How Canadian Cash Flow Finance & Mezzanine Lending & Financing Differs From Lenders Offering ABL Solutions

Does Your Firm Qualify for True Cash Flow Financing and Mezzanine Lending in Canada ?



Information on cash flow finance and mezzanine lending in Canada . How do ABL lenders differ from cash flow and ‘ mezz ‘ lenders in the Canadian business financing environment ?



We often speak to clients about ABL - true asset based lending , and they can definitely be forgiven for sometimes mistaking that form of financing with true cash flow finance and mezzanine lending in Canada offered by a small number of commercial lenders . Let's explore some of those key differences in true cash flow lending.

It clear to us that part of the confusion lies in the fact that a number of different types of lenders are inter mingled in offering mezzanine lending and financing services in Canada .They might be Canadian chartered banks, in a small handful of cases those some ABL lenders that are causing us confusion differentiation are also offering cash flow loans in addition to their asset financing service . And firms not commonly known to many medium sized businesses in Canada, such as hedge funds, private equity firms etc also make up our mix.

Cash flow finance loans in Canada are true loans, unlike ABL services which are simply the monetization of current and fixed assets. Cash flow financing in Canada is about all those things we threw out the door when we spoke of ABL financing - things such as your firms total value, profitability multiples, and cash flow coverage.

Mezzanine and cash flow lending amounts are related directly to Ebitda and multiples thereof. Depending on the size of the transaction , who is doing it, and your overall credit worthiness within your firm pricing is very competitive to traditional Canadian chartered senior bank debt financing, but can also run into the ' teens ' when it comes to unsecured cash flow loans .. Mezzanine lenders register their 2nd place position but are clearly unsecured, resulting in that difference in pricing when it comes to a senior secured cash flow loan.

In ABL financing we speak of your firm’s ability to first of all have assets, and secondly your ability, together with your ABL partner to monitor and report on those assets. That isn’t the focus in cash flow finance and mezzanine lending, so you clearly should expect those periodic and sometimes expensive audits.

While many ( but certainly not all ) clients entertaining asset based lending in many cases have significant challenges , cash flow loans are truly made to firms who have profits, cash flows, and strong financial fundamentals .

We would also point out that mezzanine lenders, because they are offering a hybrid type of financing often will ask for some sort of equity ownership, usually in the form of a warrant .. ie a right to purchase some equity in your company .

How does a firm know if it qualifies for true cash flow finance? Simply put, as we have said, your firm must be generating significant cash flows. Your borrowing ability will be related very, and we repeat, very directly to the amount of historical and projected cash flow you generate.

To successfully generate a cash flow finance or mezzanine loan you need to have a strong sense of the limited Canadian market in this area of business financing .Having a solid handle on your cash flow coverage and leverage ratios is key.

We've therefore demonstrated some of the key differences between Asset Based Lending and Cash Flow and Mezzanine Financing and lending in Canada. When considering this type of financing speak to a trusted, credible and experienced Canadian business financing advisor who can assist you to navigate this little know sector of business finance 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 . 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/cash_flow_finance_mezzanine_lending_lenders_.html

5 Things You Didn’t Know About The Government Small Business Loan In Canada - SBL Federal Loans Info

Use This Info For The Payoff in Canadian Small Business Financing

Information on common questions surround the government small business loan in Canada . How do these federal loans work and what must business owners need to know to maximize the program .



Can we ask you a simple question? Actually, if it’s ok with you, we'll ask 5 questions, and we trust and hope you will gain some valuable knowledge about the Canada government small business loan. Federal loans under the CSBF / BIL program could be your secret weapon in Canadian business financing.

Ok, so let’s get the questions out of the way first and onward to those answers! Here are our 5 key shares around the program based on questions we continually get from clients.

Why should we finance equipment with federal SBL loans? What are the basic requirements of the program? Can the government small business loan be used to refinance business debt? Can we use the federal loans program for cash flow and working capital? And finally can we purchase a business via the SBL loan?

Great questions, and now hopefully some surprising answers! Here we go.

