomes your goal and is often a challenge for many Canadian business owners and financial managers. Don't forget that when a lessor understands your industry and your asset you have a significantly higher chance of reaching what we term ' lease nirvana “. What's that? Simply financing that has the right rate, term and structure for your firms needs and cash flow requirements.

Although your firms credit quality often plays a key consideration in a lease for business financing approval it’s also the value of the asset that drives that final credit decision. Customer with less than stellar credit, even start ups by the way, have a solid chance to obtain lease equipment financing simply by virtue of the value of the asset they are acquiring. And that’s a good thing.

Key issue to consider when acquiring an asset, either industrial or IT in nature are the term of the lease, the ultimate disposition of the asset - (keep it? Re finance it? Return it? ) and how a lease financing loan works into your overall finance strategy.

Looking for the ideal lease for business solution in Canada? Speak to a trusted, credible and experienced Canadian business financing advisor to determine how you can benefit from Canada's most popular form of business asset financing.





CANADIAN BUSINESS FINANCING
7 PARK AVENUE FINANCIAL
http://www.7parkavenuefinancial.com/lease_for_business_industrial_it_financing_loan.html

What You Didn’t Know About The Canadian SBL Government Small Business Financing Program

SBL? It’s the Canadian Small Business Financing Program and is sponsored by Industry Canada which is an independent part of the Canadian government. It is in our opinion the best program from start up, small, and medium sized businesses in Canada. We're going to tell you why, and cover off 6 things you may not know about the program, providing clarification on each item.

Is it a financial assistance program? Not really, but its certainly a great financing , at solid rates, terms, and even structures that many much larger corporations could not achieve . We love providing our clients with an overview of 6 different elements of the program.

Let’s cover off the six key areas that continually come in the form of questions from Canadian business owners and financial managers. What are those areas of concern? They're as follows: eligibility, loan size, terms, interest rates and fees, pre payment, and finally, what assets can be financed!

Let's dig in. Eligibility. That’s a good place to start, i.e., do you qualify? The SBL small business financing program (also called BIL / CSBF) is open to incorporated or unincorporated businesses in Canada with less than 5 million dollars in actual or project sales. The program covers off 90% of any item you wish to finance based on what is financeable under the program. To qualify you should be a Canadian citizen as an owner of the business, and, in general you should ensure you have a decent personal credit history. Certain credit scores at the credit bureau will allow you to determine if you are acceptable in this area. Any time of business, service or asset based can come under this government loan program.

Loan size... ie how much can we get? That’s the typical question we get from clients. The program actually goes to$ 500,000.00 but that’s for real estate only, all other assets and leaseholds financed under the program cap out at a loan amount of 350,000.00$.

What terms are available under the program? Typically most transactions are done on a 5 year fixed term basis, although in a lot of circumstances a 7 year repayment term can be requested. That 7 year payment term will definitely lower your monthly payment and make cash flow work better for you when you need it.

Many clients assume because the SBL small business financing program often finances start ups and weaker companies in terms of assets and historical performance that rates are high for the loan. You couldn’t be more incorrect as rates are at 3% over prime, and the one time processing fee of 2% can often be also financed as part of the loan.

99% of financing in Canada for items such as leases or term loans, etc come with no pre payment options .Again, here our program shines, as pre payment can be made at anytime, without, you guess it , any penalties . It can’t get any better.

If there is one item of confusion constantly in our clients minds it’s the issue of what can be financing under and SBL loan. It is not a cash loan, and the only assets that can be financed are equpment, software, leaseholds, and real estate.

What do you think? Do you agree with us that this program is a solid one ?We certainly think so, and if you're interested in more info seek and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you to prepare a successful summary and application . It's Canadian business financing with a spin on win/win!





Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/sbl_small_business_financing_program_government.html