Alternative Finance Loans In Canada : Asset Based Loan Funding

Your Attention Please ! These Tools & Business Finance Solutions Will Help You With Your Business

OVERVIEW – Information on alternative finance loans in Canada . An asset based loan funding as well as other Canadian business financing options can make or break sales and profit success

Alternative finance loans in Canada come in a variety of different solutions. The ability to use an asset based loan to generate sales and profits is a key part of the benefits that come from funding your business with nontraditional offerings, which are clearly gaining traction everyday in Canada. Let's dig in.

Asset based loans tend to focus of course on your existing business assets - Two of those assets, receivables and inventory are a constantly moving target. Also coming into play are fixed assets/equipt and occasionally real estate.

What is the main challenge around business growth? We can safely say that a quite correct answer to that question is how you both finance, as well as manage business assets. The most obvious way to generate cash flow and working capital from your business is to directly monetize accounts receivable via a cash flow factoring facility.

Canadian chartered banks of course offer traditional and very desirable operating facilities. But in many cases companies looking for SME COMMERCIAL FINANCE solutions - i.e. not the big boys, simply can't access some or all of the bank credit they need. The most common ' liquid ' solution for many firms is receivable financing, aka ' factoring ‘. Be forewarned there a number of different types of factoring, some much better than others from various perspectives.

Although asset based financing in its many derivatives ( bridge loans, factoring, financing against equipment equity, inventory advances, etc) may be a more costly method of financing your business we can categorically say, and the text books will back us upon this one, that equity financing is much more expensive! A business either borrows funds, or injects owner equity into the business, and equity capital can be expensive when considering its dilutive nature relative to total ownership.

The reality is that the right amount of debt is in fact a great way to optimize leverage and increase return on investment and return on equity - a great way to measure owner and manager performance .


The key benefit of asset based lending is its ability to generate cash flow for you when you need it. Cash flow and working capital needs ebb and flow daily, weekly, monthly, annually, seasonally... you name it, it is always changing. When you send invoices, build up inventory, buy equipment, or pay suppliers, that is all part of the cash flow conversion cycle in any business.


Your ability to focus in on assets that can generate cash when you need it is a true working capital success scenario. The best thing you can do in preparing to consider a true asset based loan or asset based lending facility is to ensure you can properly demonstrate the ongoing sources and uses of your funds, and in particular the turnover of those funds .

We mentioned A/R financing, known as ' factoring ' as probably the most popular and most used alternative finance vehicle. But a word of advice - choose the right factoring partner and firm - which is best done via the seeking out of a trusted, credible and experienced asset based lender in Canadian business financing .

In many other forms of business financing receivable advances are limited to formulas and tied to financing performance of your company - that is not the cash with cash flow factoring.

Don't forget to also check out a number of other often used alternative finance funding solutions - They include:

Inventory loans
Equipment Finance (new and used)
Sr&ed tax credit financing
Sale leasebacks
Royalty Financing
Bridge Loans

Investigate the benefits of alternative finance loans, which may come in a format that works for your business financing success.



Stan Prokop - founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :
http://www.7parkavenuefinancial.com



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

' 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

Inventory Financing In Canada : Sweating It Out On Business Loans For Inventories?

Unexpected Turbulence Around Your Business Inventory Financing Needs ?

OVERVIEW – Information on inventory financing in Canada. Business loans for inventories are a specialized type of finance . Here is what business owners/financial mgrs need to know

Inventory financing in Canada is often a key component of the business loans challenge. That challenge? Ensuring the right mix of working capital financing for inventories, and that it compliments your other external financing is what it's all about. Let's dig in.


In times gone by inventory financing was most often provided by Canadian charted banks as a product of the overall revolving line of credit, which of course usually included receivables also. The ability of a company to free up cash that is tied up in inventory is critical for a firm's cash flow. These days traditional financing perceived as 'hard to get ' having many owners/mgrs sweating it out

in this key area of their business.


Have you heard the line: "if you working capital are positive you need cash flow financing '. The working capital definition referred to is of course the classic textbook definition of going to your balance sheet and subtracting current liabilities from current assets.
However, most of us operate in the real world, not the textbook world, so how do we finance inventory that we as business owners and financial managers know is good collateral?


What the Canadian business owner and financial manger must realize is that your bank or independent inventory financier is not interested in ever getting back your inventory. That should lead you to focus very strongly on your ability to project your inventory turnover, its overall marketability, and your ability to qualify the inventory into several categories - which include raw materials, work in process, and finished goods.

Success breeds challenges, because when you are turning over your inventory you need to replace it, and quite often the financial investment you have made in inventory is still part of your overall cash conversation cycle - which is of course : inventory, receivable, cash, in that order .

Combined with A/R Finance solutions asset loans are powerful working capital l drivers -simply because unless bank facilities that are ratio financial statement performance driven, they are in fact collateral and true value driven.


