Business Credit Line Needs ? ABL Is The Bank Alternative

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The business credit line in Canada. Clients we meet to can visualize it... they sometimes just can't access it - it's almost as if it’s an ancient art they haven’t quite perfected. As a result... cash flow and working capital challenges. Does it have to be that way? We think you know the answer already... it doesn't and here's why. Let's examine the ABL bank alternative.

Clients at 7 Park Avenue Financial find asset based lending is the perfect credit line when traditional financing is not a good alternative or an alternative at all! This type of business credit line has some cost benefits to is, as well as having a large amount of flexibility. Additionally you self manage the facility to a large degree with no intrusion required into your suppliers or clients. Many companies have a measure of seasonality to the business, so ABL, ' asset based lending ' addresses that very well as limits are quite flexible and can be adjusted to your needs. 

 

Alternative funding  via ABL  asset based loans is clearly becoming the bank alternative and is widely used in the United States where this type of business financing originated. Focusing on the liquidity of key current and fixed assets these credit facilities have become the business finance alternative for borrowing for operating facilities. Some business owners will be surprised to know that ABL LENDERS can also be banks, as these unites operate as smaller boutique financing lenders within the traditional banking system, both in the U.S. and certainly in Canada.

We can make the business case that ABL Lenders are more comfortable in lending to many firms when banks either won't or cannot simply because they are experts in collateral value and have the ability to adjust the line against the credit lines they have set. One expert has called it ' real-time ' lending!

Business credit lines via  ABL finance lending are attractive to Canadian businesses seeking financing for a variety of reasons in almost any economic time, pandemics included. In fact, asset based lenders for the most part continue to fund business which has significant value to firms looking to access cash flow or to achieve more financing than they could otherwise achieve through traditional sources. Even companies that are restructuring are able to source business credit line arrangements based on assets.

The ability to have a source of credit that is creative and flexible will almost always provide greater liquidity to your company, with less reliance on the banking covenant based lending championed by Canadian banks. That's the business lending that 7 Park Avenue Financial clients tell us they want. The trade-off to the typically higher cost of an ABL line is increased access to capital, notwithstanding your obligation to be in a position to report more regularly on asset values such as a/r and inventory, which most firms should be looking at anyway, right?

For this type of business credit line to be successful your company has to have the ability to create the usual management reports that highlight your asset accounts so that typically would be aged receivables, payables, and inventory lists. That allows you to successfully manage and access this creative way of financing your business.




Part of the challenge of those business credit lines is simply the fact that the majority of business owners and financial managers are fairly focused only on one solution - which is of course the commercial bank line of credit.



That is definitely one solution. The other (What? There's Another?!) is a non bank asset based credit line facility. Both facilities monetize your receivables and inventory... the difference then? ... The Asset based credit line often monetizes and equipment and real estate also; as part of your overall borrowing power. The big difference is the real key point here - lending is more generous in a non bank asset credit line. Receivables and inventory are margined more aggressively, and in bank scenarios rarely are your unencumbered fixed assets monetized into credit lines.

Why Should Your Company Consider An Asset Based Lending Business Credit Line?

Most small and medium-sized companies in Canada recognize that Canadian banks cannot meet all their borrowing needs. This might be for a variety of reasons which include profitability, an industry being ' out of favour ', or the actual financial results of a company which might not have the balance sheets and income statements they require to lend against, given the banks are both regulated and somewhat risk-averse relative their fiduciary responsibility to shareholders and depositors. It is a true irony of Canadian business that banks generally do not like a firm growing, for example at 25% per year, which then requires constant working capital needs.

Because non bank business credit lines have your borrowing against sales and assets there is not the concern of higher growth, which is in fact: Encouraged ! More cash availability than standard bank offerings is the cornerstone of borrowing against your sales and core assets. It's not about the financials, it's about sales/assets.

As we have noted the thousands of companies using asset based credit lines in Canada use it for different purposes. Some companies might be early stage, some might be in high growth mode, while other companies that are in fact bank worthy utilize it because rates in the case of high quality companies can be very competitive to low bank rates. Naturally, the current low rate environment for business borrowing in Canada is a plus for all borrowers. 

 

Some firms that are experienced a level of distress might be using the facility simply based on the amount of their assets that still qualify for borrowing under a credit facility. These companies might find themselves in the ' Special Loan ' category of the bank. This can be a stressful transitionary period on the road to business financial recovery - asset based financing works very well to correct the financing and allows a company to get back on track. 

