In Special Loans ? Here Is The Asset Based Lending Financing Alternative When Your Bank Loan is Called In

Trust us; we have heard the joke a hundred times - namely ' being in special loans is not really making your firm feel ' special ‘!

So, you are a Canadian firm that has had your bank loan called in - that’s of course the terminology used by Canadian banks when they terminate a banking relationship due to your firms covenant breaches.

Typically those ' breaches ' constantly revolve around a couple key areas : ratios out of whack , financial losses, cash flow generation challenges, your industry is out of favor ( think General Motors in 2008 - 2009 ) etc . Debt to equity seems to be the most common ' breach ' our clients face when they apprise us of being in a ' special loan' scenario.

What we won’t be sharing with you is of course why the bank has acted as they have, that’s between you and them. But here’s the good news, that there are immediate solutions to the special loan scenario, and they are available to your firm today!

The alternative of course to exiting special loans with a new operating facility is staying in special loans. That actually does seem to work sometimes, and over time the relationship is mended and you go back to your traditional bank financing facility. We are going to assume you don’t want to stay in a special loan scenario, and you agree that your bank loan called in is a reasonable reason to seek turnaround financing.

Clients in, or being told they are going into special loans are always in a minor state of shell shock - A typical reaction is simply ' If my bank has called my loan who else would even consider refinancing us? '.

The reality - replacement financing is readily available, it may come at the same cost, it may comes at a lower cost, but more likely its going to be a higher priced facility until your turnaround strategy is in place .

Two key alternatives are available to your firm, and they come in the form of an asset based lending facility . That typically is a non bank entity, and the specialization is totally focused on their ability to understand that you have viable assets - they typically include receivables, inventory, and fixed assets/equipment. We say ' two alternatives ' because the size of your operating facility request will determine if you are ready for a true asset based line of credit, or if a working capital facility with a smaller firm is in fact the turn around financing you need .

Your special loans facility can be replaced in a matter of weeks if it is under the 3M dollar range, and facilities larger than that take a month or so re due diligence , appraisals if required, etc . That’s how asset based lending works – it focuses on assets, not bank ratios!

Many firms want to exit special loans simply because of the stigma. We don't want to dwell with clients on how you got there; we want to ensure you have a clean exit out with a new cash flow facility that works. That allows you to rebuild your firm and focus on growing and generating profits again.

Speak to a trusted, credible, and experienced Canadian business financing advisor who can assist you in your special loans exit strategy via a true asset based lending solution.

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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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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