A Tale Of Two Business Credit Facilities – ABL Asset Financing And Bank Revolving Secured Facility

Business Line of Credit Alternatives in Canada


Information on business credit in Canada. What are some key differences in an ABL asset financing facility versus a secured bank line.




Secured business credit via an ABL asset financing or a bank line of credit. It's absolutely a tale of two. We guess the book might be called ' A TALE OF TWO FACILITIES’! Let's examine some of the key differences and benefits and disadvantages of both an ABL asset line of credit and the better recognized bank secured business credit facility.

Both public and private companies in Canada feel the squeeze when it comes to achieving the right financing for their firms in the current economic environment. Both the business owner and his or her financial managers can be forgiven for being a bit confused on alternative methods of line of credit finance.

So should you be doing what everyone else seems to be doing, or should you strike out on your own with some solid investigation in alternative business models when it comes to lines of credit for Canadian business?

Let's look at what some of those key issues might be in considering alternatives, the ABL facility, and the Canadian chartered bank offering. Clearly in both cases you want to be able to ensure you can grow, not just survive in business.

Price is a factor also; you want to know the total cost when it comes to acquiring the right finance facility. Naturally relationships are important also, you want to be dealing with the right people, it’s as simple as that.

So lets take a first pass at asset based lending via an ABL facility. It is just a business credit facility secured by the assets of your company. Many firms that either cant raise bank financing, or, more importantly, cant raise the amount of financing they need from banks consider ABL. Hundreds of Canadian firms now use ABL finance as there preferred method of leveraging their assets for a credit line . Those assets are used to bridge the timing of cash in, and cash out in your business. ABL is available for companies of all size, from major public and private corporations, right down the pecking order to start ups. The facility fluctuates with the amount of asset that your firm generates, typically around A/R and inventory. Funds are typically managed through a blocked account - that simply means that you deposit all your inflows into one account, while your balances to reduce the line are managed through a separate account. It's not as complicated as it seems. Key benefits are higher margins on receivables and inventory.

The more traditional alternative to business credit via a secured facility is the Canadian chartered bank. Facilities are low cost and can be combined with term loans. Banks are cash flow lenders, the ABL facility tends to be asset based, not cash flow based. Your financial statements and current financial history will dictate whether your firm is more cash flow or asset oriented. Banks will look to what they call secondary forms of repayment and are highly regulated with their offerings. ABL lenders for asset financing tend to be independent commercial finance companies that are none regulated. It's a little known fact that many of the banks have small boutique divisions of ABL finance that in some ways compete with their peers in Commercial business credit.

Investigate both the ABL secured asset financing revolver, and the more traditional Canadian chartered bank line. Weight the benefits and potential disadvantages of both in coming up with your preferred method of business financing. Speak to a trusted, credible and experienced Canadian business financing advisor today on differentiating that ' TALE OF TWO FACILITIES '!



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/abl_business_credit_asset_financing_secured.html

Know The Happiness Formula For Cash Flow Financing And Working Capital Problems ?

Are You A Great Cash Flow Manager


Information on cash flow financing management and working capital problems and their solutions in the Canadian business space.




Cash flow financing in Canada. Is there in fact a ' happiness formula' for solving and managing through cash flow problems? In our opinion it's really a combination of management as well as sourcing the proper solution based on your firm’s particular situation.

Let's examine some tools, tips and strategies around what we might consider a ' Happiness Formula '! in Canadian business financing.

A good way to address the topic is to focus on 3 sub topics - understanding what is in your financial statements, using that information to work through your cash flow cycle, and, finally, financing cash producing assets... properly.

We have said it before, and of course we'll say it again, too many business owners and financial managers focus on their financial statements from a viewpoint to looking primarily at their income statement, perhaps then the balance sheet.

Guess what though; probably the most important way to view cash flow management and to identify working capital problems is in that third part of your financials, it’s the ' Cash Flow Statement '. For us old timers it was also aptly called ' Sources and Uses ' and we're talking cash of course! We love the line ' Cash ... where got ... where gone'!


So what we are saying is that this particular part of your financials can lead you to our sought after 'Happiness Formula.’

The simple part of looking at this statement is the fact that it quickly identifies the gap between profits and cash - and as most business owners know they are often, if not always, NOT the same!

The bigger that gap is of course a solid place to and time to start thinking about solving working capital problems.

So how do you in fact secure the proper cash flow financing in Canada. And don’t forget that it’s not just about surviving in business; it’s about growing your business. That growth will simply enhance the value of your company.

The cash flow statement will properly identify your overall business or operating cycle. In fact it’s even a precise calculation that you can use to track how long 1 Dollar flows through your company, from order to collected receivable. The longer the time gap the more working capital problems and challenges you have.