At this point customers would already be reporting on their financial more often and assessing a workout plan that might get them back into traditional banking, or on the other hand, transition their senior lending facilities into asset based business credit lines. They might still well be 100% financeable with having to raise additional equity or outside collateral. It allows troubled firms to protect the company with a workout refinancing that makes sense, often paying out the bank in the process.



The options and financing flexibility alternative your firm now has allows you to successfully operate on a daily basis. As your revenues grow your receivables and inventory will always fluctuate relative to business grwoth and how you manage your current assets. Those daily changes drive the ABL credit line. Many firms that are in high growth / hyper-growth find they cannot satisfy traditional bank requirements, with the asset based facility focusing on your sales and assets, not financial statement ratios within your balance sheet or income statement.

By allowing your financing partner to properly assess asset values and growth potential, allows you to borrow effectively on the true market value of your sales and assets. As an example receivables are typically financed at 90% and inventories are margined based on the type of inventory your firm has. It should be noted that many industries are different when it comes to quality and type of assets, your facility will resemble the industry norms around types of assets. Both banks and asset based lending firms recognize specific aspects of your industry.

The two main sources of borrowing in this type of credit line are your receivables and inventory. They are the main drivers that determine the amount of your facility but there can easily be a fixed asset/equipment component to the borrowing for all the hard assets your firm owns.

The true strength of this type of revolving credit is that it can grow as your sales revenues and other assets grow - they in fact determine the amount of the credit line. There are some very simple formulas around how these assets are margined for lending. As your sales grow and you collect your receivables the ABL business credit line fluctuates, allowing you to borrow less .. and finance less, or, more importantly, borrow more if you need it!

We have referenced those other assets you can borrow against within your credit facility, with those two asset categories being equipment and, if applicable, real estate. Those amounts have a value assigned to them at the start of your facility working, which might include an outside appraisal to determine maximum borrowing power. Naturally these two categories of assets are typically not in Canadian chartered bank business credit facilities, so they highlight the benefit and flexibility of revolving ABL facilities.

Many companies that are unable to satisfy bank covenants, ratios, outside collateral etc find they can easily double their borrowing power using the high borrowing leverage of a/r, inventory, and equipment/real estate. That becomes the ABL business credit difference, a business finance solution that is tailored to your company's specific needs. Your credit line availability is calculated on an ongoing basis, allowing you to plan for your business cash flow needs - at the end of the day is ' quicker borrowing '.

Accounts receivable plays a major role in the asset based business credit line model. Your financing firm will focus on the type of receivables you have, average size, major account concentrations with any one customer, account contras with suppliers that might be in place, as well as your a/r days sales outstanding turnover and bad debt. 

 Businesses should also be prepared to demonstrate that CRA and provincial HST  is not in default, but borrowers in default will be happy to know that these type of debts are often paid out of the first advance in ABL business credit lines by  asset based lenders.

The use of your business credit line in Canada, whether it's a bank line of non bank in nature can be viewed as a ' replenishment ' of cash from funds your firm has invested in working capital and fixed asset accounts. That need becomes even more acute when your business is growing. The simple reason - you've got more sales tied up in still uncollected receivables, inventory, and the need for some fixed asset or technology replacement here and there!





Whether you disagree or not, all banks have very specific rules in Canada around business credit lines. Bank credit lines for start-ups or very new businesses in Canada essentially... Don't exist! That’s because of our strong banking system in Canada places a large emphasis on historical strong financial history, solid profits, and squeaky clean balance sheets. So while corporate credit risk at banks for the middle market companies in Canada at banks focuses on profit, cash flow generation and shareholder equity ABL  has a focus on asset turnover and turning business assets into cash. We can say that the shorter-term operating cycle of a business is what drives asset based loans.

Business owners if not familiar with The Cash Conversion Cycle would benefit from checking it out.It is really tied into the concept of cash flowing your working capital assets and how turnover affects liquidity and the need for more outside business credit. The continual revolving ability of a credit line works without your firm being tied to any type of installment and loan debt. Here the power of ABL kicks in because as sales revenues grow cash flow via the abl line increases and receivables and inventory are liquidated.

