Business Financing Change? Let Asset Based Change Your Outlook On The Business Credit Line

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Upgrade from an 8 Track Mindset to IPOD Via Changing Times In Canadian Business!    

 

When it comes to business financing in Canada what would you do if you could take one of your finance alternatives and take it from the days of  8 track players into the world of iPods and all the other technology we have access today.  Talk about a change in speed and features and ease of doing business, not to mention more for your buck!

 

AN ASSET BASED CREDIT LINE IS THE NON BANK ALTERNATIVE FOR A LINE OF CREDIT

 

That's the analogy we're using today for the Asset based credit line, which is a non-bank business finance alternative that provides your company with cash flow and working capital in a manner similar to a Chartered bank business line of credit. But there are significant differences in how these asset based lending lines of credit facilities are obtained and how they work. Let's examine some of those key differences as they affect account receivable, inventory and fixed asset borrowing.

Asset based lenders can also include real estate assets into the borrowing mix, providing even more liquidity.

 

CREDIT LINES FACILITIES ' REVOLVE'

 

When we compare how facilities such as this operate it's all about  ' revolving ‘. The analogy to your personal lines of credit in your own life isn’t far off here. So if the bank facility and the ABL (asset-based lending credit line ) fluctuate in the same manner, what’s the difference our clients can be forgiven for asking?

 

HOW ASSET BASED CREDIT LINES ARE MARGINED FOR BORROWING PURPOSES

 

One of those key differences simply boils down to the availability of funds, because you are in effect borrowing against the whole asset base of your company. To be clearer, most bank facilities focus on conservative margins of 75% of accounts receivable and an even more conservative margining of your inventory. The asset-based business facility typically lends at 90% of your receivable, and anywhere from   25-60% of the inventory and other assets such as equipment. Margining assets for more borrowing power is what asset based loans are about.

Borrowing approval is typically recalculated every month via what asset based lenders call a borrowing certificate.

 

THE DIFFERENCE IN BANK CREDIT FACILITIES AND THE ' ABL '

How then does the asset based lending lender take comfort in offering your firm so much more liquidity? They do that by utilizing two techniques that are typically ignored by the Canadian chartered bank credit facility. Those two asset based loan  techniques are :

 

Due diligence on the valuation of assets

More extensive monthly reporting requirement

 

   But those two techniques deliver because we have often seen clients go anywhere from 50-100% in total additional borrowing power. Talk about a potential liquidity explosion in your firm.

 

So why isn't every business borrower in Canada utilizing asset based financing? We wonder about that one a lot also! but the reality is that this method of revolving business credit is, on balance relatively new in Canada, having come to us from our good friends in the U.S. . Some estimates in the U.S. place asset-based lending at 30-40% of all borrowing activity if you can believe that.

 

4 TYPES OF BUSINESSES THAT UTILIZED ASSET BASED CREDIT LINES

 

Is the Asset Based Credit Line for your firm? It certainly covers all categories, including firms who are in the following phases of their existence:

 

Start up's

Fast Growth

Special Situations

Firms currently in Special Loans

Companies with solid credit but who are unable to access the full amount of financing they need from our Chartered banks can finance the balance sheet with asset loans.

 

CONCLUSION

 

Whether you are a small business or a larger corporation seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you determine the benefits of the asset based financing  ABL credit facility as they relate to your firm's cash flow needs. Let this facility, as in our analogy; take you from 8 Track to IPOD...quickly. Asset based lending works!

 

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.


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







Stan Prokop
7 Park Avenue Financial/Copyright/2020

A Stunning Claim? You Made A Big Financing Mistake By Not Considering An ABL Lender!

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How dare us. Are we actually saying you, the Canadian business owner of financial manager don’t know how to run your business? Not really! Our point is that you in fact may have missed one of the most solid strategies out there today when it comes to business loan financing. Simply speaking, if you haven't looked at an ABL lender for asset based finance business lines of credit, you just may be missing the boat when it comes to an asset based loan.

 

BUSINESS REFINANCING IS A CHALLENGE

 

We do think we can relate to the Canadian business owner though because we're the first to acknowledge that refinancing your business, in good times or bad is both a challenge and concern to the owner/manager. ABL lending is the solution that just might work!