Cash flow financing come from two areas, borrowing, or simply turning your assets such as A/R and inventory over. Naturally you also want to manager your fixed assets so they are in a proper relation to your overall equity and capital structure.

And those solutions to cash flow finance in Canada? They are varied - they include chartered bank facilities, asset based non bank lines of credit, receivable and inventory financing that are again non-bank in nature. Additional sources are monetization of tax credits or the sale and leaseback of owned assets.

Still searching for the Cash flow Happiness Formula? Speak to a trusted, credible and experienced Canadian business financing advisor 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/cash_flow_financing_working_capital_problems.html

Creative Ways To Use A Capital Leasing Company In Canada. Lease Finance Companies Have Your Solution In Hand

Mastered These Inside ‘ Scoops’ On Lease Financing In Canada?


Information on use of a capital leasing company in Canada . Creative methods to use lease finance companies for sales growth and cash conservation.



Is your company getting the most from an asset and capital leasing company in Canada? Let's examine how your firm can maximize some really creative benefits from lease finance companies in the Canadian marketplace.

Equipment finance doesn't have to be a ' complex ' form of business financing if you’re aware of the some key concepts, some of which are perhaps a bit more sophisticated than others... but bottom line you should never lose out on the advantages simply because you weren't aware.

There are numerous nuances in lease finance - they revolve around the areas of legal, financial, tax and accounting. Exploiting some of these areas to your firms advantages bring you maximum creativity.

It's safe to say that we are maintaining that you have to be involved and consider every aspect of the lease transaction - as benefits and creativity come at all stages, i.e. evaluation structuring, credit approval, documentation, and end of term.

Just simply by working with the right asset capital leasing company can save you time and money. Did you know many transactions today that are a smaller dollar limit can be approved within 24 hours, and often don't require even full financial statement disclosure?

If you know the general makeup of lease finance companies in Canada you're in a position to maximize your overall cost. In Canada the marketplace is broken down into small, mid and large ticket lessor. When you understand the ' credit box’... i.e. the financial criteria required for approval, you can save thousands of dollars on lease pricing.

We're often asked who has the lowest rates in Canada. In general we can say that Canadian chartered bank lease subsidiaries and divisions offer the best pricing, typically 200 basis points or less over bank cost of funds.

Another great alternative for Canadian lessees is to work with a captive finance firm. Although they are also highly competitive in price also there’s an extra creative advantage to utilizing a captive firm. Simply speaking, they are incented to make the sale and provide credit approval, if only because they are supporting the parent companies sales activities.

Did you also know that many captive firms for hardware and equipment will also consider financing a competitive product - there are various reasons they do that, but suffice to say you're the winner on that one?

Lease finance companies in Canada also provide you with a very creative hedge against obsolescence. Also, numerous ways of achieving end of term loss minimizations are available to the Canadian business owner.

We think many firms probably don't utilize the creativity embedded into operating leases in Canada. Although international accounting changes minimize some of the benefits of this off balance sheet strategy there are great reasons still to consider a FMV lease ( fair market value ) particularly when you are financing technology or large ticket capital equipment .

If your firm is somewhat ham strung on financial performance, rations, covenants, etc lease finance companies are the ultimate solution for capital and cash flow preservation.

Lease structures are virtually unlimited in Canada, and identifying what’s important to your firm will allow you to structure term, payments, end of lease obligations, etc... and on it goes.

Speak to a trusted, credible and experienced Canadian business financing advisor. Get creative when it comes to using lease finance companies in the Canadian marketplace.








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/capital_leasing_company_finance_companies_canada.html

Receivables Purchase Finance In Canada . Don’t Get Caught Misunderstanding AR Financing strategies And Costs

Canadian Receivables Purchase Financing


Information on a receivables purchasing finance strategy in Canada . What does AR Financing cost and how to make it work in an optimal fashion.




Receivables purchasing financing in Canada. Thousands of businesses in Canada utilize AR financing when the economic climate and their particular situation does not allow them to ' extract ' the type of financing they need for their working capital and cash flow.

Is it really positive to stay ahead of the proverbial ' cash flow shortage ' 8 ball? We think there is and at the same time your firm may now be in a position to take advantage of growth opportunities it could barely even consider, let alone realize on previously.

So why is AR financing so misunderstood in Canada. Our own opinion is that its just simply poorly explained when it comes to the mechanics and the cost.

The reality is that if you know 3 basis numbers around your business, and they are numbers you should know you are in a position to determine the cost of financing A/R, and the opportunities you might be missing by not considering a receivables purchasing finance strategy.

Those 3 business elements we are speaking of are simply the size of your receivables, your day’s sales outstanding, and the interest or financing rate.

