Unlock Your Company's True Potential: Asset-Based Lending for Business Financing

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YOUR COMPANY IS LOOKING FOR CANADIAN ASSET-BASED LENDING SOLUTIONS!

 

Revolutionize Your Business Growth: Financing a Business with Asset-Based Lending

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the biggest issues facing businesses today 

                              ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

 

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs   

 

 

Elevate Your Business Strategy: Unleash the Potential of Asset-Based Lending for Financing

 

 

Business finance solutions in Canada are regularly delivered via asset-based lending and financing.

 

The small business owner and financial manager who hasn't heard of (or checked into) this type of funding solution/business loan solution, might mistake this for a new 'secret' financing strategy, and it is not equity financing. Frankly, though, the secret is out! These days small businesses are relying on everything, including credit cards!  So let's dig in.

 

Asset based lending, aka ' ABL ' is an increasingly popular business financing solution that allows a business to capitalize on the assets and sales of the business - In that way companies can fund expenses and ongoing operations, fulfilling client orders, and purchase inventory and other investments the business must make.

Companies looking for flexible financing to meet their business planning needs used asset-based finance, versus traditional loans,  for lines of revolving credit, term loans, or in many cases a combination of both.

 

 

 

  

ALTERNATIVE LENDING VIA ASSET BASED LOANS

   

 

Asset-based loans (‘ABL') are often considered an 'alternative' strategy in the brave new world of nontraditional and 'fintech'  business solutions. But guess what? Main Street uses this form of financing everywhere in Canada, in all industries, and all sizes of companies. Bank loans come at a great interest rate but are difficult to access for thousands of companies for the funding and growth potential solutions they need.

 

 

 

WHAT ARE THE DIFFERENT TYPES OF ASSET BASED LENDING?  

 

Asset-based lending offers asset loan arrangements secured by accounts receivable, inventory and fixed assets. Business financing via Asset-based lending in Canada differs based on the financial transaction size and the methodology around which day-to-day transactions are handled and which assets are being financed by the lender.

 

 

We can broadly put ‘ABL' solutions into several key categories.

 

CATEGORIES AND TYPES OF OF ASSET BASED FINANCING

 

Non-bank business lines of credit

 

A/R Financing

 

Inventory Financing

 

Tax credit financing

 

Sale Leasebacks

 

Working capital term loans/merchant loans

 

Commercial real estate loans

 

 

There are different levels of due diligence in setting up any of these facilities - most asset-based loans are dependent on facility size, the industry your firm is in, and the quality of your assets being financed.

 

 

 WHAT ARE SOME USES OF ASSET BASED LOANS? 

 

At 7 Park Avenue Financial, we demonstrate the flexibility of  the asset-based loan solution by explaining the multitude of uses of this method of business financing

 

ABL loans:

 

Improve access to working capital and the company's cash flow for the funding day-to-day business needs

 

They allow  companies to satisfy large contracts and orders from clients which require the purchasing of inventories and materials to fulfill those orders

 

Asset-based financing allows businesses to fund growth and increase capacity for products and services

 

Asset-based term loans allow a business to acquire assets and technology

 

Many companies use the ABL solution to fund a turnaround or restructuring for firms  that might have some level of financial distress

 

Acquisition financing needs to acquire a competitor or another business is often fulfilled via an ABL solution when strategic acquisitions are contemplated - including leveraged buyouts relying on asset values of the target acquisition

 

  

  

ASSET BASED LENDING VERSUS BANK FINANCING     

 

When Canadian business owners and financial managers sit down with us and ask us to explain 'asset-based lending'  as a new type of financing, we cover a fair amount of ground, as there are various types of 'ABL' facilities compared to bank loans which are typically term loan in nature or unsecured lines of credit.

 

  

  

WHAT ARE THE BENEFITS OF ASSET-BASED LENDING?    