Equipment and lease financing in Canada are solid alternatives for the financing of your asset acquisitions. Numerous lease finance options are available, so why does it make sense to use the SBL program for equipment financing. For a start the small business loan program in Canada finances 90% of your equipment financing needs, the other 10% comes in the form of your down payment, which the program refers to as your equity in the transaction. Numerous lease scenarios may require either larger down payments, first and last monthly payments in advance, and in some cases might have a higher level of credit due diligence requirements .Equipment can be financing on terms up to 7 years, and typically that type of term may not be available through lease financing scenarios.

So what about those basic requirements of the program? The government small business loan requires the aforementioned 10% owner equity in your financing. Business owners and your business should have a reasonable credit history; you also should be ready to prepare a simple cash flow forecast that allows you to demonstrate repayment of the loan. Typically no other collateral is required for federal small business loans in Canada. We determined over time that it makes great sense to be able to properly demonstrate that you have sufficient management experience in your business and industry, whether you are a start up or an established firm.

On to our third question - can you utilize the loan to refinance existing debt .The short and simple answer is that any debt you wish to refinance in terms of equipment, leaseholds, software, real estate, etc can be financing within a 6 month window. Example - if you bought a major piece of equipment 5 months ago it can be refinanced under the program, bringing additional cash flow and capital into your business.

Can the program be used for cash flow and working capital? Simple answer = No! Unlike the U.S. equivalent of the program the government small business loan is massively understood by many, thinking it’s a cash flow loan. The program only funds equipment, leaseholds, and real estate.

And on to our final question. Can you purchase a whole business via SBL federal loans in Canada .Categorically yes if the business purchase is within the government loan cap you absolutely can purchase a company, competitor, franchise, etc using this program? Some very basic steps apply, including an appraisal of the business you are buying for example.

Well there you have it, 5 answers to common questions we get from clients everyday on Canadian government small business loan. Want more info, or wish to explore other issues pertaining to your financing needs around this great program? Seek and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in maximizing benefits of the 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 . 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/government_small_business_loan_canada_loans.html

Within 30 Days You Could Have The Business Loan For Your Franchise Finance Funding For Your Franchise Investment

Here’s How Franchise Financing Works In Canada

Information on franchise finance funding in Canada . How you can complete a business loan financing in 30 days or less using established criteria for financing success .



They say timing is everything in business. So, if that’s the case then how much time do you need for franchise financing funding for a business loan when you've made ' the leap '?

By the leap we are of course referring to one of the larger decisions in your life - buying a franchise and starting the new life of an entrepreneur. In some cases you may have already owned a business, or in the majority of times you are transitioning from company life to your company life!

Your chances of financing are positive if only for the reason that the industry as a whole is perceived as having established business models that don’t require the chance or large advertising expense that many other new start ups would .

So while a lot of the ' keys to success' are already in place the only one that isn’t in place is of course a business loan for your financing! Although that business model is there remember also that you have additional issues to address outside the norm of buying any other non franchise business - things such as franchise fees and royalties.

So how do you fund your franchise start up, or alternatively the purchase of an existing franchise that the current franchisee wants to sell? (Don’t forget to ask him why he or she is selling!)

In 99% of cases we see you can almost certainly expect no direct financing from your franchisor - they want new franchisees, not loans on their books.

So do banks in Canada finance franchises, because going to a Canadian chartered bank or credit union is where logically most of our clients first seem to go? Well the answer is threefold, yes, no, and maybe. From the maybe perspective we suppose if you have an ultra strong net worth, long time bank relationship that you might in fact receive some sort of direct financing from the bank. But the reality is that really doesn’t happen in Canada.

So are the banks out? Not really, because they are the administrators of the government BIL program which funds thousands of franchises in Canada. While the BIL program was not tailored specifically to franchising in Canada it certainly has become a poster boy for the franchise industry.

So, could you actually complete a financing in 30 days, as we have noted? Absolutely, positively, yes. In fact many financings we've completed have been done in less time based on a few key things being in place.

First of all, find a banker. Not hard you say... there are thousands. Well the reality in our experience is that only a small subset of bankers understand the program and have the ability to execute on a BIL franchise loan quickly, and effectively, and by effectively we mean approval.

Rates and terms of a franchise BIl are exceptional considering your business is in effect a start up. Additionally the amount of funds you have to permanently commit is in the 10% range, so what could be better than that. We recommend to all clients that they set up their own investment as a shareholder loan on their books, so therefore you and the bank BIl are the main creditors of the business.