If your firm is offside on banking requirements it's still exceptionally very safe to say that you qualify for an asset based credit line from a non bank commercial finance firm. And that higher leverage and borrowing power is still there of course - it’s another major appeal of the ABL (Asset based Line)



By the way, if you are in fact 'off side' with your bank on their key metrics, ratios, covenants, and collateral issues the ABL line rides to the rescue more time than you think. So while your business may have temporarily stumbled the non bank asset based line of credit steps in to keep cash flowing and working capital working! Their are different credit types and credit risk and the asset finance underwriter is well positioned to take the time to understand your firms situation.



It's not pure roses and sunshine all the time with your business credit line. You should always be prepared to supply proper reporting and updates on your business assets, even more so with ABL type facilities which in some cases might even require due diligence visits, appraisals, etc.

There are several supplementary / complementary solutions to the asset based credit line - These can be used with or separate to your business credit line facilities in asset based finance .

One of these is Purchase Order Financing. This solution becomes extremely valuable if your firm is in a position to receive large orders or contracts that in the normal course of your business you would be unable to finance due to the working capital component of the transaction, namely having to pay suppliers, facilitate your order or service, and then wait for the collection of your receivable related to that order/contract. The financing works as follows - your supplier is paid directly by your P O financing firm asset based lender. The receivable that is attached to that order or contract can then be financed under your already in place asset based lending facility, or in some cases a separate P O Finance arrangement if you do not have either a bank credit line or an asset based line in place. Purchase order financing rates are  higher and your firm must have good gross margins to absorb the 2-4% fee on the order but can be invaluable to firms looking to grow larger with access to traditional finance,


If there is a bottom line here in corporate finance  its that the business owner/financial manager needs to understand both the alternative to credit lines, as well as the nuts and bolts of how and why they work best. That will lead to a better capital structure and a more guaranteed level of long term success.


If you want to consider revolving credit lines based solely on collateral value or new and replacement alternative credit facilities seek out and speak to a trusted, credible, and experienced Canadian business financing advisor. Your want a finance partner/advisor that has a solid knowledge of the ABL lending market and has the capabilities and expertise and track record of finance success to facilitate business credit line needs.

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

http://www.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 '

ABOUT THE AUTHOR

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.






Stan Prokop
7 Park Avenue Financial/Copyright/2020

Can Asset Based Lending Help Your Company? The ABL Solution Works - Here's How!

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Asset-Based Revolving Lines of Credit and Term Loans

Is asset based lending the right financing for your business? That's a question that comes up all the time with our clients, and they want solutions now, not down the road! One ' size fits all' solution is, asset based lending. These 'ABL' techniques and solutions could provide all the financing your firm needs in today's competitive environment. Asset based lending industry statistics show explosive growth over the last decade .

What is Asset Based Lending, also known as ' ABL '?

Simply speaking it's a lending facility with the collateral being specific company assets. Utilizing the ABL formula allows your company fo fund A/R, Inventories, unencumbered equipment, and real estate is that latter asset is a part of your asset mix. The combination of those assets will significantly improve overall business liquidity/working capital.

One way to view this newer method of financing is to look at it as a ' blending ' of your company assets. This lending formula, therefore, delivers on access to more capital than any one financing. There are numerous, let us call them ' subsets ' of asset finance -

A/R Financing
Inventory loans
Purchase Order Financing
Sale Leasebacks

All of these deliver solid financing when your business needs it. But combined into an Asset Based Borrowing solution your firm maximizes total working capital needs. View it as an option to run your business on a daily basis, or in the terms of considering a management buyout or acquisition. It's working capital when you need it most.




Companies that are constantly growing and in need of additional operating capital are the best candidates for the cash flow generating power of asset based lenders. Many of the best candidates for this business finance solution are financially leveraged and are not best suited for traditional Canadian bank financing .



Business owners and financial mgr's are looking for finance that grows with their business. As it became difficult to get all the financing they needed after 2008's recession many business owners investigated the ABL loan solution.

Typically, ( but not always ) asset based finance is non-bank in nature - it's offered by specialized commercial finance companies . It helps businesses access more working capital and cash flow - typically "Job 1 " for any business.

If your company has long term debt, and is looking to avoid taking on more debt, payables are rising, and you're waiting longer to collect receivables asset finance is a very logical solution. Ironically many business owners and financial managers in some cases haven't heard of this type of financing.

In the ' old days ' ( we remember them well ) abl was often touted as a financing of last resort. No longer!! Using it can grow your business, expand into new markets, buy a competitor, and oh yes, just survive day to day!

Summary Of The Benefits Of ABL

New clients at 7 Park Avenue Financial always ask us to clarify the benefits of the asset based lending solution.

