Special Loans & Bank Workout Relief - Exiting The Troubled Waters Of A Bank Breakup In Canada

Escaping The Bank Special Loan Workout – That Get Out Of Jail Free Feeling In Business Financing

OVERVIEW – Information on exiting a special loans category when your business credit facilities are terminated by Canadian chartered banks. A bank workout has various exit options

Special loans is of course the name for your company’s relationship breakup with your bank, and Neil Sedaka had it right when he penned ' Breaking up Is Hard to Do!

How can business owners successfully emerge from a bank workout scenario and what options are available to do this? Let's dig in.

We've always been a little bit amazed at the surprise of some clients who advise us they didn’t see it coming relative to having their bank facilities called. Suffice to say that the implications of this 'relationship termination ' can be significant for your business if not attended to in the proper manner.

From the banks perspective it's a simple case of your company being deemed over and above the risk level they are prepared to take in an ongoing bank relationship that might have both revolving and term facilities in place for your financing needs. Typically your firm has not met the loan covenants and ratios established by the bank at the outset of the relationship.

The critical part of your Special loans journey involves any deadline set by the bank. Here it's important to determine whether the bank exit strategy is ' immediate' or if they will work with you on options that can ultimately save the relationship. The bank is of course interested in full recovery of any loans or credit facilities, so the critical question becomes: Can this relationship be saved or are other financing options available?!

We've used the word relationship a number of times - it's important to mention that your old account mgr and branch will often be disappearing at this point as specialized ' workout ' managers are now handling your banking.

We've worked with many firms who are in Special Loans and spent numerous amounts of time in seeking other Canadian chartered bank facilities to replace the stress of their Special Loans scenario. We have rarely seen this strategy be successful, if ever, if only for the fact that we're of the opinion that competitive banking is not achieved by buying someone else’s problems!

At this point never has it been more important to assess the assets and collateral your business has. We'll mention also that the bank workout managers will typically ask you to be reporting more on key asset categories such as receivables, inventory, payables, etc. In certain cases if your business is of a certain size expensive audits and appraisals will be required by the bank, at your cost. This is a great time to determine what you feel your future financing course will be, if only to avoid these high fees.

At the heart of the bank workout is your determination as to whether you in fact need to move on to another method of financing your business. In some cases if it hasn’t been made perfectly clear your bank might be viewing your entire industry as ' out of favor ‘. Over the years industries such as auto, printing, etc have found themselves to be deemed ' high risk ‘.

Various options are in place for new financing for your firm. Most typically they include new ' NON BANK ASSET BASED LINES OF CREDIT ' from commercial lenders who are focusing on your assets and business prospects. In certain cases temporary asset bridge loans might make sense, providing an interim step to a new finance strategy.

If you're looking for options and that ' getting out of jail free' feeling via your current situation in a bank workout special loans scenario seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can provide options in the troubled situation of your bank breakup .


Stan Prokop - 7 Park Avenue Financial :
http://www.7parkavenuefinancial.com

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

7 PARK AVENUE FINANCIAL = CANADIAN SPECIAL LOANS EXIT FINANCING EXPERTISE


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

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR:
Stan has over 40 years of business and finance executive experience. He has been recognized as a leading credit/financial executives 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

Special Loans And Workout Financing In Canada : Turnaround Just Around The Corner

Looking for a good workout ?

Here’s the bad news / good news around exiting special loans in Canada








OVERVIEW – Information on workout financing in Canada. Numerous alternatives exist around finance alternatives when your firm finds itself in, or going into, a ‘ Special Loans ‘ situation

Workout Financing in Canada: As we all know there's nothing like a good work out! When we meet with clients who find themselves in the ' bad news ' situation, namely ' Special Loans ‘it’s always good to know that the good news is the numerous turnaround finance alternatives available to owners/managers/shareholders. Let's dig in.

We're assuming that firms requiring the turnaround have traditional ' bank' type financing in place. When it's obvious that your current lenders, bank or otherwise are focusing on calling your loan there is no better time to start looking at solid alternatives.

In the case of banks calling a loan there is actually another piece of ' good news' around being put in the special loans category. There's no better example of the word ' limbo ' than the bank special loans category in Canada. Business owners/managers might well always want to change that working to ' purgatory ‘. However at the end of the day you are still being financed under the bank, albeit at a higher rate and tighter covenants and restrictions.

Here is your time to take a bit more of a ' stance ' on your overall finance situation - identifying a fix with the bank , or agreeing on a time and exit strategy - obviously new finance in place!

That ' fix ' with your bank or other commercial lender might include several scenarios:

New equity from owners

Sale of certain assets or parts of the business

Higher levels of the dreaded ' personal guarantee’

Re-doing the balance sheet vis a vis short and long term debt obligations - Here your company clearly must demonstrate viable long term cash flow generation when new forms of debt are considered


So what happened?

That's the legitimate question that owners / managers and other stakeholders to ask round the downslide of your firm's financial health. Here numerous scenarios abound - We've met with many owners who offer some interesting versions of their current financial problems. In some cases their information is correct, just being managed improperly. Examples: ' We've grown to fast ' ; ' Lost a big contract/client ‘, ' We're out of covenant on some of our operating metrics - i.e. DSO, DPO, Debt to Equity ‘.

