The Choice Is Yours – A Canadian Bank Line Of Credit – Or Alternatives To A Business Operating Line

Lawyers, Guns and Money - You need neither of these to ensure you have access to a Canadian bank line of credit. We simply love that term, it’s actually the title of a great song by Warren Zevon.

But you do need to ensure you understand the difference between a business line of credit in Canada, what you need to qualify, and how these facilities work. More importantly, are there alternatives to this type of operating line financing. There are!

Naturally Canadian chartered banks are the first stop in a business owners or financial managers mind when determining a source of operating financing and working capital.

From a banks perspective it’s a very strong focus on your ability to achieve the amount of operating credit you need - secondary to that of course comes your overall collateral.

It's sometime easy to forget why bank credit is sometimes difficult to obtain - we sometime forget to focus on the fact that our banks in Canada have to obtain the right capital base relative to what they lend - they have their own issues relative to profits and maintaining liquidity. That then affects your business, because your collateral, cash flow, collateral and guarantees directly impact your ability to access their credit facilities.

Unfortunately many clients often find themselves placed into a ' non performing' loan status because your financials don’t fit into what the bank considers a performing well loan. The reality is that if your business is growing you are using cash, not generating it, and that becomes a prime challenge in getting the amount of business credit you need.

It's a bit of a balance act at all times of course, the irony is that bank interest rates on a business operating line of credit are absolutely the lowest cost of financing in Canada .

We have often thought that the actual ratios and financial covenants that come with bank credit are much more important than the Canadian business owners need to get the absolutely lowest rate in bank financing - typically that is 1-2% over prime. You never want to be caught in the trap of managing your business because of what your bank covenants say.

For small and medium sized businesses in Canada the issue of personal and even spousal guarantees becomes a large one. Canadian chartered banks want to ensure you maintain that repayment responsibility - unfortunately the guarantee is one way of doing that. Many Canadian business owners therefore take great care to separate their business and personal lives when it comes to assets.

So, if a bank is the absolute low cost financing for a business operating line of credit is there any better alternative? There definitely is and it’s called an ABL (asset based line) revolver .Its specialty business financing, focusing on your firm’s assets, not your cash flow or personal guarantees or outside external collateral.

ABL lending facilities can give you all the financing a bank line of credit then. Rates are often competitive, but in many cases more costly. But at the same time you're managing and growing your business, not reacting to ratios and loan covenants.

Want clarity on a bank line of credit, or its alternative, an ABL facility? Seek out and speak to a trusted, credible an experienced Canadian business financing advisor who can assist you in the completion of either facility.




7 PARK AVENUE FINANCIAL
Canadian Business Financing
http://www.7parkavenuefinancial.com/bank_line_of_credit_business_operating_line.html

Preparing For Financing Accounts Receivables in Canada - AR & Contract Finance Must Knows!

Thinking of diving in? There isn’t a day when we don't get questions about the basics regarding one of the most valuable tools that small and medium size business owners can utilize for financing accounts receivables for the cash flowing of their ar and contract working capital investments.

However, there are many misconceptions about ' factoring ' (that’s the common terminology Canadian business owners use, and the issue of how pricing works for this type of financing is miss-understood by many.

The essence of this type of financing is actually quite simple - how it’s presented to clients and more importantly how it works on a day to day basis is where it gets confusing. But if you have the following basics down we can assure you that you'll be well prepared to both enter into such financing, and, more importantly succeed with it.

As stated, it’s not as complicated as you think - although others do a good job on that one. Factoring of financing accounts receivables is simply the sale of your ar (A/R) and contracts to generate immediate cash as you require it.

This allows firms that are much smaller or who have any of a myriad of financing challenges (high growth, a poor balance sheet, financial losses) to still win at the working capital game.

There are three main reasons you probably want to consider ar finance. The first of which is simply that the cash flow you obtain in this type of Canadian business financing allows you to maintaining daily operations and in many circumstances take discounts with your suppliers terms to your own firm . That inevitably, in our experiences enhances you relationships with your valued suppliers.