A combination of business assets delivers a higher level of liquidity than any one type of finance

The ability to unlock assets traditionally not margined by Canadian banks as part of a working capital revolver

The ability to restore your firm to a level of financial stability - we meet with a lot of management who by necessity are always spending mangement time on cash flow needs

Every industry requires different levels of expertise and funding - ABL suits a wide variety of industries

ABL is a legitimate ' catch-all ' for expansion, restructuring or refinancing ( Yes you can finance the purchase of an existing business )

Asset finance solutions are low cost when compared to equity financing

Traditional Canadain bank requirements around covenants, ratios, etc make ABL more accessible and it's ability to ' co-exist ' with other types of debt is viewed as a key positive for firms that have different levels of senior and junior debt.It is a funding structure that works! That what we at 7 Park Avenue Financial call ' covenant light '!




In it's purest sense asset based lending is often just a revolving line of credit that allows you to borrow against all, repeat ' all ' of your assets. Those typical asset categories include receivables, inventory and fixed assets.. even real estate if your company occupies and owns its own premises. Therefore the prime security of the loan is a focus on the overall value of your asset base, with less, or no reliance on external collateral, the focus on personal guarantees, etc.

LEVERAGING BUSINESS ASSETS TO ACCESS WORKING CAPITAL

The entire subject of leverage and margining your assets in ABL is critical to understand for the business owner and financial manager . ABL funded revolving credit facilities are based on a formula based on the liquidation value of your current and fixed assets. Naturally, a/r and inventory rank very high in liquidation value and will provide the maximum borrowing power . Typical advances on receivables are 90%, and percentages will vary based upon the many types of inventory specific to any one industry in Canada.

How Is The Exact Value Of ABL Secured Loans In Canada Calculated?

The asset based lender will focus on your firm's balance sheet with a view towards ensuring a detailed analysis of your overall potential liquidity. Factors that come into play include specific industry issues as well as current economic conditions, pandemics included!

As an example, the ageing for a/r and inventory will determine eligible amounts of borrowing under the facility, i.e. all receivables under 90 days is usually a typical measure of borrowing power. There might be a ' dilution' part to the formula - that might be an allowance for bad debts/uncollectible accounts.

The final borrowing base certificate will demonstrate maximum borrowing power for your firm.It should go without saying your firm should have a good reporting and accounting systems capabilities .



Canadian asset based finance candidates can appreciate that numerous fluctuations in their business sometimes deliver a challenge to those borrowing base calculations. Retails or distributors might require excess borrowing capacity at certain times of the year so seasonality must be factored into any common sense formula.

The best way to address that is to ensure your lender has visibility to historical documents around cash on hand, current asset levels, accounts payable, etc. Heres where overall averages can really help the final formula. Yes, assumptions must be made but those cushions will be an excellent ' shock absorber' in available borrowing.



Traditional bank financing often revolves around strict reporting periods on financial statements, and aged reports on receivables and inventories and often comes with a term loan structure. If your firm requires what the pro's call ' bulge financing ' traditional bank type facilities cannot necessarily solve the cash flow crunch. The more liquid your receivables and inventories are re turnover will mean a higher loan to value in drawing down on your facility.

THE ABL DIFFERENCE?  Simple - You can borrow significantly, on an ongoing basis, against those assets. Smaller ABL facilities tend to be in the 250k range, but they can easily run into the millions. Many large corporations use ABL also by the way!

By now you may have picked up on the fact that as your business grows you can borrow more on an ongoing basis, as your assets have grown also - with virtually no upper limit.

While Canadian chartered banks focus on ratios, covenants, personal guarantees and high net worth the asset finance solution focus.. you guessed it.. mostly on your business assets.

ABL comes in different flavours and can be specifically based or full service against all assets. That allows you to not postpone business success! Can you afford not to access this solution?

So what can ABL do for your company - if you're growing let asset based financing finance that growth? Growth financing is a challenge for every business .If you are considering funding an acquisition ABL can play a part in that financing. Many entrepreneurs don't realize the critical part asset finance can play in acquisition financing. It is often the cheapest, quickest, and most efficient way to fund acquisitions versus going the equity financing route. An asset based lending mortgage can also be part of any new facility.

If your requirement is a turnaround or recapitalization this method of business finance is well suited to your needs and can be delivered in a timely manner when timing counts! Working with an experienced advisor with a track record of financing success will also allow you to address any cross border financing that might be required.


