The Asset Based Line Of Credit : Your DIY Turnaround Strategy

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How Can an Asset Based Line of Credit Help Your Company Implement a Turnaround Strategy

Information on asset based lines of credit . Companies that need either a turnaround or growth strategy outside traditional bank financing should investigate this specialized form of alternative finance

An asset based line of credit is an excellent strategy for any firm who is considering viable turnaround options. This finance strategy is also an excellent way to assist a firm in understand what some of its underlying problems are.

An Asset based line of credit, commonly referred to as an 'ABL' arrangement can be instituted even if the company is not profitable or in fact is experiencing financial duress.

Prior to considering an ABL many firms will find they are experiencing sever cash flow pressures. Traditional working capital is shrinking, and sometimes external factors to the business simply exacerbate the financial challenge. If the business owner or financial executive do not take charge at this point a business failure in fact is likely.

Many firms gravitate towards an ABL arrangement after their bank operating line of credit. Most business owners quickly realize both the benefits and the risk of having significant bank lines in place. Traditionally these lines of credit are secured by receivables and inventory. Businesses are told they can borrow up to a certain limit based on these facilities. Every month the company submits detailed lists of a/r and inventory and can borrow certain pre agreed upon limits against those assets.

Banks typically advance 75% of those receivables that are under 90 days. In asset based lines of credit facilities that amount is often 90- 100% of receivables, creating immediate additional liquidity.

Banks have become much more cautious on inventory, that is simply because they don't, and cant be expected, to understand each firms inventory values and products. Asset based lenders tend to have much more experience in these matters and are more often than not inventory experts. Therefore advances against inventory are much higher. Again, what does that do, well it of course creates additional liquidity.

Many, if not most, oh, lets be honest, all banks set maximum borrowing limits that are dependant on other external factors such as other collateral they hold, perceived operating risk, and the value of personal guarantees of the shareholders.

Bank operating lines are best when a firm is experience steady, but not erratic growth, and when the firm can operate comfortably within its borrowing limits as agreed upon with the bank.

When firms run into financial challenges they of course have a business that is contracting in many ways. Therefore borrowing against receivables and inventory becomes limited, and the bills that need to be paid are of course paid with less cash available and on hand.

It is at this point that many businesses realize they are starting to default on bank covenants. In many cases, for a variety of reasons, sales are falling.

It is very difficult for a business owner to both realize what is happening, and, moreso of a challenge, correct the problem. Financial losses only augment the cash flow problem. Many companies in fact aren't trouble by operating losses, but have simply over expanded. Business owners get into the mindset that if they are expanding, there can't be a problem! Most financial executives know that a company can fail not for lack of profit, but from lack of liquidity.

The time to consider an asset based line of credit is probably right now. The customers bank either has, or is reviewing its options relative to collateral and security arrangements. The bank will start to take measure to ensure it gets paid in full - this typically includes reducing operating lines of credit, formally calling a loan and setting new deadlines for the customer to 'right' the business, or exit the bank relationship.

It is at this time the customer should be focusing on alternative lending sources such as the asset based line of credit with non-bank finance firms. This facility improves liquidity, places less reliance on external guarantees and collateral, and can operate with a firm that is getting back on its track to profitability. We hasten to add that a severe financial 'death spiral' cannot be properly address by either the bank or the asset based line of credit solution.

The business owner and manager must recognize the current financial situation, and address that situation in as prompt and efficient manner as possible.


7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

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
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
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.



Stan Prokop

Working Capital & Business Lines of Credit and Loans That Work : Your Must Know Strategy

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Discover These Non Painstaking Solutions To Business Financing Success

OVERVIEW – Information on working capital solutions in Canada. Business lines of credit and the right loans for your business depend on these key factors to financing success

Business lines of credit & the right loans for your business deliver on working capital, cash flow and growth for your company; they can come at a painstaking price it seems sometimes. We're exploring the strategies that allow you to be having business finance success in this area. Let's dig in.

When business owners and financial managers have successfully negotiated working capital facilities or term loans it should not be the end of the story. By that we mean that the business owner and financial mgrs must continually focus on what the bank or other financial institution requires, and more importantly, how lenders view the customer from a control point of view. So how does the lender exert control on your business?