To properly complete franchise finance funding in Canada you need to address your start up costs, as well as your working capital. Don’t forget also to give some thought to the long term growth of your business from a cash flow and working capital perspective. Additional financing for franchises in Canada often comes from specialized equipment financing or a term loan for cash.

A business loan for a franchise is completely in a timely fashion when you have a crisp business plan, cash flows that make sense, and a solid story around yourself and the franchise. Being prepared on such key issues as documenting your own background, identifying the amount of funds you will put into the business, and being able to highlight your business skills and personal credit history all need to be addressed.

So, 30 days or less? Absolutely possible. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you to meet your franchising finance 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 . 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/franchise_finance_funding_business_loan.html

Heard Of The New Paradigm Shift In Business Lines Of Credit ? ABL Asset Based Finance Is Changing Canadian Business Financing

Why Asset Based Lines Of Credit Give You A Commanding Lead in Business Financing

Information on ABL business lines of credit in Canada . Why Asset Finance lending & Financing give you an ‘ all in one’ credit facility.


We're sometimes reminded of the old bank joke concerning the sign on the bank window that says ' We can loan you money to get completely out of debt ‘...! Anyway... sometimes achieving the business financing you need isn’t always about debt. We're talking in this instance about a new paradigm shift ' in business lines of credit - namely ABL asset finance financing.

A paradigm shift is defined as ' acceptance by a majority of a changed belief or attitude or way of doing things ‘. That’s why we couldn't think of a better way to describe why ABL asset based lines of credit might be the solution for you business financing needs.

Can we all agree that it has been more challenging for Canadian business owners and financial managers to access the commercial line of credit financing they need to grow or simply survive in their business? Often times an ABL facility can be the solution that becomes what we could call a ' double whammy ' - it clears up a lot of current challenges and then focuses on the financing to grow you company .

What could those current challenges be then? It might be converting some senior secured debt into party of your new revolving credit facility, of paying off any arrears that you have with either suppliers or the big guy... aka Canada Revenue Agency!

ABL asset financing is a non - bank asset based line of credit that becomes your new ' revolver' line of credit. Typical facilities secure receivables, inventory, and in some cases can include fixed assets and real estate as party of your facility. That’s a powerful combination as you can imagine.

So where does our paradigm shift come into play? Simply that whatever you may have thought about a Canadian commercial bank line of credit somewhat goes away in the context of ABL asset finance. Receivables tend to be margined at 90% (for A/R under 90 days) and healthy advances on inventory based on its real world values now - something that has been often difficult to achieve in the past for many Canadian firms.

And what about the credit criteria used to approve such facilities. Suffice to say that they are different! Companies that are growing quickly but only just recently profitable or perhaps who had a loss last year are still 100% eligible for ABL financing. In many instances even the issue of ' concentration ' can be dealt with...namely your reliance on one or just a few customers for a large portion of your firm’s revenues.

The paradigm shift for these newer business lines of credit in Canada is significant. Your assets, the size of the facility (facilities range from 250k to the tens of millions of dollars) or the industry you operate in can effectively be dealt with in Asset based line of credit.

Probably the most important benefit of this type of financing for Canadian firms is their ability to satisfy day to day working capital and cash flow needs while at the same time being able to satisfy order demand for their clients.

In many cases Canadian small and medium sized firms are financed almost totally by the owners , in effect self financing but limiting growth ABL non bank financing provides an all inclusive facility to address daily and long term needs, its as simple as that .

If your firm has good management, growing sales, and the ability to produce good products and services while at the same time maintaining good financial statements on costs, asset quality, etc you are clearly a candidate for the new paradigm shift in Canadian financing.

Speak to a trusted, credible and experienced Canadian business financing advisor on why it might be time for you to seriously consider the new paradigm shift in business financing - asset based lines 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 . 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/business_lines_credit_abl_asset_finance_financing.html

You’ve Got Working Capital and Cash Flow Problems – We’ve got Canadian Business Financing Loan Solutions !