Secondly your firm simply might not be able to currently obtain all the financing you need from what we typically call ' traditional' financing sources, aka the banks. The third situation, and most appealing to many clients is simply the fact that you wont be losing sales and revenue opportunities at the expense of your competitors, who either are better financed... or perhaps already beat you to the a/r factoring solution.

Numerous other miscellaneous situations exist to consider this type of financing - they include speed and ease of approval. As well the inherent nature of this type of financing creates no upper limit on the amount of funds you can borrow.

So let’s cover 6 basic that you have to have under your belt to be successful in financing ar and accounts receivable.

First of all, your overall credit policy shouldn’t change because of A/R and contract financing - you are still responsible for any bad debts under a typical recourse agreement.

The most valuable piece of info we share with clients is that there exist a type of A/R financing that allows them to bill and collect their receivable confidentially. 99% of their competitors out there who use this financing are bound to notify your clients when you generate your invoice. We find that intrusive in the Canadian marketplace. We term this type of financing C I D - Confidential invoice discounting.

‘How much can we get?' is the typical client question. The answer is generally 90% of any invoice is advance to you the same day you generate sales. The balance is a reserve or holdback that is paid back to you (less the financing costs) when your client pays.

Pricing! You thought we would never get there, right?! A/R financing and its pricing varies significantly in Canada. Typical rates are 1-3% per month. This is where a trusted and experienced advisor can save you thousands of dollars relative to how a facility is priced, how it works, covering off all the small nuance which can add up both favorably and unfavourabley if not well managed .

Finding the right partner firm is half the battle in ar and contract finance in Canada. And the special C I D facility type we mentioned is worth its weight in gold.

Interested? Want to know more about benefits of financing accounts receivable in Canada? Speak to a trusted, credible and experienced Canadian business financing advisor today.



7 Park Avenue Financial
Canadian Business Financing
http://www.7parkavenuefinancial.com/financing_accounts_receivables_ar_contract.html

Looking For Loan Or Lease For Business Financing ? Finance Your Canadian IT & Industrial Assets

Canadian Business owners and financial managers want to be in a position to benefit from lease for business financing. Whether it’s a lease for industrial or IT (information technology) assets the goal is to achieve or maximize the benefits of the assets via use.

Asset financing in Canada consumes capital - and a lease for business financing simply is your alternative to that capital consumption, it conserves working capital and cash flow.

The good news about asset and lease financing in Canada is that it covers all types and sizes of assets. At the end of the day the collateral value of the asset , including software by the way , as well as your firms general credit quality drive the lease financing decision from the viewpoint of your new business financing partner, the Canadian lessor .

In the 2011 environment equipment financing and leasing is on a roll, and that’s an understatement! The industry is back up off its back, having survived the 2008-2009 recession and global financial implosion. The only decision you have to make is quite frankly to find the right lease partner. That choice in an of itself can often make or break your success in a lease or financing loan. (Sometimes a bridge loan is a solid alternative to an equipment lease financing.)

Quite frankly the challenge many clients face is simply knowing where and how to find the right lease financing solution, whether it be for industrial or IT assets to compliment their asset financing strategies. Lease companies in Canada cover a broad spectrum - some are bank based, some are independent, with either U.S. or Canadian ownership, and some actually are foreign based.

It is highly recommended to work with a lease partner that knows both your industry and is also the type of assets that you wish to finance. This becomes your goal and is often a challenge for many Canadian business owners and financial managers. Don't forget that when a lessor understands your industry and your asset you have a significantly higher chance of reaching what we term ' lease nirvana “. What's that? Simply financing that has the right rate, term and structure for your firms needs and cash flow requirements.

Although your firms credit quality often plays a key consideration in a lease for business financing approval it’s also the value of the asset that drives that final credit decision. Customer with less than stellar credit, even start ups by the way, have a solid chance to obtain lease equipment financing simply by virtue of the value of the asset they are acquiring. And that’s a good thing.

