How Asset Based Loans And ABL Financing Provide Superior Canadian Lending Solutions For Your Company

Shouldn’t You Be Considering Asset Based Lines Of Credit?


Information on asset based loans in Canada and how this type of lending and financing via ABL facilities for inventory and receivables generate more cash than traditional bank lines for Canadian business .


It's certainly not an unreasonable question. The question from clients is simple: ' How Do asset based loans via an ABL financing arrangement provide more cash to a business than a traditional lending arrangement '. As we said, fair enough. Let’s explain.

Whether you are a manufacturer, a distributor or wholesaler, or even a retailer with inventory and receivable investments on your balance sheet... well guess what, you need a business line of credit.

A revolving credit facility via either a bank or an independent non bank finance firm provides you with ongoing operating capital to optimize your firm’s growth. Naturally your inventory and A/R are the essential collateral behind asset based loans. As you convert inventory into receivables or cash sales your working capital and cash flow fluctuate, on a daily basis. Naturally along the way there are seasonal or one time bulges in your sales and finance needs.

By monetizing that collateral (our aforementioned A/R and inventory) you create cash flow to keep your business surviving, and, hopefully, growing! Naturally you have one other alternative to all this, which is putting more of your own personal owner equity into the business, or bring in outside capital. That’s allowed by the way, it’s just more expensive and dilutes your ownership - so in general not a good thing for all the obvious reasons.

So back to our question, which was ' how does the abl facility add more cash than say, for example a bank facility '. The answer - it’s all in the margining. By drawing down on better margins on eligible inventory and receivables you accelerate cash flow based on growing sales. In essence you're also turning money over quickly, and those increased turns of your accounts and stock lead to a greater return on equity. That’s a good thing!

So that’s the basic theory behind abl backed revolving credit facilities - let's check into the real world for a minute and demonstrate exactly how that margining might work.


Naturally there are all kinds of ' inventory ' in the Canadian business landscape. And not to complicate things, but that inventory is broken down into raw materials; work in process (‘WIP’) and of course finished goods. By agreement with your ABL lender you create an ongoing borrowing base for your type of inventory, given its cost and salability.

In general we can make the statement that finished goods and raw materials can often be financed anywhere from 30-70 cents on the dollar.
We hate to generalize, but given the variety of inventory it’s safe to say each industry and company is a bit unique in that manner.

So, on to A/R. What's the scoop here? Receivables it can be said are the most coveted collateral by your abl lending and financing partner. Very common advance rates are in the 90% range, and it’s certainly not uncommon if you have good records and a track record to even negotiate one time temporary bulges.

In summary, when you consider that all companies in Canada of any substance are eligible for asset based loans, and giving weight to the fact that they provide more cash flow than traditional bank financing it is safe to say this financing solution should be at least examined by Canadian business owners and financial managers looking to enhance working capital .

Speak to a trusted, credible and experienced Canadian business financing advisor on how your firm can get a better deal on cash flow financing.



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/asset_based_loans_lending_financing_abl.html

Options And Sources Of Canadian Business Financing - Raising Business Finance

Canadian Business Finance Alternatives



Information on sources of business financing for Canadian companies . Raising finance capital can be achieved with a variety of options that are both traditional and alternative in nature.



Let's be honest. What business owner or new entrepreneur doesn't want options and sources of business financing for Canadian companies or new ventures. Raising finance for any firm is a challenge - the larger corporations seem to have it down pat, but what about the small and medium sized business owner.

Let's examine some options on how you can get capital for your business, and at the same time review some of the benefits, and risk, around some of these options.

Looking for capital revolves around your ability to determine whether you need operating capital or long term capital in the context of asset financing or permanent working capital.

Operating capital is required for the combination of start up expenses, as well as ongoing cash flow and working capital financing. These initial funds are used for product development, marketing, legal and accounting fees, as well as leasehold improvements to your facility or store.

Most Canadian businesses involved in any sort of research and development around their product are probably eligible for Canada's SR&ED, aka ' SRED' credit. It’s a non refundable cheque from federal and provincial authorities.