 

 

  

Improved liquidity   &Increased Flexibility   

 

The benefits of asset-based financing? They are pretty basic - you will often differentiate yourself from your competitors given you have increased amounts of capital and cash flow - allowing you to secure more sales/contracts, as well as enhancing relationships with suppliers and other lenders you might have in place. In many cases, ABL finance addresses the seasonality challenge you might have in your company/industry.

 

  

SUMMARY OF KEY BENEFITS OF ASSET BASED FINANCE  

 

Improved cash flow and  additional working capital liquidity

 

Flexible/versatile financing custom-tailored to a company's business model and asset base

 

Ease of credit facility management - no focus on covenants, outside collateral or personal credit history/credit ratings of owners

 

Faster access to financing compared to traditional bank loans  and other traditional financial institutions

 

In certain circumstances, a lower financing cost/interest rate  can be achieved for higher quality or large  transactions

 

WHAT BUSINESS ASSETS DOES  ABL FINANCING FUND?

 

Asset-based lending is simply the monetizing of your assets to their maximum cash availability.  The most common assets financed include:

 

A/R ( Accounts receivables )

 

Inventory

 

Fixed assets

 

Real estate

 

Technology

 

  

  

PURCHASE ORDER FINANCING IS A PART OF THE ASSET-BASED LOAN SOLUTION    

 

While 'purchase orders' of new 'contracts aren’t technically an asset on your balance sheet, asset-based lending includes PO / CONTRACT financing solutions! The emphasis is clearly on your 'assets‘!

 

WHEN DOES ASSET BASED LENDING REPLACE BANK FINANCING

 

ABL business finance frequently replaces traditional bank financing, or in many situations, provides more cash flow and working capital that banks can't deliver on due to their lending constraints. This is no more evident than in the SME COMMERCIAL FINANCE sector. Flexibility is often the differentiator given that ABL solutions don’t rely as heavily on ratios, covenants, outside collateral, personal guarantees, etc. Note though that costs of this type of financing are almost always higher - so the decision becomes access to capital versus the cost of capital!

 

Asset-based lenders do not place the same emphasis on credit scores as unsecured loans from traditional banks.

 

WHAT DOES ASSET BASED LENDING COST

 

We spend a lot of time with customers showing us how some of the 'perceived' higher costs are, in fact, not really that due to the ability of the company to convert assets into cash and repeat their business cycle over and over, generating additional profits based on faster inventory turns and receivable collections. 

 

One of the tools we use is the 'DUPONT MODEL,' which will clearly demonstrate to our customers how asset turnover affects profits. It's a great financial tool!

 

  

HOW DOES ASSET BASED LENDING WORK?   

 

ABL financing focuses on the valuations of business assets as collateral for loans - Asset based lenders establish what is known as borrowing based on which defined advance rate margins are put in place as a lending percentage of the  asset based credit facility  - Borrowing capacity is almost always greater with asset finance solutions using the company's assets for future growth potential

 

Receivables typically are financed in the 80-90% range and advance rates are then established on inventories and fixed assets, as well as real estate if that is applicable.

 

Companies draw down funds based on that established borrowing base certificate other types of collateral, transactions are settled by making predetermined term payments.

 

EXPLORING OTHER OPTIONS THAT ARE EQUITY-FOCUSED?

 

Naturally, you have the ability to explore options such as angel investors, and venture capitalists when considering the debt and equity financing question. That angel investor brings no debt to the balance sheet, but he or she wants to be paid back in owner equity on their investment! So while you pay no interest on that type of investment, ownership is diluted in your business.

 

 

 CONCLUSION 

 

Business owners can benefit from understanding the benefits of flexible and cost-effective asset-based ABL financing solutions.

 

If your firm has been affected by liquidity concerns and you're one of many business owners searching for business loans, and you need additional funding to survive and grow, check out asset-based lending as a way to unlock cash flow and capital. Small businesses and small business owners in the SME/SMB market are always feeling underserved.

