Business Line Of Credit & Commercial Loan Called ? Important Info On Special Loans Financing In Canada

It's not pretty. It’s actually a bit stressful also. We're talking about finding yourself in the position of requiring Special loans financing in Canada when your commercial loan or business line of credit has been called... typically by the bank.

Options .Yes! Strategies and solutions - a double yes! Let's examine some real world solutions around the difficult situation of both being in and emerging from a special loans environment.

Typically the assets that have been used to finance and qualify your for your business operating loan of credit and/ or commercial loan are receivables, inventory, misc working capital accounts, and equipment . These assets have of course been collateralized by the bank under both a demand loan and general security agreement.

When we meet with clients who are facing a special loans financing requirement they typically have been up for review and renewal of their credit facility and have been advised that the facility will not be renewed under the favorable terms they have been receiving. Moreover other severe ramifications emerge, most notably a demand letter to exit the bank by a certain date.

It's critical at this time to assess in a very realistic manner the quality of your assets, as they are the accounts that will allow you to emerge under a satisfactory refinance strategy.

So let’s get back to that asset discussion, because that is what is going to take you successfully out when you are in a position of a commercial loan called scenario.

Canadian chartered banks have typical margining and borrowing for certain asset classes. In the case of receivables its typically 75% while inventory, no matter in what state, rarely reaches a 50% margin eligibility, whether its raw materials, work in process, or even saleable finished goods .

As challenging as it may be to finance inventory in the current Canadian business financing climate it just might be that inventory line on your balance sheet that allows you emerge from a special loans facility. Why, one word - ABL! Well it’s actually an acronym for ' asset based lending ' because it is typically an asset based lending arrangement that will be your exit strategy from a commercial loan that's been called.

In our opinion and experience one Canadian chartered bank will typically only in rare occasions re finance a customer who is in special loans financing need? Why? We think there are many reasons, but the main one being that in general credit analysis and posturing with commercial clients all banks have the same general criteria of commercial loan credit extension.

Therefore if you are out of covenant or off ratio based on your current loan agreement doesn’t it make sense that another similar institution would not waive those covenants and ratio arrangements that your firm has broker. Its just common sense we think.

So, it is the asst based lender that will typically be your solution, and yes savior in some circumstances when you require an exist strategy in special loans financing. Banks will rarely margin receivables and inventory to the extent that an ABL lender will, therefore increasing your borrowing base and in many cases not only providing you with an exit from the bank, but in fact more working capital that you had before.

In summary, it is often only an ABL... asset based lending arrangement that will be your solution to a called commercial loan in Canada . Facility structure and size and pricing vary great, so a great suggestion is to consult an expert, an experienced, trusted and credible Canadian business financing advisor who can work with you to relive the stress and financial ramifications of special loans financing in Canada.




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 .Info re: Canadian business financing & contact details :

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

Financing ? Eligible For An SBL ? – Why You Should Investigate the Canadian Small Business Government Loan

Is your firm eligible for the Canadian Small Business Government Loan... commonly called the ‘SBL’ ? We are pretty sure you are and we'll prove it to you. The benefit? You'll be taking advantage of (in our opinion) best loan for start up and small business companies in Canada. Want proof? We've got it.


So what type of proof are we talking about? Well, how about 957 Million dollars - that's the amount of loans granted to businesses just like yours in 2010, in Canada. Unfortunately, and here’s the bad news, your competitors took advantage of the loan program, and you seemed to have missed the boat! Let's get you back on the program.

A good starter would be of course to ensure you understand what the program does, and does not do. At it's essence it's a term loan, payable in equal monthly installments at competitive rates that even many larger businesses might not be able to achieve.

How much can you borrow - here is where the good news gets even better - the cap on the loan was increased to $350,000.00 during the last major recession in 2008 and 2009 timeframe. We have no reason to believe the current limit will not be staying the same.

So where does misinformation exist around the program, we have always felt it’s important to outlines the pros and cons of any financing arrangement... (We feel strongly you'll agree the pros outweigh the cons on this one!) .