So a proper facility, when set up, margins your receivables and inventory to their true agreed upon values .What we are of course saying is that if you have slow moving inventory and uncollectible receivables you will be a poor candidate for an inventory financing facility.

In order to achieve a proper facility focus on maintaining adequate inventory reports and controls, ultimately a perpetual inventory system is the best method of securing inventory finance because it of course helps focus on the true picture of your inventory movement .

Your firm's ability to produce valid purchase orders, contracts, and proper inventory accounting are a key plus in successful inventory finance. A solid proposal, prepared with the assistance of a business financing advisor perhaps, will include a financial and executive summary review, inventory records and control documentation, and you ability to show repayment of the inventory loan as well as good fluctuations.


Inventory finance works best when you can clearly demonstrate a need, and the ability to show the inventory financing facility will generate additional sales and profits. If you have good margins that will help offset some of the additional costs of such a facility. Simply your ability to generate more cash from inventory and to purchase smarter should in fact be a new benefit that will reap additional profits.

You can also spend a lot of time in Canada searching out for inventory financing that doesn't exist. It is highly specialized, and the number of firms is in the handful, so focus on working with the right parties so as not to waste your valuable time. Understand costs, as well as the benefits that an inventory financing facility will bring to your business. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your inventory loan and asset finance needs.


Stan Prokop - founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :

http://www.7parkavenuefinancial.com

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


'

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

Why A Business Credit Line Or Asset Based Loan Is A Key To Success In Your Company

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Not All Business Credit Line Solutions & Asset Based Loans Are Created Equal.

OVERVIEW – Information on the important of securing and being able to access a business credit line or asset based loan in Canada. Growing and Running Your Business with all the available financing you need is a ‘ key to success ‘

Business credit line needs in Canada call for either a bank facility or an asset based loan. Both of these solutions aren't equal in how they deliver, what they cost, and how they work. Understanding those issues helps the business owner plot a ' key to success' strategy that helps ensure business growth and survival. Let's dig in.

While both the bank credit line and the asset based loan are revolving facilities asset loans are more focused to the actual assets in your business.

All of your borrowing needs are often (not always, but often) tied to your sales revenues. As sales are generated receivables are collected (hopefully!) and paid off. For companies that sell products, as opposed to just services, inventories are often coupled into your borrowing needs. These two asset categories, A/R and inventory, form your current asset.

From the asset based lender or banker perspective these form your ' borrowing base ' on which you will draw down working capital cash flow needs. Asset based lenders lend more against your assets, and in turn they tend to monitor your a/r and inventories more closely - as those two assets are typically the prime collateral for your asset based loan.

While banks do require some ongoing reporting on your assets, typically monthly, sometimes only annually, they instead focus on your operating characteristics of profit, cash flow, debt load, and character and personal collateral of owners. (Many banks are challenged by the ability to both understand and monitor inventories - while asset lenders have developed experience in numerous industries and inventory types.

What's my rate? That's the ongoing battle cry of business owners and financial mgrs when they consider line of credit needs and benchmark the offerings of their bank or asset based lender. While your borrowing capacity can often double or triple in asset based revolving facilities they do come at a higher cost.

Conventional bank financing is cheaper, but more challenging to be approved for. An interesting note is that in recent times, due in part to general competitiveness and the low rate environment asset loans have in fact dropped in overall cost.

Start up, fast growing, as well as financially challenged companies are prime candidates for asset based lines of credit. They have limited or challenged cash flow generation performance, but require rapid access to cash flow and working capital. The conservative financial position as demanded by banks focuses on ratios, cash flow, debt to equity relationships, and owner guarantees.

It's important to note that many, shall we call them ' subsets’, of asset based loans can help deliver liquidity to your business. They include:

Factoring/Confidential A/R financing

Inventory loans

Bridge loans

Sale leaseback strategies

P O Financing

SR&ED Cash flow loans

If you're focused on ' keys to success ' in your working capital and cash flow needs seek out a trusted, credible and experienced Canadian business financing advisor who can assist you with your finance needs.


Stan Prokop - founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :

http://www.7parkavenuefinancial.com


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


' 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.

An ABL Business Credit Line : Ready For An Asset Based Loan For Credit ?

Have You Considered Asset Based Lending As The New Vintage of Business Credit Lines ?

OVERVIEW – Information on asset based lending as a viable bank alternative for business credit .The asset based loan known as the ‘ ABL Business credit line ‘ is a solid revolving credit facility for many companies in all sorts of industries







The ABL business credit line could well be called the ' new vintage' in business financing. In simplest terms its borrowing, via one facility, against all your business assets. What are those assets? Typically receivables, contracts, inventories, and equipment. Why should you consider this type of non bank borrowing? It is the ultimate asset based loan .Let's dig in.

Bank financing in Canada, low cost and flexible as it is, is simply not available to all businesses in the SME Commercial sector in Canada.

It is an irony in business that growth opportunities and the ability to generate more sales and profits simply becomes ' too much of a good thing'

as it relates to the company's ability to handle that growth. While that might refer to people, systems, processes, new assets required we're focusing today on cash flow and working capital availability.