 

U.S. AND CANADA SIMILAR GROWTH IN ABL LENDING

 

Whether you like it or not we often, in Canada, get our business trends from the U.S.  (We’re not necessarily thanking them for the 2008 worldwide implosion), and in the states, asset based lending drives a huge amount of business financing. So, we should at least look into that, right?

 

WHAT IS THE  ABL LENDING ASSET BASED LOAN  SOLUTION AND WILL IT SOLVE CASH / WORKING CAPITAL CHALLENGES

 

When we talk to clients about asset-based financing their business initial conversations focus on two areas - first of all, a definition of the subject, and secondly where ABL fits in the cash flow solution.

 

In terms of our subject matter let’s get straight on a definition in asset based loans. We're talking about what some call a  ' comprehensive ' ABL lending loan , that is to say, it is in fact one business financing revolving line of credit facility that lumps together accounts receivable , inventory/finished goods/work in progress,  fixed assets, and even real estate if your firm has that, into the mix. Real estate in ABL typically means owner-occupied and owned premises.

 

And where then does ABL lending  fit? That’s the good news, as it fits... everywhere. This type of business financing facility can function as a business line of credit, it can be used to purchase another firm via the other firm's asset base, and it is more often than not used to replace or pay out a bank facility when that isn’t working for the client.  Bottom line, a true business catch-all!

WHO USES ABL?

So who uses asst based lending ABL? That’s probably one of the biggest surprises to clients when we put forth an asset based  ABL lender solution. Why? Because what form of finance can be used from start-up to the world's largest corporations. Certainly, none that we are aware of.  Although not widely publicized, many of the world’s largest and most successful corporations utilize ABL as an alternative to traditional bank financing. It classic balance sheet finance 101 with a focus on .. Assets!

 

Cost is always a discussion point when you consider a new form of daily financing for your firm. Here you need some clarity, because asset based business credit lines are cheaper than bank facilities, and they are also more expensive.  What drives your final cost is your overall creditworthiness, the size of the facility, the level of accounts receivable and inventories, and who you are dealing with. That's the quick answer to ' whets my rate '?

 

So what do you need to really consider when it comes to assessing a new business line of credit asset based solution?

 

KEY AREAS REQUIRING FOCUS IN YOUR ABL LENDING DECISION VIA ASSET BASED LENDERS

 

Some key areas to focus on / explore and discuss are:

 

What are the direct advantages of ABL working capital solutions?  (More borrowing power)

 

Can both private and public companies use it? (Answer - yes!)

 

How does the facility operate on a daily basis different from a bank line re: access to cash flow  - (it doesn't)

 

Does ABL deliver more cash to my business (yes, 99.999999% of the time?)

CONCLUSION

Speak to a trusted, credible and experienced Canadian business financing advisor on why this solution for daily financing of your company... works

 

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.


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



Stan Prokop

 

 
7 Park Avenue Financial/Copyright/2020

ABL Lender Business Financing Asset Based

Recognize These Symptoms? It Is Time For New Business Financing And Capital Strategy Options!

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Canadian Business Financing – Techniques and Solutions

Canadian Business Financing . Or lack thereof?! Are there some symptoms for finance capital  strategy options we can look for, and fix for small business in Canada? We think there are. While some search for angel investors and venture capital at 7 Park Avenue Financial we focus on real-world accessible financial solutions.

 

Here's one for you. How many business owners would associate overdue receivables, poorly moving inventory, or underused fixed assets as a symptom of too much financing? We're pretty sure that few business owners (or even their financial managers) would associate those symptoms with having too much capital!

 

SYMPTOMS OF THE NEED FOR ADDITIONAL BUSINESS CAPITAL

 

Then of course there is the other side of the coin, which is what clients always are looking for - business loan and business financing solutions.  That might be bank loan/bank financing or a business finance solution via an alternative financing source - of which there are many. So what would some of those symptoms be?  They are pretty obvious more often than not:

 

Little or no cash on hand

 

Vendor payment issues

 

Manufacturing timing/shipment issues (You can't make ' em fast enough!)