Key issue to consider when acquiring an asset, either industrial or IT in nature are the term of the lease, the ultimate disposition of the asset - (keep it? Re finance it? Return it? ) and how a lease financing loan works into your overall finance strategy.

Looking for the ideal lease for business solution in Canada? Speak to a trusted, credible and experienced Canadian business financing advisor to determine how you can benefit from Canada's most popular form of business asset financing.





CANADIAN BUSINESS FINANCING
7 PARK AVENUE FINANCIAL
http://www.7parkavenuefinancial.com/lease_for_business_industrial_it_financing_loan.html

What You Didn’t Know About The Canadian SBL Government Small Business Financing Program

SBL? It’s the Canadian Small Business Financing Program and is sponsored by Industry Canada which is an independent part of the Canadian government. It is in our opinion the best program from start up, small, and medium sized businesses in Canada. We're going to tell you why, and cover off 6 things you may not know about the program, providing clarification on each item.

Is it a financial assistance program? Not really, but its certainly a great financing , at solid rates, terms, and even structures that many much larger corporations could not achieve . We love providing our clients with an overview of 6 different elements of the program.

Let’s cover off the six key areas that continually come in the form of questions from Canadian business owners and financial managers. What are those areas of concern? They're as follows: eligibility, loan size, terms, interest rates and fees, pre payment, and finally, what assets can be financed!

Let's dig in. Eligibility. That’s a good place to start, i.e., do you qualify? The SBL small business financing program (also called BIL / CSBF) is open to incorporated or unincorporated businesses in Canada with less than 5 million dollars in actual or project sales. The program covers off 90% of any item you wish to finance based on what is financeable under the program. To qualify you should be a Canadian citizen as an owner of the business, and, in general you should ensure you have a decent personal credit history. Certain credit scores at the credit bureau will allow you to determine if you are acceptable in this area. Any time of business, service or asset based can come under this government loan program.

Loan size... ie how much can we get? That’s the typical question we get from clients. The program actually goes to$ 500,000.00 but that’s for real estate only, all other assets and leaseholds financed under the program cap out at a loan amount of 350,000.00$.

What terms are available under the program? Typically most transactions are done on a 5 year fixed term basis, although in a lot of circumstances a 7 year repayment term can be requested. That 7 year payment term will definitely lower your monthly payment and make cash flow work better for you when you need it.

Many clients assume because the SBL small business financing program often finances start ups and weaker companies in terms of assets and historical performance that rates are high for the loan. You couldn’t be more incorrect as rates are at 3% over prime, and the one time processing fee of 2% can often be also financed as part of the loan.

99% of financing in Canada for items such as leases or term loans, etc come with no pre payment options .Again, here our program shines, as pre payment can be made at anytime, without, you guess it , any penalties . It can’t get any better.

If there is one item of confusion constantly in our clients minds it’s the issue of what can be financing under and SBL loan. It is not a cash loan, and the only assets that can be financed are equpment, software, leaseholds, and real estate.

What do you think? Do you agree with us that this program is a solid one ?We certainly think so, and if you're interested in more info seek and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you to prepare a successful summary and application . It's Canadian business financing with a spin on win/win!





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/sbl_small_business_financing_program_government.html

Canadian Business Financing Smackdown? ABL Asset Based Loan Financing vs. Commercial Bank?

It's probably just us, but we been enamored recently by the word ' Smackdown' which denotes a ' battle or severe beating between two parties '. Somehow it's just a neat word! Which got us to thinking... who would win a Smackdown between ABL asset based loan financing and a Canadian commercial bank line from one of our Chartered banks in Canada ? !

We secretly often root for the ABL facility, but we're going to let you decide, the Canadian business owner and financial manager.

ABL financing is one of the few areas that have grown significantly in popularity over the last several years. When the economic implosion of 2008-2009 happened thousands of Canadian businesses started to review their financing options with either their banks or on their own accord. It was ugly... lines of credit were being lowered or pulled in and it simply got a lot hard to write a cheque, make a payroll, etc.

We guess this is the day for ' sayings' because out of necessity came the mother of invention - enter ABL financing. But why does ABL asset based loan financing flourish when other forms of business financing don't?