Working Capital Management Finance Strategies


Information on working capital and cash flow financing solutions in Canada via a business loan or asset monetization strategy .How Canadian small and medium sized firms finance themselves today.

It becomes evident at numerous times in the life of a business that some form of outside financing is needed. Let's look at some of the situations that your firm finds , or might find itself in and what types of Canadian oriented working capital and cash flow financing business loan solutions are available.


Some times the best problem is the worst problem - by that we mean that you are growing and growing quickly. Alternatively many clients we meet are experiencing some sort of challenge - it might be a financial loss in the current or previous year. And most commonly it’s a case of financing those current assets, i.e. A/R and inventory to bring in liquidity to the company for normal ongoing operations.

Three solutions are available to the Canadian business owner of financial manager. They include taking on more debt (not optimal or often desired), bringing in a partner for additional permanent equity and working capital, or, our favorite ' Monetization ' (Back to that one later)

If your company is not leveraged, or should we say over leveraged and can handle additional debt that is not necessarily a bad thing. For the majority of firms and industries in Canada a debt to equity ratio of 2 or 3: 1 is generally viewed as acceptable by the people that count. (Banks and other lenders!)

Raising private equity for a small to medium sized business is generally difficult and challenging in the Canadian business climate. We've seen numerous clients take the public financing route via a reverse takeover or utilizing a capital pool... our simple observation on that ?... In general things never seem to work out! Let's leave it at that.

When studies look at how small and medium size borrowers really do borrow in Canada it probably isn’t shocking to our clients that a huge majority of debt comes from credit cards, the BIL Government loan, personal savings of the owner, loans from friends and family, , etc . Generally only 35% or so of business in Canada in the SME sector gets the financing they needs from traditional bank financing, due mainly to the requirements that Canadian commercial banks impose on company borrowers and their owners personally. (By the way, we love Canadian banks... its just that sometimes there is a better way)

We mentioned that working capital solutions for cash flow financing can come not from borrowing, but from monetization of current and fixed assets. That’s why be spend a lot of time with clients explaining the different benefits and costs associated with : bank lines of credit, non-bank lines of credit , a/r and inventory working capital facilities , true ABL ( asset based lines of credit) facilities , confidential receivable discounting .

In additional many previously viewed ' alternative solutions ' are becoming more mainstream everyday. They include purchase order and contract financing, tax credit financing, securitization, etc.

So, do you have a working capital or cash flow financing business loan challenge? Invest some time in real world Canadian solutions. Seek and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in addressing current and perhaps future financing challenges.



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/working_capital_cash_flow_financing_business_loan.html

The No. 1 Secret To Sales and Cash Flow Success – Offer A Canadian Vendor Financing Program & Customer Leasing Plan ! Sales = Cash !

Let Customer Financing Grow Sales, Profits, and .. oh yes .. Cash Flow!

Information on why a vendor financing program for your customers improves sales, cash flow and profits . Why a Customer leasing plan might make sense for your firm . A no cost growth solution for companies in Canada.



I am sorry, we'll have to remove it... no, we’re not doctors; we're talking about helping you remove one of the largest, if not the largest obstacle to innovation for your clients - the cost of your product.

How do we do that ? By recommending that you consider a vendor financing program for your customer base, a customer leasing plan that allows your clients to acquire and use your products while eliminating that obstacle to innovation we spoke of .. price!

Any Canadian firm that sells a product (or service for that matter) should consider a vendor leasing program for your clients. And boy are there some obvious benefits, not the least of which is to increase your sales. Just think of it, when you give your clients the choice of how to pay for your products and services their ability to pay over time via a customer leasing plan gives them significant flexibility.

That flexibility by the way comes in many forms. It includes removing your clients budgetary constraints if they are out of the budget cycle but still need your product, and secondly the pure cash flow outlay of small amounts over a 24 - 60 month period (those are typical lease terms) allows for your client to in effect match the benefits of your firms product and services with their real cash flow outlay. That’s important to the Canadian business owners and financial managers that are your clients.

Does offering a vendor financing program to your customers seem complicated. Its far from that... mainly because you dont have to form a separate financing unit within your company... instead you can simply work with a trusted , credible and experienced Canadian busienss financing advisor who can assist you by acting as an independent lessor , in effect an ' in house ' agent for your program . It does not get simpler than that. You in effect have set up an in house finance company to increase sales, at... yes... ZERO COST!