 

Also, by the way, if you feel you are getting too little of a return on investment on all your assets its pretty clear that might be a symptom of a capital strategy problem.

 

THE ABILITY TO ACCESS CASH FLOW AND WORKING CAPITAL

 

It's safe to say that the right amount of cash flow, working capital, and other assets would probably fix any challenges your firm is facing. Naturally, every business is different; for example, a service company requires little fixed assets and tends to be more cash flow based.

 

  

UNDERSTANDING YOUR COMPANY'S DEBT TO EQUITY RELATIONSHIP IS KEY   

 

Here is one for you. Did you know that some analysis around your fixed capital can actually help you solve your problems? Take a good look at your long term debt and equity on the balance sheet and measure that relationship once in awhile - yearly would be a minimum timeframe.

 

MONITOR CURRENT ASSET ACCOUNT TURNOVER   - RECEIVABLES AND INVENTORY FOCUS

 

We're still looking for some other symptoms though, right. Here are some more.  If you feel on an ongoing basis that you’re experiencing large increases in receivable and inventory growth you are a strong candidate for some hard analysis of some new financing and capital options. It's those 'investments ' in receivables and inventory that devour your cash flow, forcing you to address new financing options. For the SME owner, those large growths in A/R and inventory actually mean you will probably be able to take less out of the company in the form of dividends, mgmt. bonuses, etc.

 

By the way, if you are looking at new purchases of assets ensure those assets will generate profits, not eat up capital or create losses. That's just common sense.

 

CONCLUSION

New Business financing options can be addressed if you have a strong handle on a very few basic calculations - those include some rudimentary things like expense per day, receivable turnover, inventory turns, etc.

 

Oh, and by the way, lenders of short term and longer-term capital are looking at those same things in your balance sheet, so being able to talk to those issues will help you... a lot. Note also that a business plan and cash flow projections will assist you in accessing financing more quickly versus being unprepared!

 

So whether your company is early stage or simply high growth and growing .. speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with capital options  and business loans in the short or long term (and crisis) situations.

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.


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

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Business financing in Canada often ' revolves ' around the need to include revolving loans in your business finance mix. How does this type of credit facility work?

WHAT IS A REVOLVING LOAN FACILITY

Revolving loans are a type of business credit provided by banks and other commercial lenders that allow a business to draw down on financing and continue repaying and drawing down based on cash inflows from receivables, etc. These are known as ' facilities ' in that it is a type of service such as a defined line of credit that revolves.

WHY CONSIDER A REVOLVING LOAN?

Revolving business credit lines are a key tool in business finance and should be a part of your firm's overall business finance strategy. These ' revolvers' allow you to meet day to day operating needs and plan for anticipated cash flows based on sales and cash collection projections.  In more mature companies that are established, they are a part of the overall capital structure of the business and are complemented by other long term financings such as term loans, leases, etc.

HOW DO REVOLVING CREDIT LINES WORK?

Revolving business line of credit loans allows a company to access a defined amount, typically called a ' credit limit.  Normal uses of this type of credit facility are for buying inventory from suppliers, maintenance and repairs, funding marketing,  and addressing gaps in either the carrying of larger amounts of a/r and inventory or seasonal requirements based on the industry in question. A Typical revolving credit line is secured by the assets of the business - with the most common security being accounts receivable and inventory. In the case of asset-based lenders, they allow fixed assets that are owned by the company to be monetized within the same facility. Typically chartered banks do not include fixed assets as part of the' borrowing certificate ' that banks calculate monthly based on your levels of a/r and inventories.
In some cases, commercial lenders may utilize the concept of an Unsecured line of credit - which provides a certain level of borrowing based on a general security agreement - ' GSA ' on all the assets of the company. Typically personal guarantees of the business owners play a key role in unsecured credit.

The key aspect of revolving business lines of credit is clearly ' flexibility'. The continual drawdown and repaying of the facility creates a ' pay as you go ' scenario as businesses both use and consume cash as they run and grow their business. That's good news!