It's because ABL financing looks at risk management in a whole different manner than a chartered bank. Banks base all of their borrowing on their own issues, such as capital ratios and capital bases, and adjust their risk accordingly. They do a great job of that, and quickly have become world acknowledged as leaders in risk and financial stability. But, at whose expense? We think you know the answer. Yours! Because when banks manager commercial bank loans their do it in a manner that addresses their own issues, ( not yours ) by imposing rations, covenants, the needs for outside collateral, and a strong emphasis on personal guarantees .

But what about our friend ' ABL ' sitting in the corner. It generally uses none of those, simply focusing on the assets you have in your business to allow you to generate maximum liquidity from a business operating line of credit.

So does ABL cost more... and whats involved, if in fact you accept our premise that it’s potentially a better type of financing for Canadian business.

ABL can cost more; sometimes significantly more, and sometimes it can cost less! So don’t forget that. Additionally, as the total focus of an ABL asset based line of credit is assets expect to be able to prove the value of the assets being financing, which include receivables, inventory, fixed assets such as equipment, and yes, even real estate. All of those assets are in effect thrown together to get you a business line of credit that makes sense, and focuses solely one item- your assets. Because you borrow against all those assets in a bulk facility, daily, as you need it, be prepared to show you can report properly and methodically, either weekly or monthly, on items such as aged receivables, inventory. Etc.

Trends rarely lie. Certainly not at the outset! So its no surprise that thousands of Canadian firms are gravitating to asset based loan financing for their lines of credit. Abl lenders take more risk (bad for them ... good for you ...) and that risk and return issue they face translates into more liquidity for you.

Is there a perfect answer to our question on who would win the Smackdown? We're not sure, but we do believe that if you seek and talk to a trusted, credible and experienced Canadian business financing advisor that you will be in a better position to determine which business financing solution works best for you when it comes to a business line of credit.





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_asset_based_loan_financing_commercial_bank.html

The Working Capital Lifecycle - Canadian Business Cash Flow Loans and Financing

It's all about the lifecycle. We think that’s a great way to look at how Canadian business owners and financial managers can look at the different stages of life their business is in - all of which relates back to business cash flow and working capital needs. The bottom line - Different types of loans financing options are available at different stages of your firms lifecycle.

Let’s examine what that lifecycle is about and how knowing what stage your business is in reflects the kind of working capital you need.

Start up firms grows from great or aspiring ideas. This is when capital is most often a real challenge, and the combination of owner equity and debt becomes the total issue for the entrepreneur. As the company starts to gain traction and grow revenues in the early years financing comes from both traditional and non traditional sources.

It's important to spend time at this stage in the lifecycle to determine the amount of capital you need, on items such as operations, inventory, facilities, etc. Doing your homework at this stage in the lifecycle will prevent many future problems!

Inevitably many firms face a growth crisis. This is one of the key areas of the company lifecycle we'll address in looking at some solutions to this often challenging time in any business owners life.

As the growth challenges are solved (hopefully) businesses transition into maturity and inevitably look to a transition of some sort - i.e. sale, divestiture, merger, wind down, etc. The bottom line, we've just walked you through the business lifecycle.

Who can assist you in the challenges of solving various challenges at different points in the lifecycle? Typically people such as your lawyers, accountants, bankers, and consultants and advisors are the ones with solutions.

When clients ask us about working capital and ' the bank ' we always only say one thing - it's the banker, not the bank. The ability to find a great commercial banker is worth its weight in gold .Your ability to find a competent and confident commercial banker who can point out the sources of traditional bank financing and then execute on them for you is invaluable.

Having collateral and assets is critical in a working capital bank borrowing environment. No matter how you look at it, in Canada that borrowing is also going to require both personal guarantees and potentially collateral outside of the business. You can’t escape that requirement in Canadian business cash flow loan financing.

Many of the clients we deal with either cant access traditional bank capital, or choose not to go that route for reasons of the guarantees and collateral we mentioned. That’s when non bank financing becomes an alternative solution.