Let's recap some of those critical benefits to your new vendor financing program. We referred to both Sales and Cash previously. By offering financing to your customers you increase revenues by providing options otherwise not available to your client potentially. And, oh yes, lets get back to cash. Instead of waiting 30, 60, or even dare we say 90 days these days to get paid your firm gets paid as soon as your products and services are delivered and accepted by your client. And payment comes from your credible financial leasing partner, so no credit worries there!


We often refer back to a list we learned many years ago about what any customer considers an ' obstacle to innovation ' in the purchase of products and services. Surveys always indicated the cost was #1 on the list. So, bottom line, let a vendor financing program be your ' obstacle remover '; speak to that trusted Canadian leasing advisor today about initiating your program... 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 . 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/vendor_financing_program_leasing_plan_customer.html

Cash Flow Financing - Why Canadian Factor Companies Just Became Your Best Bet For Factoring & A/R Sales Finance

Why Canadian Business Has Chose Non Bank Receivable Financing !


Information on factor companies in Canada –how does factoring pricing work and why have Canadian business owners and financial managers chosen this method of cash flow financing to grow their business.


One alternative to borrowing funds or raising additional ownership equity in your firm for cash flow financing is the solution provided by factor companies in Canada via accounts receivable financing / factoring.

This solution is becoming more and more popular and much of the mis information around this type of Canadian business financing is being cleared up and clarified properly as thousands ( yes thousands) of companies just like yours look for new business financing methods when the old ones either don’t work or aren’t available .

Let's focus on a couple of the main points that clients want to better understand when they consider cash flow financing via factor companies. Those two key points, if we had to sum them up, are: What is the real cost of factoring, and how does it work on a day t day basis?

In Canada it is somewhat safe to say that pricing on receivable financing is somewhat ' all over the place '. Rates range from 1-3% per month. So what drives that pricing then? The key areas that factor into factoring pricing are the size of your facility, the general overall quality of your Canadian and U.S. receivables, and the relative financial health of your firm as ' borrower'. We hasten to add that when you finance your firm in this manner you aren’t actually borrowing or taking on more debt... you are just ' monetizing'... or we could say ' cash flowing' your largerst current asset, which is typically receivables .

You can win with factor companies when you become in effect a ' educated buyer’... what we mean by that is it’s important to understand the Canadian landscape when it comes to who you are dealing with. There is an incredibly fragmented industry here, and it’s yours to take advantage of if you know how.

So who are the players in the industry, because it certainly would be a challenge if you had to investigate them all! as there are hundreds of firms. These firms are Canadian, U.S., and U.K. owned, some are major corporations, some could simply be called 'mom and pop' finance firms, and finally some are medium sized in nature and capitalization and are solid candidates to handle all your business financing.

With respect to how this type of financing works... our recommended preference is confidential invoice discounting... a term we give to factoring which allows you to bill and collect your own receivables , with no notice being required to apprise your clients of how you are financing your firm .

Typically, if not always the U.S. and U.K. firms doing business in Canada do not offer this type of financing. Your best bet is to seek someone knowledgeable in the factoring market and ensure you partner up with the right firm. That’s where working with an expert always pays off. Naturally if you have all the time in world to speak to and investigate hundreds of firms who might be a poor choice for this type of financing need then by all means... go ahead! And for the record we're jealous of that time you have on your hands in running a business!

Getting back to pricing on this cash flow financing method. Remember that you aren’t borrowing funds, you're selling receivables. So by utilizing this financing you're generating immediate cash flow every time you make a sale. You are not constantly ' re-applying ' for a new line of credit, similar to a bank scenario.

Canadian firms make best use of this financing when they have growing sales and fairly decent gross margins that allow them to absorb the financing cost. Your strong sales growth brings immediate cash; the fixed costs in your business generally remain the same... so the higher business volumes bring incremental profits to your firm

Our bottom line? As usual we encourage you to work with an ' expert’... so consider seeking a trusted, credible and experienced Canadian business financing advisor who can assist you in your cash flow 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 . 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/factoring_factor_companies_cash_flow_financing.html