3 Ways To Supercharge Access To Business Lines of Credit And Asset Loans

Canadian business financing has a new success story when it comes to business lines of credit and asset loans. Although it’s clearly been around for awhile we run into tens of clients who haven’t even heard of the solution, but boy do they know they have a business financing problem! The ' supercharger' we are referring to is an ABL; an asset based business line of credit.

Let's make sure you understand the basics first - and it’s actually quite simple. An ABL facility is a revolving line of credit, which, surprise, surprise, is typically offered by an institution other than a bank! That’s what really surprises some of our clients. These business lines of credit, or asset, or asset loans are credit facilities that support your receivables and inventory, just as they would if your firm qualified or had access to a Canadian chartered bank facility.

Can we add a little more ' supercharging' to the mix - yes we can. The Abl facility can actually include equipment and real estate which can be bundled into the facility if your firm has those assets for additional leverage. So what is happening is that you as a Canadian business owner or financial manager are using your ' asset rich' status and monetizing that into temporary working capital and cash flow. That’s a good thing.

So who in Canada is already ' supercharging' their credit facilities outside of the bank environment? Literally thousands of companies, including some of the largest corporations in Canada. We would point out though that the general lower end of this type of facility typically is 250k, but after that the sky is the limit with respect to transaction size. There is a common perception out there that this type of financing is for companies that are experiencing financial challenges - and to be fair , because the program is asset based these business lines of credit and asset loans are available to firms who are doing well, and those not doing well or experiencing dire challenges . That accessibility for corporations and industries of all types is what is fueling the asset based line of credit facility growth in Canada.

It's never a perfect world, so we advise clients to expect a higher cost of funds than that of a Canadian bank facility - but at what cost would you pay more for a facility that margined all your assets, including fixed assets and real estate. When proper value is agreed upon with your firm and the asset based lender you can actually margin and utilize cash flow on your unencumbered equipment and equity in real estate.

In summary, first, you can supercharge your working capital and cash flow via an ABL facility, which is a direct alternative to any method you are utilizing today. Secondly, your liquidity could literally double if you are in a position to monetize some of your equipment and or real estate, without taking on any additional debt! And, thirdly the facility does not exclude any type of firm from applying, so you can take advantage of Canada's newest form of financing today! , thereby accelerating your growth and profits.
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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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/business_lines_of_credit_asset_loans.html

Alternatives and Tips On Working Capital Finance By Banks

Canadian business owners and financial managers seeking working capital finance by banks or other sources are generally experiencing growth in sales and profits. That’s the good news, which is of course offset by the fact that this type of success requires additional working capital.

Liquidity has become the name of the game and ' cash is king' even today never seems like a worn cliché. A recent study by the Conference Board of Canada indicated that the key worries of business owners were working capital cash flow. (Also referenced were ' regulatory issues and competition')

So you have assets... but can those assets generate workign capital finance by banks or other alternate sources.

For working capital purposes it’s all about ' current assets ' which include typically receivables and inventory. As you invest in those two assets to generate sales your working capital needs go up, and your ability to manage and turn over those assets plays a key role in the sourcing of working capital by banks, and non bank institutions.

You should not be afraid to enter into traditional or alternative working capital solutions if you have properly managed current assets - you are simply monetizing for liquidity, and that’s rarely a bad thing.

So are Canadian chartered banks the solutions to your working capital needs. Probably, possibly, maybe is our answer, meaning that if your firm is capable of meeting bank criteria for a revolving line of credit your needs typically can be met. Of more and more concern to our clients is their ability to not be able to generate sufficient financing for the sister of receivables, aka inventory.

That then takes us into an alternative for bank financing, which is the fast growing area of asset based financing, in particular asset based lines of credit. These facilities cost more, but give you total margining of the market value of your receivables, inventory, and , guess what, we'll throw in equipment and real estate if you want to temporarily margin them for working capital. And remember, your balance sheet is not taking on debt when you enter into either a bank or alternative asset based line of credit, you're simply monetizing your financials for cash flow.

The reality is that alternative methods of financing are growing more popular - yes they are more expensive, but if your firm generates sufficient margins and return on equity your ability to tap into virtually unlimited working capital can prove to be a very positive experience.