The seasonality of any industry can greatly impact cash flow - let this form of financing help you with the cash flow strain. And should your company require the ' turnaround' asset finance is a proven method of restructuring your firm.



Speak to a trusted, credible, and experienced Canadian business financing advisor with a track record of success on achieving benefits of ABL finance. Let our team tailor a specialty facility tied to your business within its industry. We will demonstrate how to unlock working capital to meet all your cash flow needs with the right total financing option. Next step? Growth/success!






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

http://www.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 '

ABOUT THE AUTHOR

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.









Stan Prokop
7 Park Avenue Financial/Copyright/2020

Can Asset Based Lending Help Your Company? The ABL Solution Works - Here's How!

What’s Your ABL Finance IQ? Info On Canadian Financing By Asset Backed Lenders !

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Business Asset Based Lines of Credit

Information on ABL finance in Canada . What is this type of asset backed financing and who are the lenders that offer this business line of credit? Asset based lines of credit work!

We're pretty sure that most Canadian business owners consider themselves knowledgeable about their business and options they have in both operations and financing. But seriously, how much do you really know about ABL finance - were you aware that asset based lines of credit is the ' new financing ' paradigm shift in Canada .

So who exactly are these assets backed lenders and why can they take your firm to new heights in growth? There isn’t a day when we don’t read of many ABL ( asset based lending ) transactions happening here in the U.S. - for tens of millions of dollars.

Is that happening in Canada but we just didn’t know it? Well yes and know, in case you haven’t heard we've got a smaller economy, but we can assure readers that ABL Financing is becoming a mainstream solution to Canadian working capital and cash flow needs .

Did you know that in the last decade over 10 Billion dollars of ABL financing was taking place in Canada on an annual basis? Right under your eyes!

But we're realists and we fully realize that many Canadian firms aren’t aware that asset backed lenders exist, let alone are using them. Ours therefore is to inform!!

We do forgive some quasi well informed clients that have a perception that ABL finance was a financing of last resort so to speak. The reality is that ABL does in fact finance many firms that are challenged and can’t obtain traditional bank financing.

But, and its a big but, thousands of firms in Canada utilize asset backed lenders for their operating lines of credit to facilitate growing their companies, expanding into new lines or geographies, acquiring competitor, or simply re financing their company in a manner that works better!

So why is Canadian business migrating to this new form of business financing? Simply because it’s more creative and flexible than the more formulaic approach that our great friends at Canadian chartered banks take.

And what is the cost of this type of financing. More often than not that’s questions number one when we sit down with clients. We'll put on our lawyer hat and say ' it depends ' which isn’t quite the answer we think you were looking for..!

The reality is that ABL financing is based on size of facility, who you are dealing with, your overall asset quality (abl finances receivables, inventory and equipment and real estate) as well as your firms overall credit situation - i.e. good / bad/ugly. (Yes ABL finances ugly.

One or two more things to know to fill up and increase your intelligence quotient (IQ!) on lenders that offer this financing . Simply that many are non bank independent finance companies , some are U.S. based but doing great jobs here, and some are Canadian but smaller in size - but still able to satisfy the majority of Canadian firms .

Well that’s it... Oh! Did we forget something? Oh yes. What is ABL by the way!! Simply a revolving line of credit that lenders against the value of your current and fixed assets on a daily revolving basis. It's a business line of credit!

Looking to fill up more on your ABL IQ? Speak to a trusted, credible and experienced Canadian business financing advisor who will help you determine if this facility is the best thing that ever happened to your business financing needs.


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


Click here for 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 .

' 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

One Way To Buy A Company . Use ABL Finance Via An M & A Business Loan For Acquisition Financing

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Acquisition Finance For Success – The Why And How



Information on acquisition financing in Canada . Consider a business loan via ABL finance to successfully complete your transaction with no money down ? !

There's just a lot of interest these days, it seems, in acquisition financing as a way for Canadian business to achieve various different objectives. On way in which they can be successful is via an ABL finance business loan to finalize that objective.


Why do companies want to acquire each other ? Of course it's for a variety of reasons, including growing sales, becoming a market leader in their niche, cost reduction, or buying the ' secret sauce' technology of another firm.


We're always on the look for some new thoughts in Canadian business financing , so we were drawn to an article in one of the two leading Canadian business newspapers the other day which had the catchy title of buying a company with ' no money down. The article was written by one of Canada's respected investment officers and fund managers.