Knowing the balance sheet must be a top focus for the business owner - once a firm is over leveraged, i.e. borrowing too heavily, the bank or commercial lender generally starts positioning around their overall security or your ability to de-leverage.

Borrowers must be comfortable and knowledgeable about the use of 'triggers '. Triggers are the implied actions the bank or institution will take when things aren't working out. This can include everything from general poor financial performance to very specific pre agreed upon financial ratios. And the business owner must remember that he or she agreed to and concurred with these ratios.

Banks want to see cash flow ' flowing ' - flowing to repay their debt - so there may be triggers put in place by the bank to ensure that minimum cash flow standards are kept, and also that owners and shareholders do not withdraw excess funds.

Over time business owners will probably find, in our experience, that the bank restrictions either tighten up or loosen, depending of course on the overall comfort level the bank has with the firm. Clearly firms that seem temporarily challenged in profits and balance sheet quality will receive much more scrutiny.

Business owners can do some very solid and valuable preparatory work in negotiation of bank triggers. If they have a solid long term history of earnings this should be a very strong negotiating point with the institution.

Simply by self introspection of the firm can the owner or financial manager focus on what is going to go wrong re sales, pricing, forex, etc. The owner needs to be able to talk to these issues and show how he could address them. Also remember that those traditional lending sources such as banks are not the only way to finance a business these days.

Other solutions in the alternative sector include:

A/R Financing/ Factoring

Inventory Loans

Purchase Order Financing

Non bank asset based lines of credit

Tax Credit Financing

Sale leasebacks

Using 'what if 'scenarios help immensely and will position yourself as knowledgeable about your business.

Discussions with your bank need not be absolute and immediate on any time of loan negotiation - you can get a great informal sense of what the bank is thinking and work from that point forward. Try and read between the lines as to what is hot, and what a Vis is not with the bank Vis their perception of your firm, industry, etc.

In summary, business owners need to show maximum flexibility on working capital and loan negotiations. Negotiations should be from strength, accentuating the positive.

Example - strong forecast sales and profits can potentially offset a weaker balance sheet. That's when those alternative financials solutions should well be investigated. Trade-offs with the bank are also encouraged- and fewer triggers and covenants are better than more!

And yes, there is more than one bank in the world, although business owners should be cautioned that shopping around is not optimal at all times, and can in fact backfire, particularly for a small business. Business owner beware! And seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help avoid those painstaking finance errors.


7 Park Avenue Financial :
http://www.7parkavenuefinancial.com
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
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
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.

Stan Prokop

SR&ED Financing In Canada : Benefiting From The ABC's Of the SRED Loan Process

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You Didn't Know Your SR&ED Refund Claim Can Be Financed ? Now you Do!

Information on SR&ED financing in Canada . The ability to monetize your refundable tax credit refund is a mechanism to accelerate the cash flow your company requires to run and grow your business. A SRED Loan works - here's why and how

Not all Canadian business owners and financial managers are aware of one of the greatest government programs still currently in existence at both the federal and provincial level. The formal name for the program is Scientific Research and Experimental Development program. Most people call it simply the SRED (SR &ED) program; we have also heard many people pronounce it as 'SHRED 'also!

We put Canadian businesses into two categories when we discuss the program - those that don't know about the program period, and those that know about the program but are not aware that their claims can be financed.
SR ED financing is an excellent source of short term cash flow, and allows a company to reap the benefits, in cash of funds that they have put into R&D.

It is probably useful to do a short overview - let's call it a SR ED primer!

The program is administered at the federal and provincial levels of the Canadian government. It is very important to note that the SR ED grant (yes it's non-repayable) is for Canadian private firms only - it does not apply to public corporations the program is applicable literally to almost every type of firm and industry in Canada. A company files it's claim at the same time it files it's year end tax return.

In our experience the majority, we feel almost 95%+ of claims are prepared by an independent third party. They have expertise, credibility, and have a strong knowledge of the program and the government requirements. We would further point out that if a claim is not prepared by a qualified third party then there may be an issue in financing the claim - not always, but sometimes.

