Thanks for dropping in for some hopefully great business info and on occasion some hopefully not too sarcastic comments on the state of Business Financing in Canada and what we are doing about it !

In 2004 I founded 7 PARK AVENUE FINANCIAL. At that time I had spent all my working life, at that time - Over 30 years in Commercial credit and lending and Canadian business financing. I believe the commercial lending landscape has drastically changed in Canada. I believe a void exists for business owners and finance managers for companies, large and small who want service, creativity, and alternatives.

Every day we strive to consistently deliver business financing that you feel meets the needs of your business. If you believe as we do that financing solutions and alternatives exist for your firm we want to talk to you. Our purpose is simple: we want to deliver the best business finance solutions for your company.

Tuesday, July 28, 2020

Restructuring Capital Options In Canada


Restructuring capital
options in business turnaround financing services leaves many clients we meet feeling as if they are business financing outsiders. Knowing they have to focus on some sort of ' financial recovery ' without knowing their sources of potential financial capital can leave owners/mgr's in a very undesirable ' limbo'.

We're reviewing some financial options, techniques and go-to strategies for the desired turn around. A company may also benefit from capital and a restructure process even if they are not severely financially challenged - not all business owners might recognize that point - that it is not always bad news but an opportunity to look at how you operate and optimize the firm sales and asset turnover.

If your firm's efforts are successful in this whole process the company will be poised to both survive and grow, even when general conditions are more difficult or on the other hand severe, such as a recession, etc. Pandemics included. Let's dig in.

In order to effect a proper turnaround in restructuring in business both time and financial skills are required to assess the overall liquidity of the company. That involves a detailed examination of the 3 parts of a business financial statement ( balance sheet/income statement/cash flow statement ) and some modelling and ' normalizing ' of those financials. More often than not negotiations with current and new lenders are a large part of a restructure. Here the focus is on both the position of owners as well as external lenders.


There are a number of reasons why a business restructuring process might be required. In some cases it is necessary to understand the true value and price of the company. In other cases mergers and management buyouts might be under consideration. Even more common is the fact that a company in some sort of financial distress might require a turnaround finance solution. Finally, a company might be raising equity - therefore the need for a ' re-jig ' of the balance sheet.

The key point is simply that business conditions have changed and the company must respond with the best type of refunding based on current conditions. Balance sheet ratios might be out of line or creditors and senior lender might be considering a ' workout ' situation of some kind. The bottom line is that the financials must be ' remodelled ' in order to assess new financing, probably with the help of a restructure company/business advisor .


Although the time of change is always a challenge for a business it is at the same time an opportunity to address long term financial stability. Arranging new financing or refinancing assets allows owners and management to position the company for future profits and growth, as well as the opportunity to address new markets, products and services, etc. Even the promise of operating more efficiently under a reorganization of any sort will benefit the company. That said it is safe to say that management will always be challenged in refinancing due to the competing interests of owners, lenders, suppliers, etc.

It is interesting to note that one industry expert has compared the debt restructuring process to a ' home improvement ' and it's probably not a bad analogy. That ' remodelling' and enhancing the outlook of the business typically will im[rove the reputation and value of the company. So whether its general economic conditions ( or a pandemic ? ) the goal of the firm is to protect assets and allow the company to survive and move forward in business operations.

Suffice to say that in business financing and a financial restructuring knowing the problem is a huge part of the solution. While the worst-case scenario is going out of business the desired solution is financing that works. Companies struggling with debt will require either a take out of current senior lenders and new debt and cash flow options, and its safe to say that some cost-cutting usually is required. Finally, even asset sales must be on the table based upon the advice of advisor/restructuring company.


Various types of finance sources exist, both traditional and alternative to help companies in times of need of a restructuring strategy when there is an operating loss or current financial structure that does not allow you to pay suppliers and lenders, much less grow. While the ' go to ' for most firms is a bank a variety of reasons preclude many firms from restructuring via traditional bank solutions; some of those issues include regulations, covenants and ratios that support the financing, and stricter margining of assets.

While owner or new outside equity might sometimes be desired, or even mandated that type of capital is often hard as you're turning around your business. One strategy explored by many is the possibility to merge your firm with another strategic partner or... dare we say it... competitor. In many cases declining sales and be assisted in ways such as cost-cutting and operational efficiencies such as asset turnover.

Having solid cash flow projections and a realistic business plan is key to a solid turnaround strategy. That coupled with a solid understanding of current business assets and their value is the key to bouncing back financially. How you generate revenue is key to understanding potential turnaround financing solutions.


Generally, a company will have debt obligations to a senior lender. This might be one loan or a combination of loans that hold security over the assets of the company. This senior debt must be addressed so that a company can free up collateral and cash flow in discussions with a new lender/lenders.

The loans that are in place with senior lenders typically are a business line of credit, ie an ' operating line '. Security for these loans is typically all, or some combination of inventory, receivables, equipment, and real estate if applicable. In certain cases a term loan, typically ' cash flow ' based, might be in place.