 

Speak to  7 Park Avenue Financial - A trusted, credible and experienced Canadian business financing advisor/partner who can assist you with your financing needs.

 

Whether you have good credit, less than good credit, or even require a business plan, talk to the 7 Park Avenue Financial team today. Making the right financial decisions with solid business funding makes long-term investments easier.

 

 

FAQ FREQUENTLY ASKED QUESTIONS PEOPLE ALSO ASK MORE INFORMATION 

 

 

What are the qualifications criteria for asset-based financing? 

 

Companies should be able t meet minimum financing usage requirements by asset-based lenders which vary by type of lender

 

Accounts receivable should be business to business based receivables from a generally creditworthy client based

 

Companies should be able to prepare proper financial statements and aged listings of  accounts receivable, inventory and other assets of the business that demonstrate proper financial controls

The business must not have government arrears in taxes

 

  

What  are some types of asset based loans  

 

Types of   asset loans include:

Accounts receivable financing / factoring companies / confidential receivable financing

Inventory loans

Equipment loans/ lease financing/sale-leasebacks for physical assets

 

Commercial real estate financing/bridge loans for asset-based real estate financing /pledged asset finance

 

  

 What are asset-based lending disadvantages?   

 

Asset-based loan financing  will often, but not always have higher interest rates versus conventional  traditional loans and unsecured loan bank financing and the  business assets are pledged as  collateral for loans in the event of default via a security interest agreement  - Asset-based lending rates will vary via the type of asset-based lender and size of the facility - Most asset based loans can be funded by fixed or variable rates

 

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

Financing A Business In Canada Here's Some Golden Rules For Working Capital and Loan Solutions

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 Alternative Lending Cash Flow Solutions And Tips For Canadian Business Financing

Financing a business in Canada. A challenge? Let's just say that's an understatement when it comes to working capital, debt, and ongoing management and recognition of financial problems and opportunities. Are there some ' Golden Rules' we could follow. We here at 7 Park Avenue Financial think so so lets cover off some loans for business in Canada.

In some cases your firm might be growing too fast, and just at the time that when you are ready to either expand or take on larger orders and contracts your operating capital and business capital needs replenishing without having the funding you need to address growth challenges. Every company, small and large eventually needs more access to capital, for small and medium firms making a financing error can lead to impaired financials and even business downfall.

Firms with poor working capital typically are poorly managed and unable to meet cash flow needs, but on the other hand a constant reliance on new working capital often has the company demonstrating that it is investing all their cash to grow the business and increase return on investment.


Here is where expert advice and right choices come in, as the wrong debt must be matched to your cash inflows, and even more challenging is the fact that uncertain economic times, pandemics included making it very difficult to find business capital.

The amount of financing you need to run a business depends on how you operate it within your industry . Finance experts call that the ' operating cycle ' and it's simple, namely the amount of time it takes for a dollar to flow through your company from order to collection of the sale via your receivables. The ability to maintain positive working capital throughout that process dictates the amount and type of financing you need.

The amount of working capital a small business needs to run smoothly depends largely on the type of business, its operating cycle, and the business owners’ goals for future growth. However, while very large businesses can get by with negative working capital because of their ability to raise funds quickly, small businesses should maintain positive working capital figures. Even issues such as seasonality of a business can greatly affect cash flow needs.



Regardless of the product name, all financing solutions consist of either debt, equity, or a hybrid combination of both. Keep in mind that there are no “good” or “bad” solutions. The best solution for you depends on your specific circumstances and requirements.


One of those golden rules of business finance is to ensure that you properly match short term debt and long term debt appropriately. Each of these two has its own benefits and potential disadvantages. Is one better than the other? Not really, it’s just that it’s a case of making adjustments and staying ' in tune ' with what needs are appropriate or required at the right time.