A major criticism of the program is simply that it’s cumbersome and a bit bureaucratic re the forms, application, etc. Our opinion is that if you invest a bit of time in getting a solid action plan in place for the Canadian small business government loan financing program that you can be approved in a matter of days.

Clients who have experienced otherwise are either poorly informed, or are not working with a respected and credible business advisor who in many cases can finalize the transaction with minimal involvement from yourself and your firm.

We spoke of some mis information around the program. If we had to isolate constant piece of mis information on the program it's simply that many clients don’t know what the program finances. So let’s be clear on that. it finances only equipment, leasehold improvements , and real estate .

Many firms either believe, or have been told, (or perhaps wish?!) that the loan can be a cash loan or that it can be used to purchase inventory or finance receivables. It does not do that, so lets be clear on that. A good example of what some people don’t know the program can cover is software, as that can easily be financed under the program. We're talking about application software of course.

Let's get back to eligibility. Why so we think you are eligible? Simply that if you are a privately owned for profit Canadian company, with actual or projected sales under 5,000,000.00$ you qualify. Can you imagine how many companies there are in Canada that qualifies under those two simple guidelines? (In actuality approx 7400 companies in Canada entered into an SBL Canadian Small Business Government Loan financing arrangement.

Could you afford not to confirm your firm’s eligibility for the program? We certainly don’t think so, therefore consider seeking and talking to a trusted, credible, and experienced Canadian business financing advisor who can help you maximize the advantages of this financing program .





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 .Info re: Canadian business financing & contact details :

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

How To Get A Canadian Business Loan For Franchise Funding – Solid Franchising Lending Tips

They usually always start with only one question. Who is ' they '? Its clients with that age old question ' How hard or difficult is it to get a business loan for a franchise in Canada these days? They of course have made one of the biggest decisions in their lives/ careers, vis a vis becoming a franchisee in this booming industry - now the only problem is ...' What type of franchise lending and funding is available ?'

Well, we'll share with you some tested and proven strategies around franchise financing in Canada, focusing on completing a successful transaction in a minimum amount of time, with a finance plan that works for you, not just the lender!

On its own franchising has somehow become an industry with a strong and viable reputation. It, like all industries was hammered hard during the 2008-2009 recession; bus has bounced back strongly, even moreso than many other industries.

So, it becomes a simply two part question then, can you get a franchise loan these days, and more importantly, how?

There are some key factors to consider, one of which is simply aligning you, hopefully with a strong franchisor. So once you have made the decision to partner with a franchisor (we use partner because we think they need you as much as you need them!) you only need one thing. Whats that one thing?

It's a ' package '. By that we of course mean that you need a solid little package that convinces both the franchisor, and of course moreso the lender that you are equipped, from a financial and planning perspective to be a winner as a franchisee.

So what are the key elements of a successful winning plan? It's really pretty basic stuff, and in our experience many good franchisors have already done a good job of helping you prepare for this. Those key elements are as follows - an overview of your own background and experience, an overview of the franchisors business ( its your new business too, by the way!) and a solid financial plan that demonstrates two things: how you will make money , and of interest to the lender, what type of cash flow you will have to repay the loan!

It’s a bit of mis information when franchisees come to us having assumed the franchisor helps them get the financing. Some do assist in a mild sort of way, but we can assure you that you're on your own when it comes to achieving final success.

So the question then becomes how do you get prepared and qualified? Answers as follows! Get working on that business and financial plan we talked about. Identify the amount that you can contribute to the business, essentially your ' owner equity ', with the rest coming from your loan or loans. Typically a minimum of 10% and up to 30-40% is required.

It's always helpful to know how the last guy succeeded, don’t you think. In reality the largest per cent of franchise financing in Canada is done via a government sponsored loan that’s formally called the BIL/CSBF program. Why that loan , and why you should investigate it ?Some great reasons are 5-7 year payback terms, great market interest rates, no pre payment penalties , and you don’t even have to personally guarantee the full loan . Is there a better deal in town? Maybe, it just that we haven’t found it.

We also hasten to add that for any type of business loan, and certainly in franchise lending, the funding and approval of your loan assumes you have a reasonable personal credit history.

So, want to get with the program? Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you to meet your franchise funding and lending needs, today!