Let's examine quick example. Let's say your annual sales are 2 million dollars and you are collecting your money in 65 days, which certainly is a typical time period these days. And lets say you are being financed by a bank and the interest you are being charged is 5 %.

The Total cost to finance your A/R is, then, 2 Million dollars times 5% divided by 365 days= 17 thousand dollars.

So, is that a great number? Putting on our lawyer hat, we will ay ' it depends '. What you need to do then is determine what the average really should be for your company or industry based on its selling and collecting terms.

Rather then demonstrate another more complicated calculation lets just say that if you can reduce the amount of receivables you carry the impact of actual DSO can go a tremendous way to maintaining your company’s general cash flow health .

If managed properly a receivables purchase AR Financing program can fund all your short term capital needs. In fact you can consider growth opportunities that were never available before, while at the same time ensuring you can meet payroll, product purchases, and expansion.

In Canada AR financing is provided by independent commercial finance firms. For facilities in excess of 250k you can even get the true benefit of AR finance, which is immediate cash flow while at the same time maintaining full responsibility for customer relations, collections, etc.

If your company requires immediate cash and you are unable to obtain bank financing for any variety of reasons speak to a trusted, credible and experienced Canadian business financing advisor for your operating capital 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/receivables_purchasing_finance_ar_financing.html

The SR&ED Bridge Loan – The ‘ Hushed Truth ‘ On ( SR ED )SRED Tax Credit Financing Loans In Canada

SR&ED ( SRED ) Finance is… Alive and Kicking!

Information on the SR ED bridge loan in Canada. SRED Tax credit financing is a valuable way to enhance cash flow. SR&ED loans were and are available during recent program changes .



The SR&ED bridge loan in Canada. Did it almost become a hushed secret at a time when the very existence of the SRED tax credit seemed in doubt?

The real secret of SRED loans in Canada is that they were available for your tax credit prior to the current budget, and, guess what. ? .... They remain in place today for your tax credit financing strategy!

Most Canadian business owners who utilize the SR&ED program in Canada were keenly aware that the very existence of the tax credit seemed in doubt in 2012.

Well, the dust has settled and if we had to say there was a general consensus we would have to say that in general there's a status quo around the program. Many firms who felt they would do ' better' or ' worse ' under the new changes are finding that it’s a case of ' it depends ' - so it could have been a lot worse.

Thousands of Canadian businesses received Billions of dollars every year under the program, the formal name of course being Scientific Research & Experimental Development. Hence SR&ED. Your firm’s ability to demonstrate you have improved a process or processes, or come up with new technology or software qualified you for Sred.

We’re not ( fortunately ?) accountants , we're financiers, so we'll let you talk to your SRED consultant or advisor on the various rates changes that took place, some up, some down , under the program . We would note that the biggest change seems to be the fact that capital expenditures don't qualify under the program, but salaries and materials and portions of your overhead still qualify.

We'd love to take a poll one day on how many Canadian firms know that SRED Tax Credit Financing exists in Canada. We'd venture to say is clearly the majority, not the minority. So if we had to reveal that ' hushed secret ' on this major Canadian tax credit incentive it's simply ' Hey, you've got an options on your SR&ED tax credit .. You can wait for months, or much longer for you refund cheq. . OR ... you can finance your claim.

If you do have a claim that's prepared by an experienced and credible SRED consultant that claim can easily be financed. The basic rules around that are as follows - The SR ED bridge loan gives you approximately 70% of the face value of your claim. No payments are made during the loan period - at final approval and payment of your claim by Ottawa and the province you receive your remaining 30%, less financing costs, a simple application and you ability to provide the SRED tax credit as collateral is all that’s required.

So is SRED dead? It looks like it isn’t. We can hear the sigh of relief among all those SR&ED consultants who provide the majority of the writes ups on claims in Canada.

And, don’t forget. SRED tax credit financing loans are here today, they were here yesterday, and they will be here tomorrow.

Speak to a trusted, credible and experienced Canadian business financing advisor on help for SR ED bridge loans for working capital and cash flow for your Canadian 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 . 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/sr_ed_bridge_loan_sred_tax_credit_financing_loans.html

Cracking The ( SBL Loans ) Code . Fast Track Your Approval On The Canada Government Small Business Loan

Secrets To Success On the SBL Government Guaranteed Loan

Information on SBL loans in Canada . How entrepreneurs and Canadian business owners can increase Canada government small business loan approvals for financing success.



SBL Loans in Canada. How can the Canadian business owner or financial manager ' crack the code ' when it comes to the Canada small business loan. It’s of course a government program that helps businesses get the financing they might otherwise not be able to achieve.

Let's examine some crucial tips, dare we say ' secrets ' around cracking the secret code known as ' approval' on a program which has helped almost 8000 different businesses annually to either launch or grow their business.