The reality of working capital finance by banks or alternative methods is always the same - you need to determine your asset turnover, there will always be times when you need a bulge in inventory and A/R to fund your growth.

Liquidity, that’s what it’s all about. Speak to a trusted, experienced and credible Canadian business financing advisor in order to ensure your traditional and alternative business financing options are first, clear, and second, available!
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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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/working_capital_finance_by_banks_alternatives.html

Take Back Productivity With Equipment Financing Leasing in Canada

Yours customers have heard the news - you have invested in new assets to better serve their needs and demonstrate your firms long term commitment to their business. That’s a clear, however intangible, benefit of equipment financing leasing in Canada.

The ability to increase production or streamline your business processes is often served by asset acquisition - acquiring those assets via a lease financing option is clearly the smart thing to do .

Competition is heating up everywhere, locally, nationally, and of course globally. That’s why your ability to invest in new assets such as production equipment, computer technology, business equipment, etc will put you at the top of the pile when it comes to today’s highly competitive environment.

Investing is always a long term strategy, so it is necessary to finance long term assets with a finance strategy such as equipment financing leasing - you are matching the long term benefits you will achieve through the assets with a same long term financing strategy. Your accountant calls that ' matching means to your needs ' - Intuitively to you as a business owner it’s simply cash flow 101!

It clearly does not make sense to any Canadian business owner or financial manager to pay cash and deplete cash flow and working capital resources and then to only receive the benefits of that cash outlay over a longer period of time.

Many of the production assets that we see clients acquire come from either the U.S, Europe, and in some cases even Asia. The 2010 strong Canadian dollar lends itself to strong buying power based on the currency and the willingness of the foreign suppliers to make sales.

When we thing of shop floor and production equipment we think of long term assets that will have a very useful economic life - in many cases they will even hold a residual value many years ago . But then... theres computer and technology. Those assets cost a lot, depreciate quickly, and as they become more and more productive that is offset by the need to constantly upgrade - think servers, pc's, laptops. Etc. Once again, equipment financing leasing to the rescue! Your ability to upgrade, replace, or extend current leasing of technologies is enhanced by a lease financing option. And think of those cash flow advantages. We pity the poor Chief Information Officer at medium sized and larger firms that constantly must wrestle with capital expenditures in such large and constant amounts.

We all here about ' crunching the numbers ' - in leasing, with the aid of a financial calculator you can very quickly identify budgeted amounts and cash outflows. There are only 5 simple parts of an equipment lease calculation- the term of the lease, the interest rate, the value of the equipment, the end purchase option, and of course the payment . Knowing any 4 of those allows you to quickly calculate the final remaining piece of the puzzle in your budgeting scenarios.

One of the greatest financiers of all time, J P Getty is often quoted as saying - ' if it appreciates buy it, if it depreciates, lease it '. That’s the strategy you probably should adopt on every asset acquisition, and utilizing the variety of equipment financing leasing options is the common way to approach that lease versus buy decision.

Speak to a trusted, credible and experienced Canadian business financing advisor that will help you achieve and overcome your obstacles to competitive innovation.

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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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/equipment_financing_leasing.html

How To Decide if Financing Receivables Is a Solution for Your Working Capital Funding

We call it the R R factor. And we are not talking about rest and recuperation! The R R factor will give you a sense it its time to consider whether a newer, more popular method of financing receivables is your working capital funding solution .

We're going to provide you with a quick but easy and powerful tool to determine if your cash flow challenges need to be addressed in a more positive fashion. It's the receivables to revenue ration - hence the term R R . First, take you year end balance of A/R, which is of course your uncollected sales revenue at that point in time. Then determine how many weeks of sales that represents. Calculate this ratio historically and you have a method of determining whether your cash flow and working capital requirements are changing.

So how does business address the challenge of working capital funding when it’s as challenging as ever to borrow. Many companies are assessing factoring, or financing receivables. It’s a simple process that is only made complex and difficult when you don’t understand the pricing, how it works on a daily basis, or the important need to align yourself with a partner that offers and matches your business financing needs.