No money down? And acquire a significant business at the same time. We were intrigued. The essence of the article was that many ' bargains ' are available in Canadian business - it’s a question of finding them! The article went on to say that the essence of such a search, once you have found a target firm, is to go back 50 years. Go back 50 years ? !Actually what the author meant was that at this point in your search it's time to call on Benjamin Graham , acknowledged as the father of value investing by almost all, including his prize teach pet student Warren Buffet .


What's recommended by these ' guru's is to look at ‘ net working capital ‘ - something we focus on a lot in our own preachings. That figure is made up of receivables, inventories and any cash on hand.


What about the other assets though? Essentially it's offered up that they don't mater. We think they do, but Mr. Graham and Buffett actually disagree with us .. the nerve!


So this is where we come in. Where the author of the article focuses on dealing with Canadian chartered banks we prefer a faster better route, ABL finance.


The beauty of ABL financing, via an asset based line of credit is that it can also include the fixed assets that seemed to have been discounted by Mr. Graham and Mr. Buffett.


A true asset based line of credit encompasses our previously mentioned current asset accounts, as well as unencumbered fixed assets. And while the article we referenced focused on bank financing the reality is that an acquisition financing via ABL finance provides a higher margin level on these assets. Typically those margins are 90% of receivables, significant inventory advances subject to appraisal / valuation, and financing for liquidation value of fixed assets.


More often than not firms in the SME sector that want to buy another business can generate no interest in Canada from ' private equity ' or ' VC' firms, as those firms focus on larger transactions.


So, no money down? The jury might still be out on that one, but we do assure clients that an ABL loan is a great financing alternative when you are looking to purchase another firm for competitive reasons.


Speak to a trusted, credible and experienced Canadian business financing advisor when you want to further your acquisition finance objectives.

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

Click here for 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 .

' 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

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

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 dependent 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.

Stan Prokop is the founder of 7 Park Avenue Financial. ( http://www.7parkavenuefinancial.com )

The firm originates business financing for Canadian firms and is a specialist and expert in working capital and operating lines of credit.


















Article Source: http://EzineArticles.com/expert/Stan_Prokop/432698


Article Source: http://EzineArticles.com/3527688

Do Something Uncomfortable . Try ABL Finance As Your Canadian Asset Based Lending And Financing Alternative!

Canadian Asset Based Lines Of Credit


Information on ABL finance in Canada. Reasons why asset based lending is the new paradigm in Canadian business financing .



We can't speak for everyone but isn't it safe to say that either in our personal lives, or in business we're often reluctant to enter into a new situations simply because of the feeling of uncomfortableness. That's one of the reasons why Canadian business owners and financial managers might be reluctant to step outside their zone of comfort when it comes to looking at financing via ABL finance; an asset based lending arrangement for their new business line of credit facility.

We would maintain it’s hardly a risk, as an asset based line of credit revolving facility is becoming more mainstream and popular everyday.

In some cases it simply not knowing what an initial course of action might be. That's actually quite simple - investigate what ABL, how it works, what are the benefits, what are the costs, and finally get a sense of how and why it differs from bank facilities.

It's clear to most business owners that the Canadian economy is clearly improving over the challenges of recent years. That's why it’s critical that firms such as yours have the ability to secure sufficient funding to support their growth and survival. It has been that access to funding that has been one of the greatest hurdles

It's clear to many Canadian firms that capital is available, it's simply a case
of being able to access funding that in many cases Canadian chartered banks are reluctant to make available. Canadian bank facilities via commercial business lines are credit are clearly the low cost solution and can offer numerous other services such as cash management, forex, etc.

But what if traditional bank lines of credit are not available to your firm? Enter asset based lending! This is where that feeling of ‘uncomfortable 'might be setting in. Why? Simply because it’s different, in that it focuses solely on your asset and your company's ability to turn those assets into cash flow.

Why is ABL finance a better fit in many cases. We'll offer up simply the fact that it supports growth and a number of unique needs your firm might have.

Recent studies suggest that asset based lending grew over 25% in Canada over the last year or so. The vast majority of this activity is clearly the refinancing of existing bank lines and turning them into an ABL financing arrangement.

In Canada large cap ABL financing is very different from facilities sought by smaller firms. Larger facilities often start in the 5-10 Million dollar ranges and go into the tens and hundreds of millions of dollars. The same type of facility is also available to firms in the SME sector where these working capital faculties start in the 250k+ range. Talk about a broad spectrum.

And that broad spectrum translates into a wide variety of rates and deal structures.