Working capital loans , whether they be a term loan to inject permanent working capital into the business,or alternatively a short term loan, typically 12 months in duration are used to cover off short term operating needs such as payables, financing your investment in accounts receivable, salaries and wages, etc. It is improper to use shorter term working capital facilities for long term needs such as financing fixed assets/equipment, or real estate, etc,

From an understanding point of view we don't want to go too far down the textbook route in explaining working capital but it's important to simply know that its calculated by subtracting current liabilities from current assets on your balance sheet. Let's leave it at that.

But if there is a shortfall in that number, or the ratio is really tight you need short term liquidity financing of some sort - The good news is that more and more there are some new, creative and alternative financing options available to business owners seeking SME COMMERCIAL FINANCE. That SME " small to medium enterprise " segment in Canada is one of the largest parts of the entire Canadian economic landscape.

How to Get a Working Capital Loan

Numerous traditional and alternative lenders have the financing options you probably need to run your business. In general the same fundamental criteria apply to their level of due diligence into your business - i.e. years in business, annual revenues, is the business preparing proper financial statements that accurately reflect the state of the business, etc. Businesses that are smaller should realize that their personal financial affairs and how they are managed are viewed by the lender as a reflection of how the business finances are managed. Therefore decent credit bureau/fico scores are important.

HOW IS A WORKING CAPITAL LOAN REPAID?

In selecting a financing facility for your business you and your commercial lender should have a sense of repayment ability. Short term working capital loans are widely popular these days, in many cases online portals are used to apply, and lenders use algorithms to determine the amount of loan and repayment timing. Many business owners and their financial managers don't realize that the loans may sometimes be asked to be repaid weekly, but monthly is also common.

The loan amount for these facilities often called ' merchant advances ' is based on a formula of your annual sales, typically 10-20%, as well as factoring in your time in business. Interest rates and cost of financing tend to be some of the highest in Canada for these loans. The appeal is of course speed and flexibility of approval.




We have mentioned the need to separate short term borrowing for long term investments in your business. So for acquiring fixed assets equipment leasing and commercial mortgages are proven options to acquire assets/real estate. In some cases a firm might be looking to invest in leasehold improvements.

On' catch-all ' for financing assets, leasehold improvements, or real estate is the Government of Canada Small Business loan program, providing up to a $1,000,000.00 of financing with a government guarantee behind the majority of the loan. Seek out the services of an experienced Canadian business financing advisor who can help you acquire this loan. Key benefits are attractive interest rates, repayment flexibility, nominal personal guarantee, and financing for investments such as leaseholds that are typically harder to finance as they are intangible assets.

It is the perfect loan solution for building acquisition or modernization via leasehold improvements, as well as covering the purchase of new and used equipment. Since the largest portion of your loan is guaranteed by the Canadian government through this Industry Canada program that allows banks to lend to businesses that might not otherwise qualify for the funding they need.

So in financing a business it is really about what the finance experts call ' sources and uses ' of funds and what type of financing suits your firms specific company or industry needs.

Canadian Bank Financing

Often seen as the ' go to ' solution for general working capital, operating loan, and other financing needs the Canadian banks offer unlimited funding and flexibility for firms that qualify. The attractiveness of a bank revolving line of credit is that it is low cost and can be used only when you need to draw done funds. The banks are very focused on repayment !; so you must be able to demonstrate historical and present cash flow generation. Loans are structured to meet your business needs but borrowers quickly become aware of the more stringent credit qualification and criteria for firms to access bank financing. Those criteria include established businesses for the most part, and focus on the size of the business, quality of the balance sheet, debt to equity ratios, and personal covenants and outside collateral requirements.

The vast majority of businesses in Canada can qualify for both Factoring, as well as the related type of facility, Purchase Order Financing. Factoring financing is probably the fastest growing type of working capital financing when it comes to how to finance a business in Canada. While some call it a receivables loan it is in fact just monetizing your a/r for cash flow.