Solutions such as receivable financing, working capital facilities, asset based lending, and financing of your tax credits can all ensure you have access to business cash flow. While some of these solutions are more expensive than bank financing they are more readily obtained and still improve your balance sheet and allow you to build your business.

It’s often the balance sheet which can help you determine which stage of the business lifecycle you are in. Your ability to expand, pay your short term bills such as suppliers, loans, etc are keys to the business lifecycle. Naturally larger more established companies have more assets, and ' wiggle room ' we can say to address working capital issues.

Good business cash flow solutions will make your company more viable at any stage of the business lifecycle. Your ability to borrow during any stage of the business lifecycle allows you to move forward to the next stage of transition in your company.

Want to discuss any working capital solutions, allowing to you plan, and not react to cash flow challenges. Consider seeking and talking to a trusted, credible and experienced Canadian business financing advisor for help in obtaining alternatives to address your cash cycles.




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/working_capital_business_cash_flow_loans_financing.html

The Magnificent 7 Reasons For Equipment Lease Finance - Make Canadian Asset Finance & Leasing Work !

Recently we wrote on the subject of providing 3 great reasons for Canadian companies to strongly consider equipment lease finance as their financing strategy in the acquisition of new equipment. Financing assets has never been more easy.

The essence of those three reasons we discussed were the concept of 100% financing of assets, utilizing leasing and financing as an inflation hedge, and finally the ability to get a better handle on the useful economic life of any asset you acquire. How? By matching the term of your lease with cash outflows of lease finance.

But... guess what. There's more. Let's discuss 7 other solid real world considerations for Canadian business owners and financial managers considering equipment lease finance.

Timing. Many lessees (that’s you) have important deadlines, vendor issues, competitive issues, etc. Unlike banks or other finance firms leasing companies in Canada are only focused on one thing - funding your transaction. So whether it’s a 900 $ micro ticket deal, or a 9 Million dollar piece of mining equipment you will always get it done faster (we believe) by working with an independent specialized lessor. This impacts time you may waste on legals, documentation, and credit approval, all of which are important to clients.

Additional add ons - that’s reason number 2 today. It makes sense in business to bundle (don’t our telcos and cable companies do a good job of that. In a leasing and financing transaction you can add in a lot of extras, for financial and convenience issues and benefits. I.E. maintenance, insurance, delivery, training, etc.

Reason # 3- The accountant in the corner... you know who we're talking about, the guy with the proverbial ' budget '. Leasing eliminates capital budget issues, operating versus capital issues, and cash flow challenges. Could leasing have made that guy any happier? We don’t think so!

Reason # 4- lender restrictions and covenants. Utilize creative financing providing by such vehicles as operating leasing and financing to eliminate covenant, off balance sheet, and ratio issues. It's a complex world in commercial lending, but a solid lease financing partner can help you work through a lot of issues that otherwise could restrict your ability to properly acquire the financial assets you need.

A lot of accounting rules are changing out there... some people predict the death of operating leases. We're not sure, but we are sure that lease accounting is one more thing in your finance toolkit that gives you something to work with.

Reason # 5- the proverbial monthly payment. Want it fixed, or perhaps variable. Want some cash flow seasonality in your lease structure..? No problem. Step up? Step Down? Step leases are payment structures that alternative according to seasonality, budgets, etc. If you need them, they are there!

Reason # 6- Working capital considerations. Your ability to achieve significant financing via leasing allows you to preserve credit lines and cash flow. You can spend all the time you want on lease versus buy analysis - but at the end of the day cash is king as Canadian business owners and financial mangers well know.

And finally, reason # 7 of our magnificent 7! Flexibility and asset obsolescence management. The right type of lease financing allows you all sorts of flexibility re rights of return, termination, upgrade, purchase of the asset, etc. Investigate them, use them.

Speak to a trusted, credible and experienced Canadian business financing advisor on how the reasons to utilize lease finance for asset finance can work for your firm .




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/equipment_lease_finance_leasing_financing.html