There is a lack of information quite often to the SME borrower who has heard about ABL finance, wants to know more, and might think his or her facility isn’t relevant, if not for size alone. In our opinion the majority of Canadian business owners and financial managers are ' desperate' for quality information on Canadian business financing alternatives.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in both understanding and creating an ABL facility to turn your collateral into cash flow, quickly, and efficiently.





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 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.

One Way To Buy A Company . Use ABL Finance Via An M & A Business Loan For Acquisition Financing

Acquisition Finance For Success – The Why And How


Information on acquisition financing in Canada . Consider a business loan via ABL finance to successfully complete your transaction with no money down ? !


There's just a lot of interest these days, it seems, in acquisition financing as a way for Canadian business to achieve various different objectives. One way in which they can be successful is via an ABL finance business loan to finalize that objective.

Why do companies want to acquire each other ? Of course it's for a variety of reasons, including growing sales, becoming a market leader in their niche, cost reduction, or buying the ' secret sauce' technology of another firm.

We're always on the look for some new thoughts in Canadian business financing, so we were drawn to an article in one of the two leading Canadian business newspapers the other day which had the catchy title of buying a company with ' no money down. The article was written by one of Canada's respected investment officers and fund managers.

No money down? And acquire a significant business at the same time? We were intrigued. The essence of the article was that many ' bargains ' are available in Canadian business - it’s a question of finding them! The article went on to say that the essence of such a search, once you have found a target firm, is to go back 50 years. Go back 50 years ? !Actually what the author meant was that at this point in your search it's time to call on Benjamin Graham , acknowledged as the father of value investing by almost all, including his prize teach pet student Warren Buffet .

What's recommended by these ' guru's is to look at ‘ net working capital ‘ - something we focus on a lot in our own preachings. That figure is made up of receivables, inventories and any cash on hand.

What about the other assets though? Essentially it's offered up that they don't mater. We think they do, but Mr. Graham and Buffett actually disagree with us .. the nerve!

So this is where we come in. Where the author of the article focuses on dealing with Canadian chartered banks we prefer a faster better route, ABL finance.

The beauty of ABL financing, via an asset based line of credit is that it can also include the fixed assets that seemed to have been discounted by Mr. Graham and Mr. Buffett.

A true asset based line of credit encompasses our previously mentioned current asset accounts, as well as unencumbered fixed assets. And while the article we referenced focused on bank financing the reality is that an acquisition financing via ABL finance provides a higher margin level on these assets. Typically those margins are 90% of receivables, significant inventory advances subject to appraisal / valuation, and financing for liquidation value of fixed assets.

More often than not firms in the SME sector that want to buy another business can generate no interest in Canada from ' private equity ' or ' VC' firms, as those firms focus on larger transactions.

So, no money down? The jury might still be out on that one, but we do assure clients that an ABL loan is a great financing alternative when you are looking to purchase another firm for competitive reasons.

Speak to a trusted, credible and experienced Canadian business financing advisor when you want to further your acquisition finance objectives.




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 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :


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

Why Canadian ABL Finance & Asset Backed Financing Loans & Lending Are An Important Development

‘A significant consequence ‘. That’s one definition of ' Development '. We think it’s a perfect one for describing how ABL finance and asset back loans and financing are becoming the ' go to ' for business financing in Canada. Let's examine why.

Two key elements make abl financing a step above a traditional bank line of credit with a Canadian chartered bank. Those two elements are ' collateral' and ‘liquidity '. Let’s focus on that for a bit. All asset based lines of credit for business revolve around your asset base. The amount and quality of these assets will drive the ultimate amount of the credit facility you achieve under an asset backed financing.

Canadian business owners and financial manager know only too well that the focus from a traditional bank perspective is not as much on the assets as it is your overall financial picture, which includes the income statement and your ability to meet ratio’s and covenants that are bank designed to protect their lending to your firm. We understand that, and we respect that... it’s just that sometimes it doesnt work for our clients.

Your firm could be in various key stages when you consider ABL loans. You could be a start up, you could be enjoying (and suffering) through hyper growth... and you could be fixing historical financial challenges or suffering thru some sort of business crisis or challenge now. That kind of covers the gamut, don’t you think. Which is exactly why we offer up ABL lending to clients looking for the 21'st century alternative to a business line of credit.