Claims can be expensive to process and prepare, and in general the industry has evolved into two types of costs associated with the claim. What are those two cost scenarios?

1. Customer pays a third party in full for time and preparation involved in the claim. The customer reaps the full benefits of the claim when it is processed

2. Customer signs an agreement on a contingency basis, and pays the preparer of the SR ED a portion of the claim when it is approved - bottom line he has no cash outlay and the SR ED consultant is at risk re time and preparation involved in the claim.

Let's now focus on financing of the claim. The financing of the claim is somewhat of a boutique industry in Canada, and requires specialized knowledge around the quality and collateralization of the claim. The Canadian banks, as a rule, with only minor exceptions, do not make SR ED loans.

Claims are financed at approximated 70% of loan to value. What do we mean by that? We mean that loans on SR ED are made to 70% of their combined federal and provincial amount. Example - Customer files a claim for $ 300.000.00. The SR ED loan would be for 70% of that amount: = $210,000.00.

Claims can be financed relatively quickly when working with a qualified financing expert in this area. It certainly is possible to complete a transaction in a couple of weeks, from initial discussions.
Naturally some level of due diligence is required on the firm, and we point out that many firms are in fact total start ups and are filing their claim for the first time. An additional financing note is that first time claims are scrutinized more closely as the customer at that point does not have a track record in this area. Track records help the financing.


In a future article we will discuss further relevant aspects of SR ED financing. Our key take away points here are that the SR ED program is a very viable program and source of cash for Canadian business. Claims can be financed, and are a valuable source of working capital for many Canadian firms.


7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

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
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
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.

Stan Prokop

Sr&Ed Factoring – Cash & Working Now for your Canadian SRED Claim

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Information on SR&ED loans in Canada. Financing the refundable sr&ed tax credit delivers cash and working capital back to your business. Factoring sr&ed claims makes business sense - here's why!

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Sr&ed Factoring , or in effect the financing of your Canadian SRED claim is a unique and innovation method of financing your tax credit .

For many Canadian business owners and financial managers the amount that their company has invested in research and development of innovative products and services represents a significant amount of their budgets.
Naturally Canadian business appreciates the amount of funds that the Canadian government refunds as non-repayable cash grant for your firms investment into product and technology advancement.

When we meet with customers who wish to finance, (factor) their SR&ED claim it’s all about timing. They want to get the immediate benefit of that cash flow and working capital back into their firm. The financing of the claim is the way to do that – it’s a case of immediately receiving the cash refund for your claim as opposed to having to wait anywhere from several months to a year to get the refund . And if your firm is filing a SrEd claim for the allowable period of two years prior well that cash flow and working capital has now doubled and provides a significant amount of cash flow if you finance the claim today.

As we have stated the whole scenario of financing a Sr&Ed Tax credit is essentially the process of factoring, or ‘discounting the claim ‘. We would point out that the whole process is applicable to film tax credits also, which a growing and robust industry is given that the government has heightened its grants in many areas of film tax credit financing.

So whats involved in monetizing your SR&ED claim? And perhaps as important, what amount of funds can you get today for the claim. We have stated the claim is discounted or factored - business factor because they need immediate access to cash when current assets such as accounts receivable cannot provide cash flow in a manner that allows your firm to have the working capital it needs. In some cases the factoring of receivables or a SR&ED claim may be one options for cash flow generation, however in a great deal of the cases it in fact is the only option .

That is because Canadian banks are reluctant to finance SR&ED claims because of the partial uncertainty in the final approval of the claim, and the reality is that many Canadian small and medium companies currently are challenged in obtaining all the business financing they need.

How much can I get? Is the typical question asked by Canadian business when financing their SR&ED claim? The answer is typically 70% now, and generally financing is structured along the lines of no principal or interest payments on the SRED loan financing until the government approves and funds the claim. At that point your firm gets the additional 30% of the claim, less financing costs associated with the claim which vary based on size of claim, overall financial situation of your firm, etc.

We want to clearly point out that no company should be deterred from financing a claim because they are in a pre- revenue state, or if they have other financial problems or challenges, as the essential security of your SR&ED itself is the prime collateral for the financing.