Since cash flow problems often stem out of a company's inability to collect it's receivables in a timely fashion any commercial or government-related receivable can be financed for immediate cash. At 7 Park Avenue Financial our recommend factor finance solution is ' Confidential Receivable Financing ', allowing you to bill and collect your own receivables without any intrusion by a third party.

If your firm had very good gross margins and can sustain the 1.5-2% fee associated with the financing your firm can become an ATM machine, generating cash as fast as you generate sales revenues. The flexibility and faster access to cash are the great appeal of receivables finance.

Another type of specialty finance related to your ability to take on larger orders and contracts is purchase order financing. This type of financing pays your supplier directly, allowing you to fulfill orders and contracts that might otherwise be lost to competitors for lack of working capital. Similar to factoring finance P O Financing has a higher cost but if your firm has good gross margins it allows your company to grow substantially larger without owners having to put up more equity. Alternative lending in Canada via solutions such as we have described is very much on the rise .

It certainly hasn’t escaped us that not only is it difficult when it comes to financing a business in Canada to manage internally, you of course have to stay in tune with what’s happening in the economy, your industry, and dare we say, politics! Talk about a full-time job.



A lot of your financing for loan capital of any type will probably come from external financial solutions. They might include a line of credit, bank debt, working capital term loans, receivable finance, inventory finance, equipment leasing, and monetization of tax credits. Those tax credits typically are covered under Canada's SR&ED program and if you have refundable tax credits they can be easily monetized under a SR&ED Loan facility. That accelerates the refund of your valuable investment in r&d capital.




However, you also generate cash internally, and you need to know how to measure that.



When you assess working capital or debt needs you need to be in a position to focus on cost, risk, and what that financing does to your balance sheet? All of those must be taken into consideration.



Also consider your current capital and debt structure and how your balance sheet will look after financing is completed. As an example, something to think about is that working capital and cash flow can be generated through monetization of assets - this doesn't really bring debt to the balance sheet, so you've achieved your goal without increasing debt.



On occasion it’s important to discuss any taxation impact on your financials with your accountant, as there are both positive and negative aspects to debt and tax.



If your firm is mature and operating efficiently you’re in a position to access all sorts of traditional financing. The other side of that is alternative finance, which works just as well but might be more costly on occasion - not always, but sometimes.





It's hard enough to access financing but choosing the right partner is a struggle in itself sometimes, ensuring that the funding source will be with you in tight markets and good times. Apparently, those two fluctuate over time. The 2008 worldwide debacle caused many finance firms to disappear or implode, causing havoc among thousands of businesses in Canada, whether you were a start-up or large corporation!



One solid Golden rule of business finance is to be proactive when it comes to access to debt solutions and working capital. You might even have to make the tough decision around diluting equity when there is too much debt on your balance sheet. That’s a costly one.



Another of those Golden rules is to have a solid sense or understanding of how outside forces, pandemics included, can affect your company's financial viability! If market conditions are continually volatile you clearly need to focus on longer term stable financial solutions.

WHAT ARE YOUR BUSINESS GOALS ?

Constantly stay on top of your cash flow planning, and consider the need for a proper business plan that accurately reflects the true growth and profit potential of your company. You might be focusing solely on growing sales, in other cases you might be going into new product lines or geographies, or investing in r&d. If you want to more clearly understand what business financing solutions are available for financing a business in Canada speak to a trusted, credible and experienced Canadian business financing advisor.



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

Financing A Business And Solving Working Capital & Funding Needs

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When  Is  A  Working Capital Loan is Right for Your Company! Financing A Business For Your  Working Capital And Funding Needs

 

Many business owners turn to working capital loans any time they need to get their hands on some quick cash. The truth is that this type of loan is better used when you need to stay afloat, cover general operating expenses, and pay bills with invoice financing. These products essentially buy you some time so you can come up with new ways to generate revenue based on your existing assets and resources.