Your SR&ED claim is most successful when it is prepared by a qualified SRED consultant who can maximize the benefits of the program. We cringe when business owners or financial managers tell us that the program is ' just too much paperwork ' because they are clearly forsaking a true capital injection into their business. Many of those consultants will actually prepare your claim at their own time and expense risk, offering you a contingency agreement on those funds. The bottom line: check out this program.

Leasehold improvements are generally very difficult to finance if you are starting a business, and even if you are already established and generating revenue. That's why it's important to investigate Canada's Small Business Loan Program, technically referred to as the BIL/CSBF program. It finances leaseholds to a maximum of $ 350,000.00 and offers rates, terms and structures that even larger corporations would be envious of.

We're not big fans of utilizing so called ' love money ‘, i.e. funds from friends and family. We're even less enamored by clients who are actually prepared to collapse personal registered savings or mortgage their homes to start a business. While its important to have some ' skin in the game' as the expression goes its our recommendation that you incorporate your business and strongly seek out traditional and alternative financing to fund your business .

Some sources these two types of financing include supplier financing via extended terms, sale of receivables which is commonly called invoice discounting , merchant cash advances ( cash flowing future credit card sales ) equipment financing for hard assets, or even more sophisticated royalty arrangements that might be a hybrid of both debt and equity in your business.

In Canada venture capital and private equity is generally very difficult to obtain for most start up ventures - we caution clients to not dwell too long on these options unless you're committed to a long haul in effort!

We also point out that the size and credit quality of any business, start up or established still offers numerous sources of financing, either traditional or alternative. Speak to a trusted, credible and experienced Canadian business financing advisor on sources of business financing and options for raising capital for your venture.



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/sources_business_financing_raising_finance_options.html

A Perfect Cure? Why Canadian Business Equipment Finance And Asset Finance Via Leasing Create A Tipping Point For Success

Winning with Business Equipment Finance


Information on how business equipment finance via a solid asset financing and leasing strategy can strengthen your firms asset base and provide solid working capital and cash flow relief .


The ' tipping point '. It's one of those business terms that seems quite popular these days, denoting a ' critical point which leads to an irreversible development '. We think it's a solid term to describe how Canadian business owners realize that business equipment financing, ie asset financing via leasing suddenly becomes your new success strategy for financing your firms new /required assets.

It's a fact that over 80% of all businesses in North America lease equipment. Unfortunately we run into many clients that are not 100% sure they are at that ' tipping point yet. That could be for a number of reasons. While the majority of folks we talk to are mesmerized about the interest rates or monthly payment on a transaction they often don’t understand other risks and benefits associated with business equipment finance.

Canadian business owners and financial managers can create their own tipping point by investing just a small amount of time , either on their own or talking to a Canadian business financing advisor on the total ' lifecycle' of the lease transaction . When you minimize any penalties and risks, while at the same time maximizing benefits, it's clear you're pretty well at our ' tipping point '.

Just discovering new leasing and asset financing options can be the difference in how your firm used to look at leasing and how you might be looking at it completely from a different perspective in the future,

Operating leases are generally a very misunderstood aspect of business financing in Canada. We've got our own theories on that, because some lessors sure do a great job of confusing this offering, particularly when it comes to understanding all the flexibility that you can invoke before, during, and at the end of the term of the lease.

We never want our clients to think of their lease company partner as an ' adversary '. In Canada there are hundreds of equipment finance firms who theoretically want to provide you with the best financing terms you are looking for - that ‘nirvana’ combination of great rates, terms, and structures.

Yet many business owners and finance managers, particularly for small and medium sized companies there never sure if they are leaving money on the table.

The 5 aspects to any equipment lease transaction are the term of the lease, the interest rate, the value of the transaction, the monthly lease/rental payment and the end of term option. That’s a handful, but by simply focusing on the positive and risk aspects of any of those aspects of your transaction you are moving ever closer to our tipping point.

Even simply things like putting a one time master lease agreement in place allows you to provide a consistent program for your firm of benefits that make sense.