So how is your overall facility determined? It could not be much more straight forward - you borrow, on a daily basis, against the ' true ' value of your assets -hence the word ' asset' in ABL (asset based lending). Those assets typically are your A/R, your various stages of inventory (raw materials, work in process, finished goods) and fixed assets and real estate if that makes sense for your firm. (Those assets must be owned and unencumbered of course).

ABL lending distinguishes itself from traditional bank financing in that the firms offering this type of financing tend to view themselves as experts in ‘asset ' valuation and liquidation . What does that mean to you? Simply that you have just leveraged up your borrowing capacity significantly.

We remember one client who was a wholesale to the dollar store industry who leveraged a 200k bank line into a 2 Million dollar borrowing facility. How? The asset based lending facility had the expertise there to view the true liquidation value of the inventory. Simple as that. As a challenge call your banker up and ask what the margining base is for dollar store inventory and keep us posted on that answer.

A common question from clients involve the long term viability of this type of financing for your firm .First of all there is the cost issue, and here’s where it gets a bit complicated , because ABL loans can be cheaper, the same as, or more expensive than a bank facility . (We’re assuming you can get a bank facility!)

Secondly the ABL industry makes no bones about the fact that it is often a bridge solution for a year or two, allowing you to migrate back to what you consider a ' traditional' financing structure. We point out to clients though that ABL is more often than not the ' new traditional '! Historically it was viewed as distressed or alternative funding, that is absolutely not the case these days, with some of the largest corporations in the world utilizing this type of financing in Canada.

We can’t overstate the flexibility around ABL financing and lending. It covers special issues, seasonality, over advances on what you actually qualify for, and comes at a cost commensurate with any firms overall credit quality. Interested? We hope so. Intrigued? No problem! Consider speaking to a trusted, credible and experienced Canadian business financing advisor on the merits, benefits of the new age of business finance in Canada - ABL finance.


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

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

What’s Your ABL Finance IQ? Info On Canadian Financing By Asset Backed Lenders !

We're pretty sure that most Canadian business owners consider themselves knowledgeable about their business and options they have in both operations and financing. But seriously, how much do you really know about ABL finance - were you aware that assed based lines of credit is the ' new financing ' paradigm shift in Canada .

So who exactly are these assets backed lenders and why can they take your firm to new heights in growth? There isn’t a day when we don’t read of many ABL (asset based lending) transactions happening here in the U.S. - for tens of millions of dollars.

Is that happening in Canada but we just didn’t know it? Well yes and know, in case you haven’t heard we've got a smaller economy, but we can assure readers that ABL Financing is becoming a mainstream solution to Canadian working capital and cash flow needs .

Did you know that in the last decade over 10 Billion dollars of ABL financing was taking place in Canada on an annual basis? Right under your eyes!

But we're realists and we fully realize that many Canadian firms aren’t aware that asset backed lenders exist, let alone are using them. Ours therefore is to inform!!

We do forgive some quasi well informed clients that have a perception that ABL finance was a financing of last resort so to speak. The reality is that ABL does in fact finance many firms that are challenged and can’t obtain traditional bank financing.

But, and its a big but, thousands of firms in Canada utilize asset backed lenders for their operating lines of credit to facilitate growing their companies, expanding into new lines or geographies, acquiring competitor, or simply re financing their company in a manner that works better!

So why is Canadian business migrating to this new form of business financing? Simply because it’s more creative and flexible than the more formulaic approach that our great friends at Canadian chartered banks take.

And what is the cost of this type of financing. More often than not that’s questions number one when we sit down with clients. We'll put on our lawyer hat and say ' it depends ' which isn’t quite the answer we think you were looking for..!

The reality is that ABL financing is based on size of facility, who you are dealing with, your overall asset quality (abl finances receivables, inventory and equipment and real estate) as well as your firms overall credit situation - i.e. good / bad/ugly. (Yes ABL finances ugly.

One or two more things to know to fill up and increase your intelligence quotient (IQ!) on lenders that offer this financing . Simply that many are non bank independent finance companies , some are U.S. based but doing great jobs here, and some are Canadian but smaller in size - but still able to satisfy the majority of Canadian firms .

Well that’s it... Oh! Did we forget something? Oh yes. What is ABL by the way!! Simply a revolving line of credit that lenders against the value of your current and fixed assets on a daily revolving basis. It's a business line of credit!

Looking to fill up more on your ABL IQ? Speak to a trusted, credible and experienced Canadian business financing advisor who will help you determine if this facility is the best thing that ever happened to your business financing needs.




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

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