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 .Info re: Canadian business financing & contact details :

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

Why Canadian ABL Finance & Asset Backed Financing Loans & Lending Are An Important Development

‘A significant consequence ‘. That’s one definition of ' Development '. We think it’s a perfect one for describing how ABL finance and asset back loans and financing are becoming the ' go to ' for business financing in Canada. Let's examine why.

Two key elements make abl financing a step above a traditional bank line of credit with a Canadian chartered bank. Those two elements are ' collateral' and ‘liquidity '. Let’s focus on that for a bit. All asset based lines of credit for business revolve around your asset base. The amount and quality of these assets will drive the ultimate amount of the credit facility you achieve under an asset backed financing.

Canadian business owners and financial manager know only too well that the focus from a traditional bank perspective is not as much on the assets as it is your overall financial picture, which includes the income statement and your ability to meet ratio’s and covenants that are bank designed to protect their lending to your firm. We understand that, and we respect that... it’s just that sometimes it doesnt work for our clients.

Your firm could be in various key stages when you consider ABL loans. You could be a start up, you could be enjoying (and suffering) through hyper growth... and you could be fixing historical financial challenges or suffering thru some sort of business crisis or challenge now. That kind of covers the gamut, don’t you think. Which is exactly why we offer up ABL lending to clients looking for the 21'st century alternative to a business line of credit.

So how is your overall facility determined? It could not be much more straight forward - you borrow, on a daily basis, against the ' true ' value of your assets -hence the word ' asset' in ABL (asset based lending). Those assets typically are your A/R, your various stages of inventory (raw materials, work in process, finished goods) and fixed assets and real estate if that makes sense for your firm. (Those assets must be owned and unencumbered of course).

ABL lending distinguishes itself from traditional bank financing in that the firms offering this type of financing tend to view themselves as experts in ‘asset ' valuation and liquidation . What does that mean to you? Simply that you have just leveraged up your borrowing capacity significantly.

We remember one client who was a wholesale to the dollar store industry who leveraged a 200k bank line into a 2 Million dollar borrowing facility. How? The asset based lending facility had the expertise there to view the true liquidation value of the inventory. Simple as that. As a challenge call your banker up and ask what the margining base is for dollar store inventory and keep us posted on that answer.

A common question from clients involve the long term viability of this type of financing for your firm .First of all there is the cost issue, and here’s where it gets a bit complicated , because ABL loans can be cheaper, the same as, or more expensive than a bank facility . (We’re assuming you can get a bank facility!)

Secondly the ABL industry makes no bones about the fact that it is often a bridge solution for a year or two, allowing you to migrate back to what you consider a ' traditional' financing structure. We point out to clients though that ABL is more often than not the ' new traditional '! Historically it was viewed as distressed or alternative funding, that is absolutely not the case these days, with some of the largest corporations in the world utilizing this type of financing in Canada.

We can’t overstate the flexibility around ABL financing and lending. It covers special issues, seasonality, over advances on what you actually qualify for, and comes at a cost commensurate with any firms overall credit quality. Interested? We hope so. Intrigued? No problem! Consider speaking to a trusted, credible and experienced Canadian business financing advisor on the merits, benefits of the new age of business finance in Canada - ABL finance.


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 .Info re: Canadian business financing & contact details :

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

A Practical Cash Flow Loan ? What Type Of Working Capital Company Can Help Your Canadian Business

Practical - it refers to good judgment in action. That type of common sense definition is what Canadian business owners and financial managers seek everyday when they are faced with locating a cash flow loan or facility.

And it becomes a bit more complicated when they don’t necessarily know what type of working capital company is the optimal solution for their business needs .Lets shed some light on that subject with real world experience backing it up.

Naturally just the creation of additional sales revenue creates profit for your firm, but it’s clear to every business owner that is simply not enough, given the investment you then have made in current asset accounts such as receivables and inventory.

One Canadian solution available is the conversion of short term debt into long term debt via a working capital term loan. This creates a long term working capital component to your financial structure. Small and medium sizes firms can source this type of solution via a government related bank - larger firms can utilize mezzanine or subordinated debt type financing to accomplish the same goal... only from a larger perspective.