When you combine and understand the powerful aspects of asset financing and leasing in Canada, ie capital preservation, tax and accounting advantages, asset disposal, etc you are exactly where you want to be. Speak to a trusted, credible and experienced Canadian business financing advisor who can help you achieve our tipping point.



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_equipment_finance_asset_financing_leasing.html

Distressed Over The Cost Of Receivable Financing? An Accounts Receivables Loan Finance Strategy That Pays Off!

Understanding the Cost of A/R Cash flow Financing


Information on Receivable Financing in Canada . An accounts receivables finance loan might not be costing what you think ! Here’s why!


There has to be something to it, because thousands of Canadian firms employ receivable financing strategies everyday as part of a receivables loan strategy that replaces the traditional ' bank line of credit '.

If we had to identify the two biggest issues around this type of financing, i.e. cash flowing your receivables, it’s first of all the cost, and second of all the daily mechanics as to how the facility works. More importantly the question we think really is ' how can I make the cost of a/r financing work for me, not against me. And we think we can show you how.


Can we all agree that if you don't know how the industry charges and pricing this type of financing you can’t be 100% sure that you're winning with this strategy? And if businesses from start up to Major Corporation employ an accounts receivables loan program then something must be working, right?

So, then, what are the factors that determine A/R finance pricing in Canada. There are several.

Size counts and one factor is often simply the size of your monthly receivable portfolio. As we mentioned, size varies here, and there are firms that finance a few thousand dollars every month and medium sized and larger firms that finance millions, yes millions of dollars every month, with frankly no upper limit on the amount that is financeable if you are working with the right party.

So you can expect overall finance volume to be one factor in the receivable financing puzzle. Another factor is what we can call ' days to pay' or your overall ' DSO ‘, which is the commercial finance term for days sales outstanding. This is a pretty simply but perhaps one of the most key factors in a/r finance , simply because your ultimate financing cost is based exactly on the amount of time if takes for your clients to pay your firm .

Many business owners and financial managers don’t calculate their DSO - our view is that you're in the dark if you don’t know what your average collection period is.

We point out to clients that there is an interesting twist here in that you want to ensure you have a facility that allows you to calculate exactly what the days to pay calculation cost is.

Don't align yourself with anyone that wants to ' round up ' to the next 15 or so days. Illustration: your client pays you in 36 days and your receivables loan accounts agreement specifies pricing increments of 45 days on the transaction. All you are agreeing to is extra costs and you don’t want to be doing that.

We hate to generalize but we can safely say that the discount pricing on A/R financing in Canada is more often 2-3%. If you are paying more than that and you are not an extremely small firm then we suggest you are perhaps overpaying. That’s when its time to speak to an expert by the way - when you cant figure out or understand those charges.

Using our example above a basic 1k invoice would have a maximum financing charge of 30$. And remember, the total beauty and power of receivable financing is that you receive the cash when you make the sale, not 60 days later when you clients pay.

Want a simple but powerful trick? Many clients don’t know that they can finance their receivables at any time after the sale is made. So if one of your best clients pays you in 60 days, consider financing that invoice at the 30 day timeframe. On our above mentioned sample example you have kept the financing cost to 30$.

There are numerous other ways to manage your A/R financing costs .One is simply to understand the ' opportunity cost ' of being able to turnover sales and cash flow more quickly. This isn’t term financing.

Speak to a trusted, credible and experienced Canadian business financing advisor on how you can de-stress over the cost of an accounts receivable loan strategy, and turn this method of Canadian financing into a solid growth and cash flow strategy.





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/receivables_financing_receivable_loan_accounts.html

Are You Mastering Technology Financing ? Canadian Computer Leasing Must Know Info For PC Hardware And Other Tech Assets

Computer Finance Tips For Canadian Business .

Information on technology financing in Canada .What do Canadian business owners and mgr’s need to address for solid benefits to computer leasing and pc hardware and software financing strategies .


Looking for a huge amount of risk, financial risk, and extra cost for your Canadian business? We aren’t’ and you shouldn't be either!

Haven’t you got enough risk in your business life to have to also consider the downside of making the wrong decisions in areas of technology financing? Surely it’s a fact that computer leasing of pc hardware, servers, and software provide both the greatest benefits to your firm, as well as the greatest risk if you structure things improperly.