The key differentiator in business credit facilities that revolve is that it's not a term loan, via that continual drawing down and repayment we just referenced. However, like term loans, they do often come with ' limits’, but more importantly they vary with your assets.

Here an important distinction occurs. When it comes to bank credit lines these pre-imposed limits are often fixed and relate directly to typically receivables and inventory. However, if you chose an asset-based non-bank line of credit via a commercial finance firm that borrowing base typically has no upward limit if you in fact have growing sales and commensurate assets.

That monthly ' borrowing base' that banks and asset finance companies utilize comes with some pretty basic formulas. In the case of banks, utilizing receivables as an example the borrowing base is 75% of your A/R; asset-based lenders typically lend against 90%. (In both cases receivables must be under 90 days old). Those calculations are a key part of a revolving credit facility agreement, and establish your ' borrowing base ' which the lender documents regularly with a 'borrowing base certificate '

CALCULATING THE BORROWING BASED ON REVOLVING LOANS

Asset-based lenders and banks determine your borrowing power by ' margining' a discount factor against a specific asset based - most commonly receivables and inventory.  As an example, if an asset-based lender allows a discount factor of 90% on receivables, which is common, a 1 million dollar receivable portfolio can represent a revolving loan of 900,000.00. The same type of calculation applies to inventory, and asset lenders also allow your unencumbered fixed assets to be margined in the same manner! Banks typically have revolving loan facility agreements around a/r and inventory only, with possible exceptions.

Various nuances might exist in your A/R margining relating typically to issues such as government receivables, high balance concentrations with one customer, etc.

Revolving loans from banks come with various covenants and restrictions. In general, we can make the statement there is a lot less restriction from non-bank asset lenders on this issue.

What then are some of the key issues around pricing revolving loan credit facilities? No one disputes the fact that Cdn chartered banks offer the lowest cost business financing rates - if you can satisfy the risk profile desired by the banks. That risk profile typically includes growing sales, profits, clean balance sheets and demonstrable cash flows.

Interest rate pricing on non-bank asset financings varies proportionately to credit risk. The good news here is simply that almost any firm with sales and assets is eligible for asset-based credit lines. So it’s overall credit risk and the amount and type of debt a company has is the driver behind asset-based revolving loans and other alternative working capital solutions.

  
TERM LOANS VERSUS REVOLVING LOANS  

Commercial lenders have a clear separation around term loans versus revolving loans/credit lines. Credit criteria for a term loan involve a firm's total credit profile with a focus on clean balance sheets,  profits, and the ability to generate cash flow as repayment of the loan over several years.
Business financing when it comes to credit lines is all about operating performance. Credit lines don't require fixed payment terms, they ' revolve ' and we can make the case they come with a maximum amount of financial flexibility. A bank or an alternative lender offering non-bank lines of credit ultimately like the facility to revolve and at some point be very significantly reduced before it is drawn down again based on the needs of the business.  When it comes to revolving loans from either banks or an ABL lender it's your revenue and operating performance that allows you to access short term operating capital.

CONCLUSION

Revolving loans and bank or asset-based lines of credit provide a safety net for the business as the credit facility allows you to draw down on cash flow needs over time as your company generates sales. Interest rates are often higher when accessing business capital via an alternative lender but these ' ABL ' lenders provide capital when a company can't access traditional bank financing, particularly for small business and medium-sized companies who can't access public markets.
If you're on the search for the right type of credit facility for your firm your search will almost always end well by seeking out a trusted, credible and experienced Canadian business financing advisor who can assist you with your credit facility 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.


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







Stan Prokop
7 Park Avenue Financial/Copyright/2020

Business Financing In Canada: Your Search For Revolving Loans & The Right Credit Facility Just Ended

and tags in your HTML document. That's it!

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Business financing needs in Canada often leave business owners/ financial mgrs with that ' not happy ' feeling when it comes to loans or alternative finance solutions. And by the way, in today's competitive environment there are some pretty smart people out there when it comes to running and growing their firms - yet even they are searching for ' the fix '.

Small businesses, that SME sector we're always talking about at 7 Park Avenue Financial often has the biggest challenge.  It's all about alternative small business funding. Let's dig in.