Financing a business always seems to come back to that tried and true (cliché?) term of cash flow to finance the daily needs of your business. So when it comes to loans for businesses in Canada it is no surprise that cash flow is often called the lifeblood of your company day to day operations.

What Is A Working Capital Loan Used For?

It's all about your day to day operations, not long term financial commitments such as leases for equipment financing, term debt, etc. The most common day to day cash needs include payables, the financing of accounts receivable, salaries, and fixed costs such as rent, utilities, etc.



No matter how overused the term might be most business owners and financial mgrs would not dispute the need for the right amount, and type of business funding . That involves taking a hard look at your balance sheet and reviewing the relationship of the current ratio items, namely your short term assets such as a/r and inventory, as well as obligations such as payables, loan payments, etc. That current ratio drives your working capital and cash flow loan needs.



The downside of not having, or being able to arrange cash flow and working capital financing is simply that you have a lesser ability to grow sales, maximize profits and take advantage of new opportunities.

So what in fact are the working capital and financing issues that are raised on an ongoing basis for your business?

Factors To Consider When Financing A Business

Key is understanding how your receivables, inventory, and other assets come together to drive working capital and cash flow. And, to our point, how do you finance those assets and those needs?



What are the real drivers in funding need - typically it's growing revenues, expanding, and in some cases buying or merging with another business.



Although most business owners/financial mgrs can't imagine having too much capital for their business that overabundance would actually mean you are not using capital properly! The bottom line, as experienced by most business folks, is that financing a business is actually a balancing act when business capital is sought.



One of the main things you should focus on is your ability to pay your current debt - On the balance sheet, your accountant shows that as ' current portion of long term debt ' - You always want to be in a position to meet these obligations as failure to do that means you are bordering on insolvency. All of that snowballs into major issues with your bank, your suppliers, and other creditors such as leasing or finance firms.



So as we have said, you need to be able to calculate, or measure working capital, and then address how you will satisfy the need that comes out of those numbers. There are some easy calculations you can perform in measuring your overall cash flow - it's really simply understanding your inventory and A/R turns, as well as having a handle on your accounts payable days outstanding.



If it was a perfect world you could raise all the working capital you need internally. How would that work?! Well, using an extreme example if you collected your receivables in 45 days, and turned your inventory in 45 days, and were able to pay your payables every 90 days you would be very self-financing.



Sounds great, except you can hear your suppliers and creditors now I bet... Also, the profits that you generate out of your business obviously become a new additional part of the working capital component and would even further benefit your overall position.



But let's get back to the real world, which states that if you have more current assets than current liabilities you 99% of the time need external working capital.



Canadian business owners achieve that additional working capital in a number of ways - the most beneficial is bank lines of credit, or in some cases, if your firm meets the criteria, a cash flow working capital loan. If you are unable to meet bank criteria and are still in a challenged or growing position then we advise clients to consider a non bank working capital or asset based lending facility.

How To Get A Working Capital Loan

Numerous new solutions in financing a business have emerged in Canada. That includes cash advance merchant lenders as well as common subsets of what is known as alternative financing. Those subsets, actual real world solutions include a/r financing, working capital term loans, tax credit financing, inventory finance, and mezzanine cash flow loans for more established firms.

When it comes to the merchant advance lenders the focus is on typical business credit optics such as how long your company has been in business, what your annual revenues are, and the overall turnover of current asset categories such as receivables and inventory.

Depending on the size of the transaction the personal credit history of the owner/owners is also a subject point in the overall decision. As far as ' working capital loan repayment ' works the formula is actually quite simple - a short term loan based on approx 10-20% of your annual sales that is repaid monthly, or sometimes weekly based on a review of your cash inflows.



If those receivables we discussed tend to be your main current asset than a factoring or invoice discounting facility makes the most sense. Most Canadian business owners don't fully understand how factoring in Canada works, and are often confused by the costs and process. At 7 Park Avenue Financial our recommended funding solution in this area is Confidential Receivable Financing. This is not a receivables loan but a true sales based cash flow financing facility.

