Looking For A Detour To The Right Business Lines Of Credit In Canada ?
OVERVIEW – Information on business line of credit lenders in Canada. Funding A/R and Inventory can be accomplished in more ways than you think
Business line of credit lenders offer one of the most valuable types of funding required by all types of businesses in Canada. It allows a business to in effect monetize sales via the financing of receivables, inventory... or both. Let's dig in.
When financed properly these credit lines allow a business to sell more of their product and or services - Revenue, and the resulting receivables and inventory are converted into the business life blood - cash flow.
The type of facility that your firm is eligible for is ultimately decided by the ' risk profile ' of your business That same ' risk profile ' will determine the sort of security your lender ( a bank - or a commercial finance company ) requires, and, as importantly, how they will manage the facility .
The business owner/manager should realize that there are different varieties of the commercial credit line facility. As an example more and more firms are turning to ' ASSET BASED LENDING ' as an alternative to the Canadian chartered bank revolving credit facility. One of the interesting features of this facility is that more assets (for example equipment or real estate - if applicable) can be a part of the leveraging of your assets for cash flow and working capital.
We'll add that even the banking community caught onto this one, and many of our major banks have specialized Asset based lending businesses - although some debate how different they in fact really are from a standard bank offering.
From the bank perspective it's of course all about risk, and that demands their ability to ensure requirements met for a credit line include profits, cash flow, clean balance sheets, and personal commitment of owners - aka the dreaded ' personal guarantee ' .
Banks, as opposed to the opposite lender can often be much more lax in monitoring current assets. The opposite side of the coin is the asset based lender - they tend to lend more, and can actually handle your firm having adverse issues (financial losses / weaker balance sheets, etc) because they focus heavily on more regular reporting.
Many commercial finance firms compete with the banks for what we call ' subsets ' of the bank credit facility. That might be A/R financing, or inventory financing, or equipment bridge loans. They do this by more closely monitoring and controlling cash receipts.
Traditional bank financing typically provides funding for mostly A/R and inventory. This is done by monthly borrowing bases that are established based on the value of those two ' current assets ' on the balance sheet.
Often the type of working capital/cash flow finance your business needs is determined by factors such as seasonality, bulges in sales revenue and their timing recognition, or simply the general ' operating cycle ' of the business - with different industries having different cycles and peculiarities.
In a perfect world (is there one?) solutions from business line of credit lenders (banks/commercial finance co's) will allow your company to convert sales into cash - allowing the facility to revolve.
In some cases a permanent working capital term loan might also solve a problem - it simply depends. These loans are repaid from predictable cash flows.
If you're looking for a ' detour ' in the business fork in the road for the right type of business credit line seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with funding options that both make sense.. and are attainable.
Stan Prokop - 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 90 Million $ of financing for Canadian corporations . Info /Contact :
7 PARK AVENUE FINANCIAL = CANADIAN BUSINESS CREDIT LINE EXPERTISE
Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?
CONTACT:
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 '
Stan Prokop
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