Numerous workout financing turnarounds can be implemented. They can be done within the banking system but more often than not they involve alternative solutions – that includes:


Asset based Lending / ABL Non Bank Credit Lines
Bridge Loans
Sales Leasebacks
Cash Flow Loans – Secured/Unsecured

If you’re looking to have a solid workout on your financing turn around seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
who can assist you with SPECIAL LOANS scenario that fit your situation.



Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

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

7 PARK AVENUE FINANCIAL = CANADIAN SPECIAL LOANS WORKOUT FINANCING





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

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop

Refinancing? Solutions Your Company Can Live With Via A Restructuring Loan Or A Bank Special Loans Takeout

Looking For A Restructuring Loan For Refinancing Your Business ?


OVERVIEW – Information on refinancing your Canadian company when a restructuring loan is required . Why Special Loans situations are not ‘special’ !



Many Canadian companies find themselves domiciled in the town of ' Dire Straits '. That’s when a 'relocate ' via restructuring loans and refinancing is in order. In certain other cases extreme situations might exist whereby a Canadian chartered bank or other institution has in fact ' called ' their loan, putting them in the unenviable situation of being in what our banks call ' Special Loans ‘. And we'll promise to hold off on the humor around the work ' special '!

When you consider your firm is either in, or a candidate for refinancing or restructuring that involves a focus that’s combined with what the finance folks call the ' stakeholders '. They include owners of the firm, lenders, and of course key suppliers. These situations are often dynamic and time sensitive, further adding to the excitement!

What are some of the benefits of working with someone, or a team that is experienced in this area? Naturally finding an individual or a firm that is as serious about your turnaround as you are is key... it’s that ' people thing ' we hear about so often. You're looking for both technical synergies and of course... solutions.

Naturally the final outcome of any restructuring can be different. It could involve the sale of the firm, a partial sale of equity, of more simply, a refinancing of the business that addresses the key issues and problems.

'Assets ' are key to turnaround and restructuring. Whether they are hard assets or perhaps future cash flows under recurring revenue model its all about keeping customers and injecting new cash flows into the business.

So what are some key elements required to get your firm out of ' SPECIAL LOANS ' and back into a day to day operating business cycle that you can live with .?
They might include asset sales, supplier term renegotiations, or financing of badly needed to assets to sustain and grow the business.

There are some key things you can expect in any restructuring of your company. First of all it usually takes longer than you think, a worst case scenario re timing is never wrong to have in place.

Financing solutions in Canada that work well with special loans takeouts include asset based credit facilities, bridge loans, sale leasebacks, and working capital financing re A/R and inventory programs that margin current assets to the maximum allowed.

The bottom line - restructuring and refinancing of any firm, small or large is rarely a fun cake walk! But solutions exist, so seek out and speak to a trusted credible and experienced Canadian business financing advisor today for the experience and special attention that this challenge requires

7 PARK AVENUE FINANCIAL
CANADIAN REFINANCING AND RESTRUCTURING EXPERTISE





Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/special_loans_restructuring_loan_refinancing.html

In Special Loans ? Here Is The Asset Based Lending Financing Alternative When Your Bank Loan is Called In

Trust us; we have heard the joke a hundred times - namely ' being in special loans is not really making your firm feel ' special ‘!

So, you are a Canadian firm that has had your bank loan called in - that’s of course the terminology used by Canadian banks when they terminate a banking relationship due to your firms covenant breaches.

Typically those ' breaches ' constantly revolve around a couple key areas : ratios out of whack , financial losses, cash flow generation challenges, your industry is out of favor ( think General Motors in 2008 - 2009 ) etc . Debt to equity seems to be the most common ' breach ' our clients face when they apprise us of being in a ' special loan' scenario.

What we won’t be sharing with you is of course why the bank has acted as they have, that’s between you and them. But here’s the good news, that there are immediate solutions to the special loan scenario, and they are available to your firm today!

The alternative of course to exiting special loans with a new operating facility is staying in special loans. That actually does seem to work sometimes, and over time the relationship is mended and you go back to your traditional bank financing facility. We are going to assume you don’t want to stay in a special loan scenario, and you agree that your bank loan called in is a reasonable reason to seek turnaround financing.

Clients in, or being told they are going into special loans are always in a minor state of shell shock - A typical reaction is simply ' If my bank has called my loan who else would even consider refinancing us? '.

The reality - replacement financing is readily available, it may come at the same cost, it may comes at a lower cost, but more likely its going to be a higher priced facility until your turnaround strategy is in place .

Two key alternatives are available to your firm, and they come in the form of an asset based lending facility . That typically is a non bank entity, and the specialization is totally focused on their ability to understand that you have viable assets - they typically include receivables, inventory, and fixed assets/equipment. We say ' two alternatives ' because the size of your operating facility request will determine if you are ready for a true asset based line of credit, or if a working capital facility with a smaller firm is in fact the turn around financing you need .

Your special loans facility can be replaced in a matter of weeks if it is under the 3M dollar range, and facilities larger than that take a month or so re due diligence , appraisals if required, etc . That’s how asset based lending works – it focuses on assets, not bank ratios!

Many firms want to exit special loans simply because of the stigma. We don't want to dwell with clients on how you got there; we want to ensure you have a clean exit out with a new cash flow facility that works. That allows you to rebuild your firm and focus on growing and generating profits again.

Speak to a trusted, credible, and experienced Canadian business financing advisor who can assist you in your special loans exit strategy via a true asset based lending solution.

-

Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/special_loans_bank_loan_called_asset_based_lending.html