Europeans have a great name for this - they call it overtrading. Without a decent facility in place payable grow, CRA obligations mount, and the company struggles to meet client needs.

ABL (asset based lending) provides one solid solution to that challenge. In effect you are opening the tap

by cash flowing your business assets. Part of the cash flow shortage problem is simply that fact that a ' domino theory' exists in commercial ' business to business' transactions. Each firm stretches out payables- the irony included here is that even the largest corporations and government bodies are sometimes the slowest payers!

So why is the ABL business credit line getting more popular every day? Simply because it provides the alternative to traditional Canadian chartered bank financing that might not be available. The right facility, properly structured, with the right finance firm, can provide unlimited capital, allowing the owner/manager to capitalize on growth opportunities.

Part of the appeal of the ABL business credit line is way it is structured. As your assets and sales revenues grow you have the ability to draw down on a daily basis. We should probably note that the borrowing calculations you receive on your maximum borrowing power in fact is calculated monthly by a standard document known as a ' borrowing base certificate'. It totals your A/R, inventory and equipment and allows you to borrow against that balance via some very healthy margining ratios. Typically that's 90% of A/R, 30-70% of inventory, as well as the liquidation value of equipment.

A short technical point - Inventory is assessed when you start up your facility and an on going borrowing per cent age is applied to future inventory calculations. As far as equipment goes assets are appraised at the start of the facility and become a key part of your borrowing base.

Costs vary in the asset based loan. Larger credit worthy concerns can achieve facilities that are even lower priced than banks! But the majority of the SME COMMERCIAL sector that uses ABL credit pays higher rates than banks, the trade off being access to unlimited credit that goes lock step with sales growth.

There's nothing like the taste of a good new ' vintage ', so it might be time to consider speaking to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can introduce you to a new idea in business credit.




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 ABL ASSET BASED CREDIT LINE EXPERTISE





Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?
CONTACT:

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


' Canadian Business Financing with the intelligent use of experience '



























Stan Prokop

Is The Asset Based Credit Line And Loan A Threat To Bank Business Lines Of Credit In Canada . You Decide After This!

Is There A New Triple Threat In Canadian Business Financing


OVERVIEW – Information on the business line of credit in Canada . Differences in bank and ABL asset based loan facilities are worth knowing for the Canadian business owner / manager



Not all business owners and financial managers in Canada are familiar with the new (relatively speaking )kid on the block in Canada , the business line of credit known as the ABL , which is basically an asset based loan , non bank in nature .

Is the ABL a real ' triple threat '

when it comes to the alternative, the bank commercial credit facility? We'll let you decide but we’re quite sure you will agree there is a market for both as you will soon see.

Oh, and by the way, the banks agree with us, because many of them, unbeknownst to many, offer their clients both alternatives. Talk about a secret we have let you in on!

So if the ultimate goal of both the ABL and the bank facility is to provide you with revolving credit, how in fact are they different? One way is simply the focus - for the bank its on cash flow and profits, while the ABL facility focuses on... you guessed it, just assets ! While our chartered banks view collateral as a back up to their credit decision the Asset based lender views your assets, the collateral, as pretty well the only back up plan.

The way bank credit lines and ABL facilities behave is partly driven by regulations. That is to say that our strong Canadian banking system is driven by rules and regulations around the amount of funds they have, what they can lend, who they can lend to . Given the fact that our banks are all pretty well public corporations on the stock market we can further imagine all the visibility around their lending that that garners!

And the asset based lender then? Well we are certainly not portraying them as drunken cowboys

doing what they want and when they want, but the reality is they are not regulated, are more often than not private firms, and make their own risk ratings and decisions based on management experience and their opinion of your assets - typically A/R, inventory, equipment, and even real estate. All of those components become part of your business credit line.

Here's another little surprise we'll share with you today. When bank loans go bad they are placed in a ' non performing ' part of the banks books, a special place known as ... you guessed it ' SPECIAL LOANS '. Do you know who often refinances these loans and pays out the bank? Surprise! It's the asset based lender!

So when a company is consuming too much cash, rather than generating it the asset based business line of credit is a great business credit solution. So all of a sudden historical cash flow and profits, critical to a bank, are a non issue when you are looking for an ABL facility. Big difference!

Do we criticize our banks for their behavior .Some might, but not us, because Canadian chartered bank solutions deliver the lowest cost based on the risk they are prepared to take.

That brings us of course to pricing. In fact certain ABL business lines of credit are in fact 100% competitive, even lower than bank offerings. However, the majority are in fact priced higher, with the offset being the tremendous amount of additional liquidity and working capital your firm achieves when monetizing assets via an asset based ABL loan.

So, co-existing. Absolutely. Just be prepared to recognize the price, limitations and benefits that your firm is prepared to take one when looking for a true business line of credit. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your business credit decision.



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 10 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/business-line-of-credit-asset-based-loan-bank.html







7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com