Mezzanine Finance Solutions : The Powerful Persuasion Of Unsecured Cash Flow Financing

Why Mezzanine Financing Might Be Right ( Or Wrong ) For Your Firm

OVERVIEW – Information on mezzanine financing in Canada . When do ‘ Mezz ‘ bridging finance solutions work, and when are they wrong or unavailable for your firm

Mezzanine financing offers a unique allure to Canadian business owners/financial managers that seek additional capital for their firm. However in certain cases this type of finance solution is potentially either wrong for your firm, or, in some cases simply not attainable. Let examine what we call the ' powerful persuasion’ of the bridging finance capability of ' mezz ' and see when it works, and when it doesn't... Let's dig in.

Some of the key uniqueness of Mezzanine solutions revolves around the fact that it has unique elements of debt and equity - rare or non existent in almost all other financing solutions you might be looking at. This is because it's a ' 2nd position' financing that stands behind any secured lenders that might already by in place.

The other persuasive argument around this solution is the issue of collateral - essentially there is none, other than our aforementioned 2nd position on assets. Another key item is the fact that other secured lenders tend to ' love ' your mezzanine finance scenario if only for the fact that it is treated as ' equity ' on the balance sheet by secured/term lenders/lessors.

If the allure of ' MEZZ ' is that attractive how easy is it to get approved. Companies that are traditionally candidates should have attributes in the following areas:

- Established business
- Operating in a viable industry
- Good candidate for growth

Above and beyond those ' attributes' is the requirement for historical, present and future cash flow generation

that shows ability to service the unsecured mezzanine debt.

The minimum amount of financing done in this area is typically $1,000,000.00 and that clearly is on the small size. Larger deals preferred! In some, but not all cases the lender will also ask for a future equity position in the firm, which owners must certainly consider as a factor in considering this method of finance. Top experts advise that firms can usually expect to receive ' mezz' financing at least 1-3 times its cash flow - although clearly amounts will vary.

Any type of debt, secured, or unsecured (Mezz) will inject a certain number of ratios or covenants into the financing. These typically focus around debt to equity, cash flow coverage, etc, but in some cases might even limit your firm to what it can spend and how re Capex or shareholder compensation/dividends.

We haven’t mentioned the ' cost of financing ‘. Suffice to say that borrowing rates for mezzanine bridging finance will typically always be in the ' teens' which reflects the risk a 2nd position lender takes on transactions such as this . Owners/managers typically benchmark this financing cost against other options such as issuing equity which is of course even more expensive.

Is mezzanine bridging finance right for your company? 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 finance options.

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 100 Million $ of financing for Canadian corporations . Info /Contact :

7 PARK AVENUE FINANCIAL = CANADIAN MEZZANINE AND BRIDGING 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



Email = sprokop@7parkavenuefinancial.com



' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop

Commercial Financing Choices : Evaluation Bridging Finance In Canada : Asset Monetization Bridge Loans vs. Equity

Ready To Triumph In Private Commercial Financing ?



OVERVIEW – Information on bridging finance solutions in Canada . Bridging finance alternatives are compared to equity capital . When do bridge loans and alternative financing make the most sense






Commercial financing for private companies in Canada, or rather, the lack of it has been a challenge for companies in the SME sector (small to medium enterprise) for some time. Let's dig in.

Remarkably even the owners of Canada's largest stock exchange, the TMX Group recently announced capital raising activity for companies whose longer term goal is to ' go public '.

In the mean time the business owner grapples with lack of bank financing, and finds himself or herself considering bridging finance solutions - those bridge loan and alternative finance solutions that are non bank in nature.

Top experts, including those TMX gurus tell us that ' bank loans and venture capital are tougher to come by '. Naturally private financing of a larger nature comes with ' control ' issues, or loss thereof, as the stats tell us that when private equity and VC's are done with your firm they often own majority interest in the business, in fact over 86% of the time!

Financing in the SME sector typically involves amts of 250k and goes up to the 10-15M dollar range. The challenge for the owner is almost always the same - debt, or equity?