Not often thought of as a cash flow loan, but in reality it is the creation of a sale leaseback for assets your already own. You in effect sell the assets to a lessor or working capital company and create a similar cash flow loan along the lines of the term loan we had reference above. All these solutions achieve the same goal.

Probably the most popular method today of generating cash flow is the sale of receivables via a factoring or securitization type facility. The good news for Canadian business is that this type of financing is available for a 10k solution as well as a 10 Million dollar solution.

We seem to be continually explaining this type of solution to clients, and it’s frankly quite simple to understand. It’s your selling of your receivables as you generate them for cash flow... today. What makes it complicated, and we're not to proud of it we can assure you, is how the working capital company sometimes complicates things around how this whole process works, what it costs, and how it affects your company on a day to day basis.


When you exactly face the decision to go out and look for more working capital. Really it fundamentally comes down to three areas, starting a business, growing your business rapidly, and then simply financing those day to day activities because for some reason cash flow is failing you.

You have clear options in the Canadian business financing environment .Its a questions of knowing those alternatives and determining what is achievable based on your unique needs. Very typical fundamentals you should have under your belt are up to date financials, a strong sense of your cash flow needs (via a cash flow budget) and some ' education' on what facilities are available for a firm of your size and credit quality.

The premier working capital and cash flow loan solutions in Canada are as follows - receivable financing, a working capital facility that combines A/R and inventory, or a true asset based lending arrangement which replaces a bank facility but gives you higher borrowing margins. We of course also touched on the cash flow term loan earlier.

Three more esoteric ( but totally viable ) financing solutions for your business are purchase order financing, inventory loans, and financing your tax credits if you have access to them.

Complicated? It doesn’t have to be. Seek a trusted, credible an experienced Canadian business financing advisor who can assist in clarifying individual solutions to your practical business financing needs.



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 .Info re: Canadian business financing & contact details :

http://www.parkavenuefinancial.com/cash_flow_loan_working_capital_company_business.html

Where Will You End Up Without Canadian Film / Movie Tax Credits & Financing?

‘The Movie and Film Business is a cruel and shallow money trench, a long plastic hallway where thieves and pimps run free, and good men die like dogs. There's also a negative side."

The above quote has been attributed to quite famous U.S. journalist Hunter Thomson... it's in dispute apparently whether he made these comments on the music industry or film. Quite frankly though, we have made our point.

We recently saw a movie called "Made in Romania starring Jennifer Tilley ". The film has classic elements of a film tax credit scam gone awry in the worst way, from co production to poor planning, etc.

So that’s our trivia for today, what we really wanted to address was that Canadian Film and Movie tax credits, and their unique financeable features can save you from ending up somewhere along the lines of our analogies above .

Canada has made it very clear that it supports the film, TV, and emerging and fast growing digital animation industry by providing a solid finance tax credit mechanism that works. And you're already familiar with the strength and reputation of Canada’s government and banking policies, which are world renowned.

If you have a Canadian controlled private company (most producers of course set up a special purpose legal entity for each of their productions) you are eligible for tax credits, and have the further ability to monetize those tax credits for cash flow and working capital purposes. We would point out that it also includes co productions and various treaty arrangements throughout the world. (We’ll have to check if that includes Romania!)

So what do these film and movie tax credits include. Essentially when we're talking film and Television were referencing labour expenses ,production costs, and some really unique what we will call ' regional ' credits , which might actually drive where you choose to shoot principal photography, scene locations, etc .

Let’s provide a quick example, because we receive many calls from U.S. producers always quizzing us on some of the nuances of the system.
Let us assume you have chosen British Columbia as a location. The majority of the industry is driven to Vancouver of course, a major metro centre. But by filming outside Vancouver and additional 6% of tax credit becomes available. We suspect it’s because of the ability of your production to drive employment and spending in non city areas... but who are we to judge? Ours it to utilize!

The reality is that this is Canadian financing of utilization of tax credits requires some expert help, so your ability to align yourself with a Canadian film tax credit financing expert is valuable from a viewpoint of maximizing your claim .