It's always been clear to us that there are just a huge amount of benefits to your business when your technology infrastructure is throwing your firm off the benefits you had hoped for... (and were promised?)

Another aspect of getting the right tech financing in place is simply the amount of time you and or your key staff in this area can spend on weighing options and considerations .When your finance folks, accounting folks, and those techies aren’t in mutual agreement or in the know about whats going you are leading your firm into potential mistakes and costs you could have avoided.

When we sit down with clients and layout some key issues for them to consider for computer and software leasing one of the key areas we focus on is ' end of term '. It's a simple phrase that has all sorts of ramifications you didn’t think of. And unfortunately most clients focus on starting a lease, and not ending in, which should have the same consideration when it comes to computer and tech financing.

So why is the end of the lease so important in technology financing ?Simply because that’s when a lot of your risk mitigation kicks in , and , depending on which type of and lease company you are dealing with that’s when their real profit on your transaction often starts . It’s not always about the interest rate, which many clients seem to always focus on a being the most important part of a computer leasing success story.
So whats one example of how you can lose big time in technology financing and end of term .Quite frankly you wont believe how simple, and costly this is! We're talking about 'notification '.

Most Canadian companies don’t either know or understand their notification rights when it comes to end of term. Your lessor may have promised to call you when your lease term is up... if they do, or even better, notify you in writing, that’s great. However when they don't you are in many cases obligated to keep paying for the lease.

Ever paid for something twice by mistake? (We hate it when that happens!) You wouldn’t want to do that in your personal life, and surely with the cost of pc’s, servers, and software you would regret paying for that twice also. That's a bit of an understatement, don't you think?

So discuss end of term options, ensure you understand your rights and obligations, and also diarize when that lease term is up. Never had a calendar been so important!! And by the way, by spending some time on a ' Master Lease ' allows those notifications, rights and obligations to be addressed one time, up front, in writing! That’s smart business.

In summary, we often preach to clients that one of the largest obstacles to technological innovation to your firm is the cost of pc hardware, servers, software, telecom equipt, etc. Consider eliminating that 'obstacle to innovation' by speaking to a trusted, credible and experienced Canadian financing business advisor who can ensure you have computer leasing that makes sense , in place, 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/technology_financing_computer_leasing_pc_hardware.html

Understanding ( And Getting ) A Canada Government Small Business Loan – SBL Loans 101!

How To Smooth Out the SBL Loan Process For Business Financing Success

Information on the Canada government small business loan . Understanding the process of Canadian ‘ SBL Loans ‘ and qualifying for approval .



Understanding. Getting. They might seem a bit unrelated, but in the context of a Canada government small business loan boy do they make sense. Let's examine how SBL (small business loan) loans work in Canada. And won't it make sense that understanding the process around this program will allow you to get approved and funded! We certainly think so.

We'll examine how the SBL loan is evaluated in Canada, what your expectations should be, and provide you with a clear road map of business financing success with SBL loans.

Clients often come to us with experiences of frustration around the program. A common complaint is that whoever they have spoken to about getting approved for the loan seems disinterested at best. And don't even start to talk to us about timeline, that’s the other frustration around the program. So is it the banks fault, or yours. Let’s examine who's to blame.

First of all, some key basics on the program - since if you don’t know what it is you can’t deal with it, right? The Canada government small business SBL loan is the Canadian version of the U.S. ‘SBA’ program. In Canada it’s sponsored and regulated by INDUSTRY CANADA in Ottawa, but it’s actually the Canadian chartered banks that provide the financing for the program. Thousands (in 2010 over 7000) Canadian businesses are funded every year under this great program. The maximum loan amount is $ 350,000 and we can assure clients that rates, terms, structures, as well as the limited guarantee component is very appealing.

So back to the question ' who’s to blame’ when the program doesn’t work for you. It is only common sense that the banks want to ensure that they adhere to the program guidelines. And it sure helps if you don’t have a bank that is unfamiliar with SBL loans. And if you run into a banker that is somewhat daunted by the paperwork details of the program that only complicates the situation.