The process is actually quite simple --- On a daily, weekly, or monthly basis - it’s your choice, you sell your receivables. So what happens next? Simply that the day you generate that sale you have the same day cash for those receivables. Therefore the Canadian business owner and financial manager have created a true ATM machine out of the investment the company has in accounts receivable. Readers will also begin to immediately appreciate that they have just stumbled upon the ultimate cash flow solution, because every time they sale they have instant cash. So whats the catch?

We believe there are 2 catches, and when the business owner understands and addresses them the receivable financing solution becomes much more clear and common sense.

The first ' catch ' is the cost. The typical Canadian cost of financing a receivable is 1.5- 2% / month. The firms offering the service do not call that an interest rate, they call it a discount fee. You sold something, for cash, i.e. you’re receivable, and it was discounted by 1 or 2% for that privilege. Is that expensive. Absolutely ... maybe! That is because most business owners don’t pick up on the fact that they are in effect carrying those receivables already, which is a cost that is often not intuitively calculated by the business owner. Secondly, the term ' opportunity cost ' comes in to play, because the reality is that if your firm can generate a good return on investment you can use the cash flow from your receivable financing to generate higher profits .

So why isn’t factoring or receivable financing the choice of every Canadian business for working capital funding? The reality is, and this is a surprise to many, that the largest firms in Canada utilize this financing. They simply have a stronger ability, due to their financial strength, to determine how the facility works on a daily basis, the best type of facility we recommend to customers is one in which your firm is able to bill and collect its own receivables, which is not offered by 99% of firms in the Canadian marketplace. Search out that 1% solution is what we tell our clients - at that point you will have a competitive financing vehicle for working capital and virtually unlimited cash flow growth.

Speak to a trusted and credible business financing advisor who can assist you to put together a solid working capital funding solution.

The Myth Of Inventory Finance Companies

Your company carries it. You need to finance it. We're of course talking about inventory. Discussions with clients reveal a lot of misconceptions around inventory financing in Canada. Let's try and resolve some of those myths around the financing of your inventory, who the players are , who they are not ( that’s the most common myth ) and we'll also try and provide some straight forward direction on next steps in your inventory financing challenge .

The overall quality of your inventory management will play a large part in your ability to finance your products, which are a part of the current assets component of your balance sheet. You cannot overlook the importance that an inventory lender will place on your ability to report and count your products. The reality is that most firms are either carrying a ' continuous' or ' 'periodic' system of inventory control.

So here is solid tip # 1 - be aware that inventory lenders prefer a continuous type of inventory accounting, for all the obvious reasons. Essentially you are counting and monitoring inventory (with the use of software of course!) at all times. That’s a good thing when it comes to a lenders valuation on an ongoing basis and their ability to lend.

You're company is growing. Unfortunately so is your inventory! And that places a huge drain on your cash flow. The working capital cycle dictates that cash turns into inventory which turns into receivables and then we start all over... that lag can be anywhere from 60 - 120 days, sometimes longer . Never underestimate the problem that higher sales will bring to your inventory financing needs.

Clients typically are looking for inventory financing because the level of investment that you have in product and receivables drains your cash flow. As sales volumes increase your cash flow decreases based on your overall collection period of A/R and of course those inventory turns.

Your sales staff of course never wants to be in a position to tell a customer you don’t have the product they have worked so hard to sell.

Does your company have an inventory financing strategy? The majority of firms we talk to in Canada, certainly in the small and medium business sector do not have access to the inventory financing they need. Do true inventory financing companies exist in Canada? We feel that the answer is generally ' no ‘, they do not. However if your firm would consider an asset based lending scenario that in effect takes the place of inventory finance companies in Canada .

Under an asset based lending strategy your inventory is margined for what its worth, by experts who categorically know what its worth. You will enhance your ability to finance your product if you have the controls, reporting, and inventory accounting system in places that makes the inventory and asset based lender ' comfortable ‘.

Speak to a trusted, credible, and experienced business financing advisor with regards to inventory financing companies and asset based lenders who will give your product the financing it deserves!
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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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/inventory_finance_companies.html

The Future Is Now ! Financing Your Film Tax Credit Incentives In Canada Today

As a producer, director or owner of a project for Canadian film, televison or the increasing popular area of digital animation you already know the score. Costs are up and the ability to finance your projects to full completion is as challenging as ever. Financing your film tax credit incentives under the 5 or 6 different tax credits that are available may be the solution to your problem!

