Steps To Commercial Business Financing Options

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Ending The ' No Bank Financing ' Conundrum

Business financing options are provided by a number of non bank specialized finance companies in Canada. They provide an array of corporate solutions , all of them different but still allowing you to achieve cash flow and working capital goals . They are in fact , the answer to .. you guessed it ' no bank financing' conundrums.

The challenge for business owners and financial managers is to identify and execute on who those sources are and what they can do for your company . Many companies, and industries in fact have specialize needs .

When you think of the right type of business financing for your company it's important to think of senior and junior ! What do we mean by that comment ? Simply that a senior lender will want all the security on your business, typically handled by a document called the G S A - General Security Agreement . It then becomes a challenge to source other types of cash flow and debt solutions which can't be monetized.

A good example of a senior lender is Canadian chartered banks. But when that source of capital isn't available many firms these days choose asset based lenders , allowing them to drawn on various assets of their business but with more flexibility.

In some cases your business might need a ' bridge loan' - they solve temporary capital shortages .. they are a ' bridge' to future refinancing of your business.

Leasing companies are one of those specialized asset lenders that financing both new and used equipment, even software. While many firms think they are eligible for VC or private equity financing in fact they are poor candidates for that type of financing .

Is there a bottom line? We think so , Simply that if you are looking for a commercial finance company for debt and medium or
short term financing options alternative non bank lenders are a great choice.


Seek and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of success when looking for a non bank commercial finance company in Canada.







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 !





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

A Tale Of Two Business Credit Facilities – ABL Asset Financing And Bank Revolving Secured Facility

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INFORMATION ON ASSET BASED BUSINESS LINES OF CREDIT AND BANK FINANCING IN CANADA

Secured business credit via an ABL asset financing or a bank line of credit . It's absolutely a tale of two. We guess the book might be called ' A TALE OF TWO FACILITIES’! Let's examine some of the key differences and benefits and disadvantages of both an ABL asset line of credit and the better recognized bank secured business credit facility.

Both public and private companies in Canada feel the squeeze when it comes to achieving the right financing for their firms in the current economic environment. Both the business owner and his or her financial managers can be forgiven for being a bit confused on alternative methods of line of credit finance.

So should you be doing what everyone else seems to be doing, or should you strike out on your own with some solid investigation in alternative business models when it comes to lines of credit for Canadian business?

Let's look at what some of those key issues might be in considering alternatives, the ABL facility, and the Canadian chartered bank offering. Clearly in both cases you want to be able to ensure you can grow, not just survive in business.

Price is a factor also; you want to know the total cost when it comes to acquiring the right finance facility. Naturally relationships are important also, you want to be dealing with the right people, it’s as simple as that.

So lets take a first pass at asset based lending via an ABL facility. It is just a business credit facility secured by the assets of your company. Many firms that either cant raise bank financing, or, more importantly, cant raise the amount of financing they need from banks consider ABL. Hundreds of Canadian firms now use ABL finance as there preferred method of leveraging their assets for a credit line . Those assets are used to bridge the timing of cash in, and cash out in your business. ABL is available for companies of all size, from major public and private corporations, right down the pecking order to start ups. The facility fluctuates with the amount of asset that your firm generates, typically around A/R and inventory. Funds are typically managed through a blocked account - that simply means that you deposit all your inflows into one account, while your balances to reduce the line are managed through a separate account. It's not as complicated as it seems. Key benefits are higher margins on receivables and inventory.

The more traditional alternative to business credit via a secured facility is the Canadian chartered bank. Facilities are low cost and can be combined with term loans. Banks are cash flow lenders, the ABL facility tends to be asset based, not cash flow based. Your financial statements and current financial history will dictate whether your firm is more cash flow or asset oriented. Banks will look to what they call secondary forms of repayment and are highly regulated with their offerings. ABL lenders for asset financing tend to be independent commercial finance companies that are none regulated. It's a little known fact that many of the banks have small boutique divisions of ABL finance that in some ways compete with their peers in Commercial business credit.

Investigate both the ABL secured asset financing revolver, and the more traditional Canadian chartered bank line. Weight the benefits and potential disadvantages of both in coming up with your preferred method of business financing. Speak to a trusted, credible and experienced Canadian business financing advisor today on differentiating that ' TALE OF TWO FACILITIES '!






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


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

Canadian Business Capital – Bank Business Lines of Credit & Alternatives

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Canadian Business Financing - Tried & Tested Real World Alternatives

Information on acquiring bank business lines of credit in Canada. How are these facilities secured, how do they work, and are their alternatives to business capital requirements other than the bank?

Business Capital. Easier said than done, right? Let's examine how  bank and other secured lenders offer business lines of credit - More importantly, we're going to bet a dollar ( we're conservative by nature!) that you might not be aware of some other options and alternatives for business line of credit financing !