Other debt that is in place, and ' unsecured ' might be working capital loans, equipment leases on specific collateral, etc. After new owner equity considerations and possibilities have taken place it is then necessary to consider reducing or refinancing debt, the potential sale of any assets, etc,

Financing Solutions In The Turnaround

Unsecured cash flow loans

A/R Financing - Proper refinancing of sales receivables will always get you more cash; optimizing current assets for their quality and turnover is key to a successful refinance strategy

Inventory Loans

Asset based non - bank business lines of credit (loan advances for these credit lines are much more generous than traditional Canadian chartered bank alternatives

Sale-leaseback strategies - In many cases proper appraisals of fixed or current assets may well be required by external sources. The sale-leaseback strategy is often a key part of any refinancing. Assets owned by the company, which might include equipment and real estate typically can be ' resold ' to the leasing company or other commercial lender. The asset, still used by the firm can be refinanced over a fixed period that allows for cash flow to both be injected into the firm as well as a monthly installment program initiated on the repayment based on cash flow projections.

The ability to generate new cash flow from long term assets is a key aspect of a sale-leaseback solution. It's an add on to your firm's other debt and operating facilities when potential financing has been exhausted and time is of the essence. It is important to determine which assets are critical to the value of the company and which assets are most suitable for refinancing.
The most common refinance assets include equipment and real estate, in some cases technological equipment such as computers/software etc can be considered for refinancing.

While traditional chartered banks might view a refinancing of an equipment loan in normal bank lending with an emphasis on financials, cash flow, profit, etc an equipment lessor, on the other hand, will focus on the value of the asset and its role and importance in your business. Established leasing companies have a significant amount of expertise in valuing assets, and will, on occasion, use the services of a third-party appraiser.

The cash raised by the leaseback is new working capital for the business and is more often than not used for general working capital purposes. The leaseback refinance strategy allows you to match the maturity of the loan with the useful economic life of the asset as it pertains to your business operations.

Leaseback refinances works simply because it recognizes the value of the owned assets in the company and monetizes them to release the cash value of those assets. Owners must ensure those assets being refinanced are key to the core operations and future needs of the business. Otherwise, those assets must be considered for sale.

Naturally larger hidden values might typically come from company real estate/owner premises where a combination of high depreciation as well as tax benefits might make great business sense to refinance and bring liquidity to the company. The building refinancing could also introduce new amortizations that might make better financial sense. Similar to unused equipment business-owned real estate must be assessed in the context of the core business of the company.

In the lease back process, it is all about the core focus of the company going forward, allowing the owners and advisor to act accordingly int he disposal or refinancing of assets.

PO Financing

Sales/Royalty financing

Proper financing of your current assets ( A/r / Inventories ) allows you to turn inventories into receivables into cash in an ongoing cycle.  Asset Turnover  is key!

In many cases turnaround financing is a temporary fix - typical time frames are from 12-24 months; naturally, business owners should be focusing on the long term plan also. Survive and then thrive might well be the mantra!

Outside collateral and personal guarantees of owners will almost always (unfortunately) be on the discussion table. Also, it's important to note that cash flow also comes from effective payables mgmt., as well as limiting extended terms to your customers.

Some of the strategies mentioned above involve your ability to maximize asset turnover and recognize proper valuation of your assets. Simple strategies such as the ' sale leaseback ' of assets you already own can bring invaluable capital to pay off or re-arrange debt.

In any turnaround strategy, it's important to address any government debt such as CRA arrears, HST, etc. New ' turnaround ' financing will often address this govt debt first because of the ' super priority' the govt has on all businesses.

Once new financing is in place your focus should be on managing cash flow and balance sheet activity. Just the ability to properly forecast a realistic future cash flow need goes a long way in arranging new financing. While lenders always have a long term focus on ' getting out' and getting paid the business owner/mgr's skills in showing control and minimizing risk is key.

When a business undertakes a restructuring strategy both the overall financials as well as how the company operates will be the focus. Financial pressures will often force a company in some way to address how it does business. The goal? Simple. Fixing the business and making it better.
The firms goal will be to ensure sales and operations can cover cash flow needs and debt repayment, trying to avoid the worst-case scenario, which is of course business failure.

' Fixing ' the business internally is certainly possible, and requires a total management focus on costs, profit potential, employee headcount and even a potential sale of a part of the business.

Remember also that in addition to reducing costs there is, somewhat ironically, costs associate with a proper restructuring. Those costs might come from asset write-offs, facility closures, and purchase of required new assets.

Certain industries will at times find themselves ' out of favour' with lenders, thereby affecting even the strong players in an industry segment. Whether its oil, automotive, or building the issues are sometimes systemic to the whole industry - even the best planning in good times cannot avoid an entire industry segment becoming out of favour with either customers or lenders.


7 Park Avenue Financial is an expert at providing alternative capital to small and medium-sized companies when traditional lending solutions may at times be not possible in restructuring a company . Via a combination of debt financing, monetizing assets for cash flow, and energizing working capital facilities the firm provides solutions to traditional funding challenges. Asset-based lending solutions, combined with lease financing/sale-leaseback strategies can save a company via creative solutions specific to a company's needs.

Non-bank alternative financing solutions fill the void left behind when Canadian chartered banks are unable to or unwilling to fund a business. If you are looking for a custom solution specific to your company or industry and asset base/business model seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with business turnaround financing services/options.

7 Park Avenue Financial :

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com


Click Here For 7 PARK AVENUE FINANCIAL website !

7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.

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.

' Canadian Business Financing With The Intelligent Use Of Experience '


Stan has had a successful career with some of the world’s largest and most successful corporations. He is an experienced

business financing consultant


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 financing 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.

Click here for the business finance track record of 7 Park Avenue Financial

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Restructuring Capital Options In Canada

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