It is critical to ensure that you are matching your business financing needs against either a long term or short term solution. When your company needs new equipment, real estate, etc the business owner and financial manager must explore options such as equipment loans or commercial mortgages where payments are fixed and amortized over longer terms.

When it comes to an ' operating loan ' solutions for your company include a traditional bank revolving credit facility or in some cases an alternative lending solution such as a non bank asset based lending facility.



The Canada Small Business Loan financing program, unfortunately, does not cover working capital needs, although the government's crown corporation non bricks and morter entity does offer long term working capital loans that come with prerequisites of profits and a reasonable balance sheet.



Export Development Corporation ( EDC Direct Lending ) and the somewhat related financing of refundable tax credits are solutions, but these facilities take a significant amount of time to set up. When exploring government loans or related financings it is strongly recommended that you use the services of a business financing consultant with expertise in this area.

Alternative lending Canada based solutions are continuing to dominate Canadian business financing needs and compete regularly with traditional business offerings provided by Canadian chartered banks and are truly an advanced alternative lending solution when traditional financing doesn't solve your business capital needs.

So what’s our bottom line recap - it’s simple!

Understand how much financing you need - that means ' measuring' your needs, as well as what type of funding suits that need. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a financing track record of success.






7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



Business financing for Canadian firms, specializing in working capital, cash flow, asset based financing, Equipment Leasing, franchise finance and Cdn. Tax Credit Finance. Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations.

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR

Stan has had a successful career with some of the world’s largest and most successful corporations. He is an experienced

business financing consultant

.

Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.


Stan has over 40 years of

business and financing experience

. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in-depth, hands-on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.









Stan Prokop

Business Finance In Canada & Financing Alternatives

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Alternative Lending : Use As Directed

 

 

What Is The Best  Business Financing Option For Your Business?
Business financing alternatives in Canada - For many business owners and financial managers it , must seem like they spend a tremendous... aka ' too much' time searching for the credit and banking alternatives and the sources of cash they need to run and grow business. Raising business is even more challenging when the search is for financing for startups!

What then are some of those decision points when your business is looking for business funding of any type? Business sources such as Canada's premier business dailies such as the Globe & Mail and Financial Post constantly reveal the challenges of the SME commercial finance sector in financing a business. Let's dig in!

Easy to say, but fundamentally it's all about finding the right types of funding in the amount that you need that carries an acceptable level of risk and cost relative to means of financing utilized. As we said, easier talked about than done.

More often than not it's about taking on the wrong kind, or too much debt and therefore risking business failure. Working with the right type of banks or finance companies is also important; it's all about knowing the lay of the land!

Business Financing Alternatives

There are several ways in which business finances itself.  Business owners should know that interest rates vary based on what type of traditional or alternative lenders are utilized. Sources of cash for your company include :

Vendor / Supplier credit - That is financing a business without a loan!

Lease Finance / Equipment Financing

Bank Financing

Government of Canada Small Business Loan and Grants for startups - ( Working with government programs and crown corporations often can seem frustrating for business people. It is strongly recommended that you use a business finance expert who has a proven track record in business finance

Asset monetization

New equity

Online Lenders

Many business owners often underestimate the power of supplier finance. The terms and credit needs you're able to negotiate contribute significantly to business cash flow. Supplier credit stems from the outflows of cash. The bad news here is that everybody's in the same boat at the end of the day, as everyone, including your clients attempt to stretch payment terms.

Instead of paying with cash for equipment and technology assets businesses can choose to lease those assets on a lease or rental basis.  Terms of anywhere from 2-7 years, sometimes longer, are available to leases assets such as rolling stock, computers, heavy equipment, production machinery, etc. Bottom line... any asset can be financed.