Business operating lines are used to finance your investments. Your investments in   receivables, inventory, and other current asset accounts of course.  Canadian banks willingly offer these credit facilities (no seriously, they do) but the quality of the collateral they take is critical to that offering!

So how do the Canadian banks structure that facility in order to be made whole and feel comfortable in providing you with that business line of credit that is so badly needed for working capital and cash flow financing.  For a starter, they take a first charge on the actual assets that are used to margin the facility - those current assets are  accounts receivable, inventory (  raw materials, work in process and finished goods ) , all secured via a common security agreement which is typically referred to as a GSA ( General Security Agreement )  . You'll of course be surprised at how un - general and very specific this agreement is!

So once you have a bank operating line of credit how long does it last for. In our experience these facilities are renewed on an annual basis - with the two criteria for renewal being your business financials of course, as well as how the account has operated over the past year.

How are limits established for bank business lines of credit in Canada? Typical ' ratios '' or ' margining ' as we have called it are 75% of accounts receivable under 90 days, and some per cent age of inventory. It's only our opinion, but Canadian chartered banks really struggle with the inventory component of your business lines of credit - most typically because they can’t be expected to have experience on the value and disposal of all types of inventory.  So typically you are very luck if you can get anywhere from 10-50% inventory financing on the value of your inventory.

Do your customers ever find out about how you are arranging business capital? Not really, the security is registered at a central registry, but clients and suppliers are never notified unless, of course, your loan is called.

Naturally many firms do  also require long term financing commitments for  business capital assets - i.e. those ' fixed assets' on our balance sheet . Typical bank term loans in Canada range from 3-5 years, sometimes longer, and have strict repayment and cash flow coverage requirements

As many Canadian business owners know, often personal assets are also charged as extra collateral for business lines of credit in Canada.  These include cash savings, home equity, cash surrender value of life insurance policies, etc.

So why do the majority of Canadian business owners and financial managers always try to get bank financing in place. In might just be force of habit, but we think two other factors play a role. They are the cost of bank financing in Canada (its low!) and, as importantly, their lack of knowledge of other financial options.

There are other financial options for business capital in Canada other than the banks? Yes, there are! Prudent owners and managers should investigate ever growing alternatives including asset based lending, confidential invoice financing, tax credit financing, and purchase order financing, and unsecured cash flow loans. How's that for alternatives!

To more closely explore traditional or alternative options in business capital in Canada consider talking to a trusted, credible and experienced Canadian business financing advisor, who can put you on the path of business lines of credit that make sense.

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

Bank Financing In Canada : Business Loans & Other Alternative Finance Solutions For Your Consideration

Looking For Best Answers in Commercial Bank and Business Financing Alternatives?

OVERVIEW – Information on bank financing requirements and solutions in Canada. Business loans to properly fund your business can also be achieved via numerous alternative finance funding choices

Bank financing in Canada is, no question about it, the most commonly thought of source for business loans. Another solution is alternative finance capital - more widely available than ever these days. Let's dig in.

There is no question that the wide availability of bank funding has the potential to serve all the needs of Canadian business - that’s in the form of business revolving lines of credit, fixed term loans, and a wide variety of other products and services. The challenge for Canadian business owners/ financial mgrs? Trying to understand exactly how ' the bank' thinks!

If there's any good news on Canadian banking it’s that our banks continue to be #1, world class in capital, profits, mgmt, etc. For the business owner this is a two edged sword, because those bank offerings come with a prerequisite of collateral, personal guarantees, cash flow, and conservative loan to value scenarios.

Companies in Canada that are ' start up' in nature, as well as ‘collateral light)! makes that decision to borrow very difficult on most occasions. Think of it as ' lower risk lending’, but oh those great rates and access to capital!

The other common challenge to owners/mgrs are the financial covenants and ratios that might be difficult to satisfy, much less explaining to wives and husbands the whole issue of personal guarantees, notwithstanding the ability of some business people to feel confident they can negotiate some level of guarantee re: personal assets/holdings.

So notwithstanding the important of bank ' relationships' as well as the dangers of being put into ' special loans' it’s important to consider alternatives.

Alternatives? You bet. They include asset based lenders who focus only on the assets of the company, placing full focus on only your assets and their borrowing capacity. Those assets include receivables, inventory, and equipment and real estate if the latter is applicable.

Other solutions include Accounts Receivable financing based solely on your A/R and sales growth. Commonly known as factoring, it’s a solid solution when sales are growing and traditional finance is less available.

Other forms of alternative finance include inventory loans, PO finance, working capital term loans, sale leasebacks, and equipment financing.