The core of bank financing in Canada revolves around the ability of our chartered banks to ensure loaned funds are always secure. If a business does not have cash flow repayment power, or significant unencumbered assets then getting all the financing you need will be difficult. While the entrepreneur dreams of hyper growth the bank dreads it - there go the ratios!

The Canada Small Business Loan program is often a solid alternative for start up or fledgling companies. It's all about the government guaranteeing loans that typically max out at 350k - recent changes to the program have made this program worth watching.

The challenge with taking on debt in commercial financing is simply repayment ability - don't forget also that repayment of bridge and asset loans come at the cost of not being able to plough that money back into the business. Many businesses in Canada become so focused on their debt that the hurdles to growth and success are even higher.

Equity capital in Canada can come from several sources, in addition to the new kid on the block ' Crowd funding’ the owner can also solicit capital from Angel investors, VC's, and strategic partners.

While equity investors rely on sales projections and future valuation and operating margins the asset lender focuses on past and present financial statements. Here the focus is debt load, quality of accounting and cash flows.

Bridging finance solutions in Canada include:

Non bank commercial finance companies

Equipment lessors

Mezzanine lenders

Solutions offered by these firms include:

A/R financing

Inventory Finance

Sale Leasebacks

Royalty and Contract Financing

Franchise loans

SR&ED Tax credit monetization

Asset based lines of credit that bundle A/R, inventory and equipt into one solution

If you're looking to ' triumph' via bridge loans and asset monetization seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your commercial finance 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 COMMERCIAL 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

A Sale Leaseback Is A Solid Way Accessing Bridging Finance Needs : The Asset Bridge Loan Made Easy

A Different Way Of Looking At Short Term Loans Via Bridge Finance



OVERVIEW – Information on the bridge loan concept in Canada . Sale leaseback transactions can help the balance sheet and cash flow via a unique way of looking at bridging finance need




Bridging finance , in some manner, is often sought by Canadian business owners and financial managers. The sale leaseback, via a traditional lease, or a ' bridge loan' (there’s a difference) is one way to achieve that financing need. Let's dig in.

Your company has the ability to make maximum use of your firms owned assets in a manner you may not have considered. It's the 'sale lease back’, and by selling back the asset, or assets to a third party you can address several key challenges you might be facing on the balance sheet, not the lease of which is cash flow.

So how is this type of transaction completed... successfully ? Several factors come into play. When you have assets such as equipment, technology, and even real estate that are used in your core business, are still needed, and are owned outright a significant opportunity exists to ' cash flow' the asset/assets.

Naturally the need for capital can be satisfied in a number of ways, but most owners are reluctant to address the issue of new equity investment - it dilutes ownership and sometimes simply isn’t possible.

Let's recap some of those key benefits of a bridge loan/ leaseback on owned assets. They inlcude:

The ability to free up equity that’s held on your balance sheet - this could actually be distributed to the owners or used as a working capital component to continue growth of the company

If your business is doing well and simply hampered by growth capital the ability of your company to earn higher profits that offset the costs of the bridging finance is a desirable route

In many cases it allows the company to re do their balance sheet in some manner, i.e. pay down other more expensive debt, eliminate some debt altogether, etc

Using company owned real estate as an example you can ensure your company is using capital to operate and grow the business, as your charter is clearly no real estate ownership. Note: Many large corporations, even our chartered banks included have sold their real estate holdings and leased them back - even the big guys recognize they are running a business, not investing in real estate. Apologies of course to those ' PRIDE OF OWNERSHIP' folks!

In certain cases the interest rate environment alone might be a major consideration. The current low rate environment might make sense to acquire capital at 4% and reduce debt acquired at 9% as an example.

Finally, in some cases your advisors such as accountants and the tax folks might be able to point out some solid advantages to a sale leaseback.

If you’re looking for a different way to raise capital/cash the sale leaseback is a great way to address bridge finance needs. That might be either a traditional lease or a short term bridge loan. Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can turn those needs into ' easy'.



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 Sale LeaseBack expertise!







Stan Prokop









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