When it comes to raising finance needs and acquiring business loans for your business today’s environment calls for looking far beyond the traditional solutions of the past -  that is where alternative lending and alternative financing options have grown in popularity.

More often than not that has meant ' the bank ' as the sole solution provider of business capital and the 'go-to' for funding options. The variety of alternative finance solutions offered by the alternative lender has given rise to a whole new way of financing in Canada.

Banks by their nature put heavy emphasis on historical and present cash flow, external collateral, and personal guarantees and banking covenants. Not all businesses can meet those requirements!
Business owners who are unable to raise capital from conventional lenders have found that alternative business financing solutions that have significant benefits are readily available, It is of course important also to ensure that they consider any of the risks and costs that come with any type of business financing.
f you are a small or medium business owner who has struggled with obtaining a loan in Canada in the past, or even if you want to avoid the headache and frustration associated with conventional lenders, there are several sources of alternative lending from which you can choose. Each has its own unique set of benefits and drawbacks, so be sure to consider them all carefully.

Some have called it ' debanking'! Industry stats show that a large percentage of applications by firms in the SME COMMERCIAL FINANCE sector are in fact declined by banks for a variety of reasons - the bottom line is these firms simply don't fit what the pro's call ' the credit box ' of banks and their fiduciary lending responsibilities.

But by addressing the proper cost of capital versus growth opportunity as well as the ' risk ' element associated with any form of traditional or nontraditional finance a whole new world of capital providers is out there.  Traditional bank loans for small business have traditionally been unable to satisfy entrepreneurs hoping to start, grow, or acquire a business.

HOW TO ADDRESS SEARCH FOR BUSINESS FINANCE IN THE CANADIAN LENDING INDUSTRY

What then is the best way to look at some of those alternatives, and, as importantly, what are they?!   It starts by assessing your need, which is usually in one of three categories:

Growing sales
Refinancing
‘Other’

That 'other' can cover various scenarios, one of which might mean a forced exit from your bank relationship - i.e. the dreaded ' special loans' category.

As we have said, understanding how things work, cost and risk are the key elements of a new financing strategy. That kind of thinking will often determine what's best for your business.

Looking for some key tips around alternative financing as well as new sources of business financing and capital? We've narrowed it down for you as follows:

 

SOLUTIONS TO CONSIDER FOR TRADITIONAL AND ALTERNATIVE FINANCING

Keep an open mind to new solutions available

Consider both traditional and alternative financing solutions

Understand what you need - i.e. new assets, working capital, investment

Focus on potentially a combined solution of different methods of business finance

Ensure you are in a position to present your company properly - i.e. current financial statements, a strong exec summary or business plan, etc

Be prepared to consider ' Plan B '!

Cost of financing and interest rates

BUSINESS FINANCING SOLUTIONS RECAP

Let's recap business financing solutions most typically available to your firm - they include:

SOLUTIONS OFFERED BY TRADITIONAL AND ALTERNATIVE LENDERS - WHICH ONE IS RIGHT FOR YOUR FIRM?

Bank credit lines/term loans
A/R financing / Invoice financing / Invoice factoring
Inventory loans
Equipment finance
SR&ED Tax credit bridge loans
Sale leasebacks of owned assets
Non bank business lines of credit - Advanced alternative lending facilities
Unsecured cash flow loans
Royalty finance
Business Start Up Loans - The Canada Small Business Government Guaranteed Loan

CONCLUSION

The appeal of alternative lending arises from the ease of access as compared to traditional financing norms. Even online portals offering relatively quick ease of access to short term working capital loans and other types of financing have gained a lot of popularity.

In many cases, even the banks have participated in some of these online portals in some manner, including lender finance solutions. The domination of Canada's chartered banks has definitely seen a dent put into its dominance.

Part of the growth in alternative lending stems simply from the fact of a new and continue awareness of financing options - When it comes to asset based loans the ability to financing the balance sheet is at the top of the list in Canadian alternative finance.
It is interesting to note that a large portion of alternative finance solutions is in fact American owned firms who have chosen to enter the Canadian market.