Talk to an expert in SR&ED financing and determine if you’re a solid candidate for immediate cash flow and working capital via this great Canadian government program.



7 Park Avenue Financial :


http://www.7parkavenuefinancial.com

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
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653

Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
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.



Stan Prokop

Business Financing Services In Canada. Fixing Financial Emergencies Via Specialized Funding

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Summary: Information on business financing services and financial strategies for the funding needs of your firm when emergencies arise. Putting The ' Ding' In Fun When It Comes To A Financing Emergency.

Business financing services in Canada. That's where the Canadian business owner and financial manager looks when they need to quickly put the ' ding ' back in the fun; which equates to FUNDING of course!

We meet many clients who fortunately are doing a pretty good job of planning ahead for their financing needs. What they don't forsee is the unanticipated event that causes an immediate negative reaction in their cash flow and working capital funding needs. Just the other day we met with a client who had lost their major client. The problem? That represented 80% of all of their business. The adverse reaction? Well, you can pretty well feel the pain, but one immediate thing that happened was that their bank called their operating line of credit.

Is there some ways to take stock of how you can plan for adverse business events that happen pretty fast? We think there is, so let's dig in!

A lot of the points we'll make revolve around three areas, growing your business, generating profits, and just plain surviving! It's the goal of the owners and financial managers to keep cash flowing through all those periods, and each of them has their challenges.

It seems easy to prepare a cash flow forecast and get a strong sense of your inflows and outflows over time based on your own experience. But what will you do when the unexpected occurs: That might include:

Competitor issue re pricing/products
Government legislation
Technology change

Etc!

That's when things get exciting, in the worst way!

So how can the business owner plan for funding when an emergency situation occurs? To us it comes down to three elements:

1. Having a strong sense of the time it takes to search for funds - It just might be recommended that you always have an expert in Canadian business financing to talk to - even in the good times

2.Knowing what options are available - These might include a temporary bridge loan on unencumbered assets, a receivable finance strategy, Purchase order financing, an unsecured cash flow loan, and finally a monetization of any tax credits which can be financed. (Yes you can finance a SR&ED claim), and the sale leaseback of owned assets. Oh, and by the way, do you recall that client that had their chartered bank operating line of credit called - they are fully eligible for a non bank asset based line of credit?

3. Knowing that you do have a strategy to mobilize resources you are not using today. At this point you are no longer ' keeping score' in business; you're taking stock of all your financial resources in business assets, financing relationships, etc

Financial emergencies can happen to your company at any time. At that point you need to ensure you know what your resources are, what assets can be liquidated, and knowing you have alternative financial vehicles to cope with planned outflow of cash.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with a financing emergency, or help you to avoid one!




7 Park Avenue Financial :

http://www.7parkavenuefinancial.com
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
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
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.

Stan Prokop

Why Equipment Leasing In Canada Dominates The Acquisition Of Assets For Your Business : Right Choice 101

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The Rise And Fall .. And Rise Of Equipment Leasing in Canada!

OVERVIEW – Information on basic financial fundamental reasons why Canadian business owners and financial managers choose lease equipment financing as a great financial strategy for new equipment, technology, etc , including examination of key benefits for business owners and financial mgrs

Equipment lease financing in Canada has business owners and financial mgrs constantly coming back for asset acquisition alternatives.

So as business credit continues to always be a challenge it's no secret that equipment loan needs are on the rise. Simply speaking its
one of the best alternative methods of acquiring equipment in a very cost effective manner!
We use the term equipment, but let’s be clear that that term includes every business asset you can imagine for Canadian business needs - that includes

Construction equipment


Airplanes!

Computers

Telecom assets

Software (Yes Virginia software can be financed!)

Plant machinery and equipment

Bottom line: virtually any asset you can utilize in your business.