We continually meet with clients who are in the same conundrum, which is namely that they are in search of that final ' gap ' that will fully complete their financing. Equity investments have been committed, some sort of debt has been arranged for a part of the project, and pre sales and distribution is being finalized. Maybe, just maybe creative financing of the tax credits available to you in Canada (these are non repayable grants of very generous dollars) will be your final piece of the puzzle.

We don’t necessarily believe that film tax credit incentives could claim they are the total solution to the entertainment industries problems, but at a time when we are just seeming to come out of the global 2008 implosion that hit every industry including yours the reality is that the Canadian tax credits are the freshest breath of air in probably the entire industry. (Many U.S. and international tax credit schemes for film are under attack).

Jeff Steele, a U.S. pundit and expert on film and film financing recently said that part of the problem is that production owners use the tax credit and the financing thereof for the cash flow to start the next project, while the current one is not yet completed - we'll leave that one for you to decide re right and wrong way to do things. We do agree with him though that the planets align in a very challenging way when you consider the global credit crunch, the only minor participation of banks in the industry, as well as the general perception of people that many players enter the financing of productions based solely around the perceived' sexiness' of the industry . Anyway...!

Not considering a film tax credit incentive financing is clearly not helping the cash flowing of your project. Tax credits in all ten Canadian provinces can be financed on a ' when completed' basis, although more and more entrepreneurs, particularly independent producers utilize accrual financing ‘, which creates a ‘cash flow as you go ' scenario, providing instant working capital to your project.

The proper financing of your production , utilizing a tax credit finance strategy should no doubt enhance your overall R O E, namely return on equity - and we can assure you those equity and mezzanine investors will feel a lot better knowing that film tax incentive finance props up your project just nicely .

Speak to a trusted, credible and experienced advisor in film tax credit finance and get on the cash flow bandwagon, which we believe is where you want to be!
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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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/financing_film_tax_credit_incentives.html

How To Decide If Sred Financing For Your CRA SRED Is Right For Your Firm

We won’t bore you with the 4 Billion details. We are of course talking about the CRA Sred program and the billions ( around 3-4 Billion dollars annually ! ) of sred grant funds that are of course non repayable and distributed to Canadian privately owned firms on a yearly basis .

If you know the program and you know what we are talking about as a Canadian business owner or financial manager then you're ahead of the game already. The real basics are of course that the program is technically called the Scientific Research and Experimental Development Program - aka SR&ED, providing those billions of dollars we talked about back to firms such as yours in the form of non-repayable grants to literally all sectors of Canadian business.

So we are focusing on your decision as a claimant to wait for your refund on your expenditures, or consider the option of financing the claim to accelerate your working capital and cash flow. We're all familiar with the cliché that size isn’t important - but in the case of your CRA Sred claim it plays a bit of a role in the overall ability to finance your claim.

We have to backtrack a bit and first of all answer one of our clients typical first questions, which is simply - is a sred financing achievable and who actually finances these claims. In Canada we are aware of one of the chartered banks that finances sred claims, we have a strong opinion that the overall financing of your claim with a bank is subject to many other bank criteria. We think you know what we are getting at, so the reality is that sred claims are financed 99% of the time by the private sector via boutique firms. Therefore we encourage readers to seek the services of a trusted and credible and experienced sred financing expert who can guide them thru the process.

So once you have found your sred partner firm in this area we again circle back to size. In general Canadian claims in excess of 250k tend to be financed more efficiently and economically for both the lender and yourself. Claims are financed as a general rule at 70% of the LTV relationship, referring of course to loan to value. So on a 250 claim you would net 70% of your combined federal and provincial claim.

You would consider financing your sr&Ed under the following conditions - as a first time or previous filer you have confidence your claim was prepared by an experienced party. You also should be in need of the cash flow (who isn’t) as sred rates are typically higher than traditional financing rates. Timing is everything and typically a sred financing can be achieved in 2-3 weeks, with the usual due diligence around your claim, the collateralizing of the claim, and any related paperwork and applications.

If your company can put the cash flow to use to retire term debt or payables, increase sales, or, dare we say, to start the R&D re investment process all over you are a strong candidate to finance your sr&Ed.
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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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/sred_financing_cra_sred.html