So when it comes to alternative lending  and getting a loan in Canada , and if your firm needs finance ' fix ' seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your loan and cash flow needs for capital lending 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 !



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.


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







Stan Prokop
7 Park Avenue Financial/Copyright/2020

Fixing Business Financing In Canada: Accessing Bank & Alternative Finance Loans

Business Financing: Maximizing Cash Flow Via Alternative Loans & Tax Credits

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Business Financing: Maximizing Cash Flow Via Alternative Loans & Tax Credits

The Hidden Gems Of Canadian Business Financing

Business Financing Loans And Financing Tax Credits For Cash Flow

Business financing success in Canada might well come from finding some of what we call the ' hidden gems ' of loans and other financing options. Even the govt via tax credits under the SR&ED program or gov't guaranteed loans might well become your best friend when it comes to business finance success. Let's dig in.

 

TWO GOVERNMENT SPONSORED BUSINESS FINANCE PROGRAMS YOU NEED TO KNOW ABOUT

Two of Canada’s government-sponsored business finance assistance programs are the farthest thing from handouts you can imagine. Canada's SR ED Tax Credit program for R&D is a solid tool for recovering your R&D capital via refundable tax credit financing.In many cases anywhere from 30-40% of your entire research budget can be recaptured via a refundable tax credit for a loan amount your require.

CAN THE REFUNDABLE SR ED TAX CREDIT CLAIM BE FINANCED?

 Even better news is that this tax credit can be financed via a bridge loan while you wait for your refund to be approved and arrive. It’s no secret that many of the thousands of firms who received billions in refunds every year take advantage of SR&ED loan financing.

THE ' SBL ' GOVERNMENT LOAN PROGRAM

 One other ' hidden gem ' for start-up and early growth companies requiring SME COMMERCIAL FINANCE solutions is the govt sponsored Guaranteed Small Business Loan. It's very accessible and is geared toward financing 3 asset categories - equipment, leasehold improvements, and finally real estate. While not often used to finance real estate thousands of firms do in fact finance their fixed asset and leasehold needs via this program. One of the main ' users' of the program is entrepreneurs wishing to start or purchase a franchise business.

The Govt small business loan is NOT a handout. It's not a grant. But what it is provides a flexible term loan with great interest rates and flexible terms and amortizations. It even can be repaid without penalty - which even other traditional financing methods don’t allow.

What are the approval criteria for SR&ED loans and the Government SBL loan that we've described? In the case of the SR ED tax  program, you simply need to file your claim with your yearend financials. Claims are typically 'written up ' via SRED consultants who specialize in maximizing your claim under the program. Naturally, your R&D capital investment spend under the program must be well documented when it comes to actual expenditures and monies paid/spent.

As far as the Govt SBL loan is concerned very typical lending criteria apply. Business owners must have reasonable personal credit and be able to provide a business plan and cash flow that assumes some realistic repayment of your loan. Invoices or quotes from suppliers on leaseholds and equipment you intend to finance also helps. The interest rate on the program is very attractive and competitive and comparable to main street financing rates given the nature of the program.

ARE THERE OTHER SOURCES OF ALTERNATIVE FINANCING FOR CANADIAN BUSINESS?

Our two ' hidden gems’ , the SR&ED program and Canada Govt Guaranteed business loans can be complemented with numerous other finance solutions. Those include financing under:

ALTERNATIVE FINANCING SOLUTIONS

A/R financing
Inventory Loans
Equipment Leasing
Non bank asset based credit lines
P O financing
etc.!

Business Financing  Loans Cash Flow Tax Credits: If you're focused on understanding all the finance solutions and business credit available to your company seek out and speak to a trusted, credible and experienced Canadian business financing advisor.


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


Stan Prokop 7 Park Avenue Financial/Copyright/2020

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SME Finance, (that’s ' small to medium enterprise ‘), aka ' small business finance ' , in Canada no doubt requires a fix (or fixes?) of some sort. Getting a tailor-made business financing solution for the loans and cash flow solutions you need is not easy, but where there's a will there's a way. Let's dig in.

Alternative financing solutions for small business lending are a new and appealing part of the Canadian business landscape.

