A Different Way Of Looking At Short Term Loans Via Bridge Finance
OVERVIEW – Information on the bridge loan concept in Canada . Sale leaseback transactions can help the balance sheet and cash flow via a unique way of looking at bridging finance need
Bridging finance , in some manner, is often sought by Canadian business owners and financial managers. The sale leaseback, via a traditional lease, or a ' bridge loan' (there’s a difference) is one way to achieve that financing need. Let's dig in.
Your company has the ability to make maximum use of your firms owned assets in a manner you may not have considered. It's the 'sale lease back’, and by selling back the asset, or assets to a third party you can address several key challenges you might be facing on the balance sheet, not the lease of which is cash flow.
So how is this type of transaction completed... successfully ? Several factors come into play. When you have assets such as equipment, technology, and even real estate that are used in your core business, are still needed, and are owned outright a significant opportunity exists to ' cash flow' the asset/assets.
Naturally the need for capital can be satisfied in a number of ways, but most owners are reluctant to address the issue of new equity investment - it dilutes ownership and sometimes simply isn’t possible.
Let's recap some of those key benefits of a bridge loan/ leaseback on owned assets. They inlcude:
The ability to free up equity that’s held on your balance sheet - this could actually be distributed to the owners or used as a working capital component to continue growth of the company
If your business is doing well and simply hampered by growth capital the ability of your company to earn higher profits that offset the costs of the bridging finance is a desirable route
In many cases it allows the company to re do their balance sheet in some manner, i.e. pay down other more expensive debt, eliminate some debt altogether, etc
Using company owned real estate as an example you can ensure your company is using capital to operate and grow the business, as your charter is clearly no real estate ownership. Note: Many large corporations, even our chartered banks included have sold their real estate holdings and leased them back - even the big guys recognize they are running a business, not investing in real estate. Apologies of course to those ' PRIDE OF OWNERSHIP' folks!
In certain cases the interest rate environment alone might be a major consideration. The current low rate environment might make sense to acquire capital at 4% and reduce debt acquired at 9% as an example.
Finally, in some cases your advisors such as accountants and the tax folks might be able to point out some solid advantages to a sale leaseback.
If you’re looking for a different way to raise capital/cash the sale leaseback is a great way to address bridge finance needs. That might be either a traditional lease or a short term bridge loan. Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can turn those needs into ' easy'.
Stan Prokop - 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 90 Million $ of financing for Canadian corporations . Info /Contact :
7 Park Avenue Financial = Canadian Sale LeaseBack expertise!
Stan Prokop
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' Canadian Business Financing with the intelligent use of experience '
Stan Prokop
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