Canadian commercial banks offer significant financing choices when your firm seeks business credit.  The most desirable bank facility is typically the ' revolver' allowing you to draw daily against the cash you need up to a set limit.  The danger of breaking a bank arrangement often leads many businesses into a death spiral.

While in many cases it's desirable to get new equity into your company the challenge here is that it dilutes ownership at the expense of current owners.
Many owners and finance managers who focus on getting new equity don't fully realize that numerous ' Asset Monetization ' strategies exist as an alternative to equity in many cases.

They include-

Receivable financing
Inventory Financing
Tax Credit Financing
Royalty financing
SR&ED Tax credit monetization
Non bank asset based lines of credit
Sale leaseback
Canada Small Business Loan and BDC Funds
Bridge loans

4 or 5 key issues typically should come up in your overall financing decision. They include:

1. Flexibility of the financial offering
2. Risk
3. Cash flow and profit concerns
4. Control exerted by the lender based on the finance offer  - that refers to issues such as loan covenants, financial ratios that must be maintained, and those ever-dreaded ' personal guarantees'.
5.Timing

At certain times in any company’s history it can't always get the financing it needs. Issues such as your overall leverage and your capital structure need to be addressed carefully. Growth, while always desired by almost all firms requires a proper assessment of your financing needs.


Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with business credit and banking decisions that make sense today and tomorrow.

 

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.
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

Golden Rules For Financing A Business In Canada . Working Capital and Debt Solutions .. That Make Sense !

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Information on financing a business in Canada

Financing a business in Canada. A challenge? Let's just say that's an understatement when it comes to working capital, debt, and ongoing management and recognition of finance problems and opportunities.

Are there some ' Golden Rules' we could follow. We think so.

One of the golden rules of business finance is to ensure that you properly match short term debt and long term debt appropriately. Each of these two has its own benefits and potential disadvantages. Is one better than the other? Not really, it’s just that it’s a case of making adjustments and staying ' in tune ' with what needs are appropriate or required at the right time.

It certainly hasn’t escaped us that not only is it difficult when it comes to financing a business in Canada to manage internally, you of course have to stay in tune with what’s happening in the economy, your industry, and dare we say, politics! Talk about a full time job.

A lot of your financing will probably come from external financial solutions. They might include bank debt, working capital term loans, receivable finance, inventory finance, equipment leasing, and monetization of tax credits. However, you also generate cash internally, and you need to know how to measure that.

When you assess working capital or debt needs you need to be in a position to focus on cost, risk, and what that financing does to your balance sheet? All of those must be taken into consideration.

Also consider your current capital and debt structure and how your balance sheet will look after financing is completed. As an example, something to think about is that working capital and cash flow can be generated through monetization of assets - this doesnt really bring debt to the balance sheet, so you've achieved your goal without increasing debt.

On occasion it’s important to discuss any taxation impact on your financials with your accountant, as there are both positive and negative aspects to debt and tax.

If your firm is mature and operating efficiently you’re in a position to access all sorts of traditional financing. The other side of that is alternative finance, which works just as well but might be more costly on occasion - not always, but sometimes.

It's hard enough to access financing but choosing the right partner is a struggle in itself sometimes, ensuring that the funding source will be with you in tight markets and good times. Apparently those two fluctuate over time. The 2008 worldwide debacle caused many finance firms to disappear or implode, causing havoc among thousands of businesses in Canada, whether you were a start up or large corporation!

One solid GOLDEN RULE of business finance is to be proactive when it comes to access debt solutions and working capital. You might even have to make the tough decision around diluting equity when there it too much debt on your balance sheet. That’s a costly one.

A great GOLDEN RULE is to have a solid sense or understanding of how outside forces can affect your company's financial viability. If market conditions are continually volatile you clearly need to focus on longer term stable financial solutions.

Constantly stay on top of your cash flow planning , and if you want to understand what solutions are available for financing a business in Canada speak to a trusted, credible and experienced Canadian business financing advisor .


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