If you're focused on the ' best answer' to your needs in Canadian business financing seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
who can assist you in your bank financing or alternative finance needs in business loans and cash flow 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 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 :


7 PARK AVENUE FINANCIAL = CANADIAN BANK FINANCING & ALTERNATIVE FINANCE EXPERTISE



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

Fax = 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

Bank Financing Solutions In Canada : A Mindset Rework On Working Capital & Term Loan Solutions

Diving Into Bank Financing In Canada With Knowledge Vs. Myth

OVERVIEW – Information on achieving successful bank financing in Canada. Working capital, cash flow and term loans can power your business to new levels with flexible finance and low costs if you know how to qualify and position your business

Bank financing in Canada is often viewed as a ' hurdle ' for business owners/financial managers, particularly in the SME COMMERCIAL FINANCE needs area. These can be often overcome with some basic knowledge of success strategies to achieve what is arguably the lowest cost/most flexible financing available to the Canadian business owner. We're diving into some truths and myths around bank lending .Let's dig in.

We're not 100% sure of the per cent age amount of bank finance applications that are declined in the Canadian marketplace , but we do know that in talking to clients it's difficult for them to overcome getting inside the box . The box? That's the credit box of ratios, covenants and collateral that your firm must fit in. When you are not approved you're forced to get financing ' outside the box '! - more on that later.

Let's cover off some basic bank solutions to your capital needs, and then let's discuss several key areas you can in effect ' pre-qualify' yourself on, thereby improving chances of success.

The good news in Canadian chartered bank financing is that, when successful, you can achieve all your short, intermediate and long term financing needs for your business.

Those needs? They include:

Unsecured business loans: These loans are substantiated by your immediate cash flow. Terms are shorter in nature and are often for interim financing or seasonality finance needs of your business

Business line of credit: This of course is to cover off your ongoing working capital needs. It's quick daily access to your ongoing working capital and cash flow needs. In essence it funds your working capital accounts on your balance sheet - typically A/R and inventory.

Term loans/ Leasing - These solutions allow you to finance fixed assets and take on debt that makes sense for your firm. While not all Canadian banks offer ' leasing' solutions for assets in some cases they partner with major well known players. A term loan can also often achieve the same results and equipment lease finance.

Let's cover off some basics around the process. First of all it's critical to have a strong handle on what can be called your ' use of funds'. Knowing how much to ask for allows you to take a look at your finance statements and ensure you can meet 'debt service' ratios that are required for approval. Key point - banks love ratios!

Get used to it!











Typically a cash flow ratio of 1.25:1 is required. By knowing your cash flow ratio you can literally determine yourself the amount of busines credit you will qualify for - all other things being equal.

In the SME COMMERCIAL space in Canada owners must have reasonable personal credit. Know your credit score and be prepared to address issues that might arise out of that discussion.

Canadian chartered banks focus a lot of collateral, both inside the business as well as the owners outside net worth/assets. Different types of assets have different value - a good analogy would be real estate versus perishable inventory. Big difference in collateral!

Bank financing can also be achieved via the Govt Guaranteed Business Loan, which is administered by the banks but is actually a govt program, it’s a great way to achieve inside the box financing that you might otherwise not qualify for.

If it's necessary to go ' outside the box '

don’t forget that numerous non bank solutions exist for business capital needs. They include:

A/R Financing
Inventory Finance
Asset based non bank lines of credit
Tax Credit Financing for refundable tax credits
PO/Royalty financing
Leasing/Sale leasebacks

If you're looking to do a rework on your mindset of what Canadian chartered bank business financing is , or is not seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your capital needs - inside and outside the box!



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 BANK FINANCING 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

Eliminating Business Loan Wind Chill : Understanding Bank Financing In Canada

The Unbearable Lightness of Being A Canadian Business Borrower

OVERVIEW – Information on business loan success in Canada . Bank financing and other forms of financing your company requires an understanding of these issues






Most business owners and financial managers aren't necessarily aware of the methods and factors that banks utilize to control and monitor their loan facilities with commercial customers. We are talking about two types of loans essentially, term loans, and also operating lines of credit, also called 'revolvers' by some. (Revolver - the credit line revolves, it goes up and down on a daily basis...)
Banks essentially use several different strategies to ensure they have maximum control and influence on the business borrower.


Banks often are reluctant to allow maximized borrowing from other parties for asset growth. Why? This is because when a customer has to service the additional non- bank debt they might be unable to service the banks loans. Banks have very well known and published cash flow ration and they want to ensure their customers can meet these rations on the bank debt. Naturally if a bank feels comfortable with a customer growth and cash flow profits they are much more likely to approve a third party financing. If they aren't comfortable they may ask the company to at lease temporarily defer bonuses, dividends, or, in the case of a public company, a stock repurchase.