So what is the take away then on this key point? It’s simply to find and work with a banker who is very familiar with the program. All you need to do is ask, and there’s even an easier way than that, which will comment on later.

Naturally we commiserate with the bank on applicants who aren’t prepared. We are guessing the Canadian chartered banks don’t make a ton of money on these loans, at the same time they require a fair bit of operating costs and reporting under the program.

Is there a way we can clearly summarize the road map for success under the small business loan SBL program? When credit trainees in any aspect of lending start their careers they are told to focus on the 3 C's of credit extension – character , capacity and capital.

It occurs to us that that are a great way to create your own mini road map on SBL approval. Demonstrate to the bank your business experience and personal credit rating, demonstrate in your business plan how your business will have the capacity to repay , and , with respect to capital, make sure you have the required 10% permanent equity down payment under your loan request.

Want a fast track to both understanding the Canada government small business loan program? Easy to do. Speak to a trusted, credible and experienced Canadian business financing advisor who can work with you and a top notch SBL banker to get you the business financing you need - quickly!



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/canada_government_small_business_loan_sbl_loans.html

Canadian Franchise Financing Loans ! 3 Things You Wish They Had Told You About A Business Franchise Loan

What You Need To Know To Finance A Franchise In Canada

Information on how to successfully obtain a business franchise loan in Canada. Financing loans for franchising success . Use these key pieces of advice to make entrepreneurship a reality .



If only I had known! That's one of our clients talking about a business franchise loan in Canada. The financing loans for franchising in Canada is often a major challenge.

Let's examine 3 key areas of the franchise financing dilemma and help you get to the goal line on what is surely one of most rewarding and sometimes daunting business journeys that you have been on.

And what are those 3 things you sure wished they had told you previously? They are as follows - there is a unique program specially designed to cover off the majority of franchise financings in Canada. Who knew! Secondly certain aspects of your franchise business can be financed, certain things can’t. You need to know what's what and plan accordingly. Thirdly... it’s all about that word plan, because if you are 100% prepared, with a basic package, your chances of getting a business franchise loan financing approved increase commensurately. We can pretty well guarantee that.

We have always agreed that a franchise purchase in Canada is a great way to balance entrepreneurial risk. The range of opportunities available to you seems to grow every day, and if you are working with the right people and the right institutions you're in a position to capitalize on that success.

We talked about the necessity to be prepared. There was a study done in the U.S. and we're pretty sure it mirrors the Canadian experience, that over 80% of loans to new small businesses ( that’s kind of what a franchise is , wouldn’t you agree ?) are declined only for the one reason that the applicant wasn’t fully prepared with respect to a quality package of basic information.

And what those business folks hear about how basic some of those requirements are it must be downright embarrassing to know franchise financing loans weren’t approved simply because you didn’t cover off the basics.

We also point out to clients that a business franchise loan in Canada can cover of purchasing a new turnkey location, and in fact can also pertain to financing an existing franchise within the chain you are focusing on. This scenario of course requires full co operation and disclosure from both the current franchisee as well as the franchisors permission for you to complete the transaction.

Many franchisees ' turbo charge ' their chances of financial freedom and progress by adding additional units to a franchise they already own, thereby building their own mini empire! All power to them of course. We do caution clients though that it’s important to set up separate legal entities for each of those locations from a view point of risk and accounting implications.

So, what can be financed, and what can't. Typically what are financeable in a franchise scenario are leaseholds, equipment, real estate if applicable, and items such as software of POS systems. What is not financeable, much to the chagrin of a lot of our clients is inventory, as well as the franchise fee, prepaid rents, consulting you may have needed, etc.

The Government CSBF/BIL program which is administered by the banks is your quick and accessible solution for franchise financing under $350,000.00. It works great for starting any new business, and rates, structure and other aspects of the program such as limited liability make it almost perfect for what you want to achieve.

So... if only you had known! But now you do. So speak to a trusted, credible and experienced Canadian business financing advisor for franchise financing loans that make sense and are achievable under your personal circumstances.


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_franchise_loan_financing_loans.html