We think we can all agree that if you don't understand the program offering then you clearly can't formulate a proper plan for approval

First of all Industry Canada although sponsoring or ' underwriting ' the program is not the direct lender under the program. So, bottom line, no trips to Ottawa required. (We lived there for ten years though and it’s highly recommended for a vacation!). So if the government loan is not obtained from the government, who do you get it from? The answer is a Canadian chartered bank, and several other miscellaneous instantiations, but essentially it’s the banks.

Since there's virtually a Canadian chartered bank on any business corner in Canada cracking the code on that is easy, right. Not so fast, partner!! The reality is that you need to find a commercial/business banker that is attuned to the program, understands it, and has the ability and credibility to sponsor and recommend your loan. That banker is best obtained via a referral from any trusted Canadian business financing advisor of yours, or even your accountant or lawyer.

To crack the code on successful approval we can summarize by saying that you need to have a solid understanding of:

Eligibility

Amount of Financing Available

Repayment Terms

Usage restriction of the funds (this is critical and widely misunderstood)

The approval process

Businesses in Canada with revenues fewer than 5 Million dollars, even if they are a total start up are eligible for the Canada Small Business Loan. (The government calls it the CSBF program / BIL)

Financing up to 500k can be sought, but that amount pertains just to real estate, so typically the cap on the program is 350k.

Repayment terms and structures are excellent - Terms of 1-7 years are generally available, 5 is a typical term we see all the time. Rates are essentially 3% over prime, making that a great rate anytime, even better in the current low interest environment.

Proceeds can be used not for cash or working capital, but for equipment leaseholds, software, computers, architectural design fees, etc.

The approval process consists essentially of a need for a crisp busines plan or executive summary, a detailed cash flow analysis and repayment plan, and miscellaneous info on yourself and your business that you would associate with any financing application.

Need help to ' crack the code '. It's not as big a secret as some maintain. Speak to a trusted, credible and experienced Canadian business financing advisor for help with ' the code '!







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/sbl_loans_canada_small_business_loan_government.html

Canadian Franchising - Key Components Of A Successful Loan For A New Or Existing Franchise

Financing A Franchise In Canada

Information on successful components of a franchise loan for a new or existing business in Canadian franchising .



Canadian franchising. Got your act together? The act we're referring to of course is your ability to successfully secure a franchise loan for a new or existing franchise in Canada.

Let's focus in on some critical components of what to do and with whom!

It's not as hard as you think to turn one of the most successful business models (franchising) into a successful financial solution for the acquisition of your business. Naturally you have the option of building or inventing your own business model in any industry but surely utilizing a proven method success already in place has significant appeal.

And the financing for your franchise can be focused on any number of industries where the franchise model is prevalent. You ability to be able to generates profits while duplicating the franchisors success is not limited to geographic issues , and , more importantly , the need to invest large amounts of capital when in fact you don't have to under the franchise model .

Many clients we talk to are looking at either acquiring an existing franchise as opposed to a new unit. There are advantages to both and we are pretty sure based on experience that neither, new or existing offer any superior advantage.

But our subject is of course focused on the financing re: your franchise loan .of that new or excising business. The one positive thing when you are considering a resale by an existing current franchisee is of course that you have access to financial performance of the existing owner.

That typically includes several years of financial statements and a proper disclosure of assets in the business. If the owner still has debt outstanding in the business that debt, in the form of bank loans or equipment leases or working capital loans, must be addressed in the context of your purchase and refinancing.

In the case of a franchise which has hard assets and leaseholds, (as opposed to a service business) an appraisal of those assets at fair market value is both recommended and in fact probably required.

We also point out to clients early in the process that they structure their purchase as an asset sale as opposed to a share sale , as share sales are exceptionally difficult to finance other than on an all cash basis - and then of course its not a financing per se, its a ' cash sale ' . A cash sale may or may not be the right thing to do. Too much equity certainly lowers your overall return on investment and ties up your personal assets, quite often permanently.

Don't forget also to address employee issues with respect to financing liability of any severance, termination scenarios, etc.

If you finance your Canadian franchising purchase via a government SBL loan (the preferred solution for many franchisees) an appraisal of an existing franchise is certainly required. If in fact a new or turnkey unit is under consideration you require a detailed business plan focusing on your experience, the industry in which you're going to participate, and a proper financial forecast that ' cash flows ' in a positive nature in order to retire the debt satisfactorily .

Other things you should focus on in your plan are customer profiles, competition analysis, etc.

Having a formal or informal network of business advisors, lawyer, accountant, and banker certainly helps.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who has the ability to turn your Canadian franchising dream into a success franchise loan resolution for a new or existing franchise.








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/canadian_franchising_franchise_loan_new.html