Bankers

of course usually know the company very well, as a relationship and financial history has developed over the years. They will often want to have input into the company's growth direction in an effort to ensure the customer is not going down a path that in their opinion, might lead to liquidity loss or profitability loss. This sort of 'advice' from a bank can come in a number of manners, one of which is simply providing a debt to equity ratio that cannot be overlooked by the customer.


Business owners know that it is no ones best interest for the bank to trigger a default on a loan - it's clearly a case where both parties have a lot to lose. However if a bank feels on a number of fronts that the customer is spiraling downward they will take steps to ensure their loans are provided for.


What are some of those downward spiraling scenarios?

They include:


Cash flow deterioration
Asset erosion
Working capital problems


Again, the worst case scenario is the bank 'calling the loan '. We have agreed this benefits no one, so the bank usually prefers (as does the customer!) to return to the bargaining table. At this time business owners are strongly cautioned to prepare a corrective action scenario to satisfy the bank. It is at this time that the bank normally considers an interest rate increase, or more restrictive covenants.


We also want to point out to business owners that banks want to ensure that there is a proper ' matching ' of financing. By that we mean that the bank does not want the customer to borrow short term to finance long term scenarios. For this reason working capital ratios are put into place.


Finally banks utilize whets known as a 'negative pledge 'clause. This forces the company to consult the bank when pledging other assets or selling unencumbered assets. If such sales are agreed to the proceeds are usually used pay down the bank.


In summary, it benefits business owners to understand the whys and wherefores of bank strategy and influence and control around business loan scenarios. Understand where the bank is coming from allows a business owner to more proactively plan financing growth with a view towards successful financing. Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your business capital needs.



Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :


7 Park Avenue Financial = Canadian Business Loan Financing 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

Stan Prokop

Bank Business Credit Line Alternatives In Canada. Inside The Hidden Sector Of ABL Loans And Financing

What To Pack When Going On A Trip For A New Business Credit Line Lender

OVERVIEW – Information on ABL loans in Canada . This busines credit line is the alternative to bank financing and just might work if you have … Assets!




Searching for a business credit line in Canada . One question to ask is what is the difference between bank financing of such facilities and the newer ' ABL LOANS' which offer a strong alternative to Canadian chartered bank facilities. So what should the business owner/financial manager pack when embarking on this trip? Let's dig in.

A tremendous amount of business owners/ financial managers still equate revolving lines of business credit with our Chartered banks. While it is true they offer the lowest interest/ financing rates, and unlimited capital to borrow from the reality is that every firm does not qualify for bank credit.

ABL (asset based) Loans serve the same purpose as bank lines. They provide your firm with cash flow/working capital that bridges the timing of turning your revenues into cash. Carrying inventory and receivables are the drivers behind that need for business credit.

ABL business credit facilities differ from the banks in that they often have no upward limit. While limits might be initially set, as your business grows and investments in A/R and inventory increase so does your borrowing power. Bank facilities tend to be traditionally capped at a certain borrowing limit, and are reviewed annually based on financial statements, profitability, cash flow coverage, and any other collateral the bank might hold.

Business owners can be forgiven for asking ' How can the non bank asset based lender offer this type of facility that is so different from our Canadian chartered banks?'

The reality is three fold:

1. They are non regulated and can do what they want

2. They focus solely on assets - not ratios and covenants

3. They perform a higher level of due diligence and reporting in both setting up the facility and then monitoring it - you can expect to supply monthly reporting in the form of aged receivable, payables, inventory and equipment lists - Bottom line - It's all about the assets.


What are the issues that allow a firm to consider asset based versus bank credit lines? One might be fast growth. When your financials don’t support the equity, debt and ratios required by the banks, or if there is seasonality in or ' bulge ' requirements for growth you're a strong candidate.

We are assuming you have investigated lower cost options such as the bank and simply don’t qualify regarding their requirements. If you can produce clean financials, can report on assets regularly you're a candidate for ABL loans.

Typical ABL business credit line facilities start at 250k as a minimum - As for the upward limit there is really no upward amount that can't be financed if you're with the right lender.

It's a bit of a secret

that Canadian chartered banks, for the most part have small internal niche divisions of ABL credit that compete, to a certain degree, for this type of business. It's unclear to us whether their requirements differ that much from typical bank offerings - we'll let our clients decide that one.

By the way, borrowing power is greater with ABL facilities. A/R is margined at 90%, and healthy borrowing is in place for your inventory and equipment, all of which are bundled in the same facility.

While some may consider ABL as a ' hidden market’ it’s becoming more and more popular everyday. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in determine if your firm has what it takes to embark on that ABL loan trip!


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 :


7 Park Avenue Financial = Business 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

Phone = 905 829 2653


Email = sprokop@7parkavenuefinancial.com

Stan Prokop