 These solutions are of course available to any firm, both public and private, but we're quite sure the majority of firms that use these solutions are privately held.

At a certain point in time, business owners come to that turning point where equity no longer works and debt or cash flow solution decisions around a company loan must be made. Now ' leverage ' seems to make a lot more sense than equity dilution.

Monetizing assets for cash flow, as well as securing working capital allows your firm to consider growth projects to enhance both sales and profits. In some cases you might be making investments in new marketing strategies, in other cases your company might be investing in research and development.  ( Don't forget to check out the Canadian Governments SR&ED Program - and by the way, you can finance those SRED Tax credit refunds !)


Many businesses find themselves in unexpected situations where they have maxed out on the liquidity available to them from current lending sources. That is the time to consider either cash flow or asset monetization solution. Cash flow solutions are best suited to firms that are unable to offer up additional collateral to lenders. They also place much less emphasis on the proverbial ' personal guarantee ' required by almost all lenders when it comes to borrowing in Canada. 


Working capital loans come in two flavours - short term loans that typically are repaid in one year, and of course longer-term loans that typically have a maturity of  3-5 years, and sometimes longer. These short term loans have become very popular with thousands of firms, and are a spin-off of the ' merchant advance ' industry which flowered in the United States and then moved into the Canadian domain.


Whether its a short term loan or one that matures several years out a good lender will work with you to tailor repayments based on your current cash flow inflows.
The danger in working capital type loans comes from how these funds are deployed - typically shorter-term loans should be used to augment your day to day working capital, and they should not be invested in asset procurement/capital asset purchases.


Working capital loans make sense if you have good sales; many firms use this financing simply because they are growing too fast and traditional chartered bank financing is not available. In certain cases, companies may wish to capitalize on short term opportunities that have arisen around inventory volume discounts, or large orders received from new or existing clients.


All businesses that sell on credit carry receivables, and there is a cost to that, as the buildup of both a/r as well as inventory places pressure on the investments you carry in receivables and inventory as sales grow. That's why it is important to focus management on good inventory turnover as well as the prompt collection of receivables, leading to a better ' days sales outstanding - DSO '.

Alternative finance for a small business capital loan and asset monetization from financial institutions is almost always more expensive than bank debt. But from the owner/entrepreneurs point of view working capital and cash flow cost far outweigh equity /ownership dilution - especially for growing firms with promise.

Let us not forget also that even established firms with relatively good financials often can't ' tap ' the financing they need. And going the VC/Private Equity route makes sense only for the smallest % of Canadian business

WHAT COUNTS AS COLLATERAL FOR A BUSINESS LOAN?

Typical collateral for a business loan in Canada revolves around accounts receivable, inventory, and fixed assets. When dealing with a senior lender for business capital they will typically collateralize these assets for securing the loan/financing.

So what are in fact some of those ' tailor-made' solutions that might be highly applicable to your business finance needs when it comes to small business loans  and business lending Canada

 

What types of business cash flow loans can a business use to finance their business?

Factoring

Confidential Receivable Financing

Inventory loans

Bridge loans

ABL loans (non-bank asset-based business lines of credit)

Equipment leases/sale-leasebacks

Unsecured cash flow loans - cash flow based lending

Govt Guaranteed Small Business Loans -  Business loan new business

Sales Royalty Finance

SR&ED Tax credit financing

WHAT IS CASH FLOW FINANCING

Important Point: Owners/ financial managers should understand the following about loans for small business

1. In some cases, these alternative finance solutions can be combined or added on to one another - example: term loan and cash flow facilities

2. In some cases it's possible to have traditional bank financing in place as well as an alternative financing vehicle backstopping your bank facility

3. While the majority of these solutions are almost always used to finance operations and growth it's important to note that they can also be used to acquire a company or to finance management or leveraged buyout

If you're looking for the right ' fix' or a ' tailor-made' solution for your business financing needs in Canada seek out and speak to a trusted, credible and experienced Canadian business financing expert to fully understand the requirements and benefits.





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.


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







Stan Prokop
7 Park Avenue Financial/Copyright/2020

SME Finance Loans Cash Flow Business Financing Solutions