How the tides have turned, because the majority of interactive media and film and TV principals in the industry are currently quite bullish according to polls conducted by one of the major accounting firms that specializes in this area. The ability to reach your audience through a variety of media increases everyday.



Financing of your claims can be a tremendous boost to your overall production budget from a cash flow perspective. You can finance your claims on completion, or utilize accrual type financing, providing cash flow during your spend.

Want to avoid a huge part of film, TV, and digital media budget financing stress. Speak to a trusted, credible and experienced Canadian film tax credit financing advisor. Maximize your credits, and by the way, here’s one more great quote about your industry. Let Canadian film and movie tax credits get you to the final destination -->



“Shooting a film is like taking a stagecoach ride in the old west. At first, you look forward to a nice trip. Later, you just hope to reach your destination.”
- Francois Truffaut



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 .Info re: Canadian business financing & contact details :

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

Hard To Believe – Lease Finance Tips for Operational Financing of Assets – A Financial Win!

Isn't it all really about growing your business? That is why lease finance, utilized properly becomes a solid competitive strategy for your Canadian business financing needs.

Whether it’s operating leases (some owners call them ' operational ‘) or lease to own capital leases your ability to match the financial solution to your asset acquisition needs can create a viable option to complete your financial strategy.

But solid insights into how Canadian equipment and lease finance works sure can help, as the market is fragmented and has numerous players , all promising you different things, and all trying to fit you into their ' box ' - which you might find won't fit once you're inside!

A frequent term utilized in lease financing is ' lifecycle '. Let's look at that in a number of ways. In its most common use it refers to two things - matching the financing you utilize to your useful asset life, and at the same time choosing the type of lease that works best for that particular asset, and your balance sheet.

Utilizing the right type of lease will end us satisfying owners of the firm, and its creditors, relative to new debt being acquired. We talked about those ' operational ' leases, more commonly called off balance sheet operating leases. They have the ability to eliminate additional debt on the balance sheet ( trust us its still there, just not on the balance sheet !) as well as keep your ratios intact if you're operating within bank guidelines around debt to equity, cash flow, etc.

Those operating leases tend to work really well when you are in a technological environment, a good example being computing and telecom.

Quick example - let's say you are doing a major computer upgrade and total cost of all hardware and software is $1,000,000.00. Getting back to our lifecycle comment you typically would finance this over 3 years (given the fast changes in technology). A capital lease at today’s competitive rates would typically generate a monthly payment obligation of approx $30,000.00 - and at the end of the lease term your firm is the ‘proud owner ' of 1 Million dollars of computer hardware and related items. We'll come back to the word 'proud '.

However, that same transaction, utilizing a lease financing operating (operational) strategy would yield a payment obligation of only $24,000.00.
And oh yes, would you really feel that 'proud' about owning a 3 year old computer system - we think not, that’s why that same operating lease can provide you with lifecycle management flexibility, allowing you to return, extend, upgrade, or purchase if you choose . It’s a right though, not an obligation, and that’s important.

All clients, whether we like it or not, focus on rates. Of course they are important, but we caution you that you can have the best rate and monthly payment in town and pay dearly for being in the wrong type of lease financing strategy with the wrong options available to your firm.

And do you want to know the true reality of ' rates ‘. It’s that you get to pick you own. Surprised? You shouldn’t be, because in effect your own credit quality actually drives your final rate - as it’s a competitive world out there. We can usually tell within minutes what a competitive rate band you might find yourself if, if you'll share some key financial disclosure on your firm.

Finally, industry knowledge. Is there a way you can navigate Canadian equipment financing waters successfully, in a manner that makes sense from a time and cost perspective. There are hundreds of lease finance firms, all have different criteria, some do large complex deals, some only small ticket deals and all have varying levels of financial disclosure required by your firm.

The solution? Seek a trusted, credible and experienced Canadian business financing advisor who is independent and focuses on financing the type of transaction you need at rates, terms, and structures that you deserve. Expertise and service that will be guaranteed.




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 .Info re: Canadian business financing & contact details :

http://www.parkavenuefinancial.com/lease_finance_financial_financing_operational.html