For many of our customers it's all about a ‘competitive 'lease rate (well actually they ask for the best rate!) but we often point out that while every customer is due a competitive rate based on their overall credit quality, it is equally as important to ensure you have the right type of lease selected, the right term or length of lease, as well as the expertise in structuring your lease along the lines of your business model and financial and cash flow needs.
Example: A ' seasonal ' businesses - that isn't necessarily related to the weather all the time, it’s just the ebb and flow of their particular industry, for example a wholesale that has huge orders and contracts from a major retailer at Christmas time, etc.

Our customer are often surprised at the nuances that we can structure in a lease, such as seasonal payments, quarterly payments , sometimes even annual payments . In most cases it is not uncommon to finance all the taxes, plus the installation and maintenance relating to the equipment. (Think computing technology or sophisticated shop floor equipment).

Our customers know they have a need for the equipment. What they want is of course the equipment and the ability to preserve their capital, either their cash on hand or working capital by way of their bank operating line or asset based lending facility.

There are many financial/accounting advantages to business leasing. Lease payments more often than not are tax deductible, so they have further advantages over term loans obtained via banks or other financial institutions.

Key point: It's always good to do some solid lease versus buy versus loan analysis to determine what the right way to acquire a business asset is.

SUMMARY: there are financial benefits and overall business benefits based on the proper use of leasing. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your asset purchase needs. That’s a winning Canadian financing strategy!




7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

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
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
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.

Stan Prokop

Asset Finance In Canada : Would Your Company Benefit From An Asset Based Line Of Credit

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The Not So Secret Origin of Asset Based Non Bank Revolving Credit Lines

OVERVIEW – Information on asset finance solutions in Canada. The asset based line of credit can solve the working capital and cash flow needs of Canadian Businesses In the Small To Medium Enterprise sector

Asset finance and revolving credit lines that can generate cash flow / working capital for business are almost always a top priority for Canadian business owners and financial mgrs. Could your company benefit from this method of financing? We think so, let's dig in.

Independent finance firms are the real origin of asset credit lines - they are therefore ' non bank ' in nature.

Entering into this type of facility should always be done with the expertise of a business financing advisor, your accountant, and in some cases... your bank! More on that last one later.

The most important thing you can do in contemplating such a transaction is to both understand the financial offering, and at the same time ensure you understand how the Canadian marketplace works.

Asset finance, or asset based lines of credit provide your Canadian firm with maximum utilization of asset values related to 3, possibly essential components of your firms asset base.

Those components?

Inventory

A/R

Equipment

(In some cases real estate can be blended into your credit line)



So why does this facility work differently than a more traditional chartered bank line of credit? The answer?

Higher borrowing/margining limits!

What is meant by that? Well is simply the ability of your firm to leverage higher borrowing, when and if you need it, against those asset classes which we have just mentioned. In the case of receivables it tends to be 90% of receivables less than 90 days, and in the case of inventory it's a case of understanding in advance the true value of your inventory on an ongoing basis re your costs and ultimate marketability of that inventory.


The true cost benefit of an asset based line of credit facility is that you use the facility when you want and to what extent you want - from a cost perspective that equates to paying for only what you use.

Asset finance and asset based lines of credit tend to traditionally be more expensive than banks lines of credit. Let's just understand the basics of that. Currently banks pay between one or two per cent, perhaps three per cent to depositors in Canada. If they can lend out those funds at 2-300 basis points more - i.e. 5 or 6% rates to your firm the banks consider that a winning proposition .

But they want to be secure on that transaction, so that involves your personal guarantee, lower margining of the asset, and strict rules and covenants around ratios, operating performance, etc.


Independent finance firms borrow from banks, or raise capital themselves - they therefore mark up those funds so in general, asset finance and asset based lines of credit cost your firm more .

But if your firm can grow revenues and increase profits with a higher borrowing cost is that not ok. We think the weight of evidence suggests that proper consideration of an asset finance and asset based line of credit warrants significant merit.

The bottom line is as follows:

You should consider asset based facilities if your company is growing or has growth opportunities .Bank lending is still difficult to access for many small and medium sized firms

Investigate asset finance, determine your needs, and work with a credible advisor to ensure your Canadian asset facility can help your firm grow revenues and profits.


7 Park Avenue Financial :

http://www.7parkavenuefinancial.com


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
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR

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.

Stan Prokop