Can ABL Finance Eliminate Sleepless Nights ? Here’s How An Asset Based Lending Business Line Of Credit Can Help

Looking For A Solid Business Line Of Credit?


Information on why ABL asset based lending is the business line of credit of choice for Canadian firms looking for business credit alternatives .



A cure for sleeplessness? Well, we're not really saying that ABL asset based lending via its business line of credit facility is your cure to what we might term as ' business insomnia ', but we do meet many Canadian business owners and financial managers who profess to have some sleepless nights worrying about how to finance their business on an ongoing basis .


So why then is an ABL facility a solution to less worrying about Canadian business financing. It's important therefore to understand what asset based lending vis a vis a business credit line is, and why it's getting more broad appeal everyday in Canada.

ABL is a secured credit facility collateralized against various assets of your firm. You essentially borrow against all those assets under that collateral facility. So the question then begs to be asked, ' why is this any different than a facility from a Canadian chartered bank?" It's a reasonable question, and the answer we guess is two words ' more ' and ' easier. By that we mean that 9.9 times out of ten you are going to be able to achieve much more liquidity under an asset based business line of credit. And with respect to ' easier ' the asset based lender focuses on assets, not cash flows, covenants, ratios, outside collateral, etc.

The assets that you typically borrow against are inventory; accounts receivable and any fixed assets such as plant, machinery, etc that aren't already encumbered by another lender or lessor.

How then does this business credit facility generate more financing for your firm, or perhaps a better expression is the potential ability to generate additional cash flow . The answer is that it's all in the margin, because typically your business A/R is margined at 90%, unlike the bank 75%. Inventory and assets are appraised at the commencement of your facility and you can enjoy significant draw down ability with them anywhere typically form 0-70%. (Every business/industry is a little different, so borrowings differ according to type of inventory, asset, industry, etc)

Essentially, as we have demonstrated, the assets in your businesS form the borrowing base for all ongoing borrowings. You can hopefully immediately see that you have much greater access to liquidity and that as your business grows so does your facility. Clearly we have demonstrated that your sales growth is automatically funded by that commensurate growth in client receivables and inventory if in fact your firm has an industry position.

There are various technical aspects to how your ABL business line of credit is monitored and funded. Areas of concern to the ABL lender include warranty returns, credit notes, and inventory composition re raw materials, work in process, finished goods, etc.

We strongly encourage you to take a hard look at ABL credit as your key working capital revolving facility. Will you sleep better? We hope so, knowing that your business is financed properly and poised for growth and profits. Speak to a trusted, credible an 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/asset_based_lending_abl_line_of_credit_business.html

Are There Disadvantages To Lease Financing Assets In Canada ? Equipment Finance Pro’s And Con’s

Comparing the Disadvantages of Equipment Finance to Benefits Of That Same Strategy


Information on potential disadvantages of lease financing equipment asset in Canada and how business owners can address these to maximize benefits .



Disadvantages to equipment lease financing in Canada? Say it isn’t so Joe!
It's not really ' disadvantages' we're talking about, perhaps the better choice of words are ' things to be on the lookout for '.

No one is more bullish on lease finance in Canada then us when it comes to financing business assets. When we talk to clients about the pros of lease of this popular method of asset acquisition we probably sound like a broken record.

It's all about cash flow preservation, 100% financing capability, leaving your other sources of credit undisturbed, tax and accounting benefits, and ownership rights along with the obligations. Anyway, suffice to say you can put us in the bullish column when it comes to recommending this method of Canadian business financing.

But, back to those ' disadvantages', or as we said, things to properly look out for. As much as we hate to say it, we don’t think we'll ever get our customers focused off of the issue of the rates and cost inherent in lease finance. Customers who perform a lease vs. buy analysis may well find that purchasing an asset with cash, or entering into a bank term loan may in fact some cost advantages. For the record we have never seen a big disparity in any lease vs. buy analysis when it comes to that decision at the fork in the road.

However, as we said, Canadian business owners and financial managers do often focus just on cost, rate, low monthly payment, etc. All we say is simply it's never ' just' about the rate; it's also about the flexibility, ease of acquisition, etc.

Another thing you have to look out for is the loss of ' salvage ' value when it comes to the end of the term of your business equipment lease... At the expiration of your term in a business lease, unless you have properly addressed the issue the equipment may belong to the lease company. That's clearly a disadvantage, IF ... you don’t address the issue by properly constructing a lease that mirrors your choice of ownership at the end of the term.

How can that be done? Pretty simply actually. You can eliminate the loss of ownership ' disadvantage ' by simply ensuring you have a purchase option at the end of your lease term, or , alternatively, you can opt for a true operating lease and invoke on of the rights you have at the end of that transaction . Those rights are buy, extend, or purchase at a fair market value or pre agreed amount.

One of the most popular again types of equipment lease financing in Canada continues to be the sale leaseback. It's a case of monetizing assets you own already by leasing them back to your firm. However if the tax base of the asset is below its sale price you might have to pay or record some sort of capital gain. Talk to your accountant guy about that one! Just in case.

Other disadvantages? Well, as we said, we're not necessarily pitching them as disadvantages, just things to look out for. So other areas you want to focus on are your obligations in the lease, which pays the insurance, are there any restrictive covenants, etc.

Finally, who to deal with? In Canada lease finance can be accomplished via a number of partners. They include bank lease co, specialized commercial finance firms, captive manufacturers, insurance companies, etc. To wade through any potential confusion disadvantages consider seeking and speaking to a trusted, credible and experienced Canadian business financing advisor who can ensure you're ' accentuating the positive ' when it comes to lease financing of equipment assets 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/lease_financing_equipment_canada_assets.html

5 Advantages Of AR Accounts Receivable Finance In Canada. Using A Business Factor Funding Program Works.

Looking For Some Solid Benefits In A/R Finance In Canada?

Information on advantages of ar accounts receivable finance funding . How does a business factor program work.



Thousands of Canadian business owners and financial managers perceive AR Accounts Receivable Finance as a solid strategy for financing their firms. Let's examine 5 key advantages of this method of working capital finance. But first let’s take a quick step back and ensure we understand the product and the mechanics of this type of finance service.

The heart of the AR finance strategy is of course your receivables. This financing differs significantly from a bank loan or more commonly the Canadian chartered bank line of credit. What is that main difference? Simply that under a bank facility the financing is based on your firm’s credit worthiness, with the receivables being assigned to the bank as collateral.

The difference then? It's simple and basic. AR financing is not a loan to your company per se, instead its the purchase of your receivables, generally on an ongoing basis , This sale of ar, via our business factor funding arrangement enhances your cash flow and working capital .. Immediately!

One of the main points of confusion that we find continually exists around this method of financing is the pricing. While the bank facility charges your firm an annual interest rate (plus some miscellaneous fees here and there!) invoice finance is the sale of your A/R, at a discount, allowing you to receive funds and replace A/R on your balance sheet with cash, immediately as you make sales.

In general, certainly more often than not, invoice receivable finance in on a recourse basis, just as if you had a bank facility in place. Simply speaking, you're responsible for any credit losses. Purchase of business credit insurance can eliminate bad debt risk, especially if you have foreign or concentrated receivables.



Finally let’s get on to those advantages we spoke of. Here are just five of them, and if you are having challenges in accessing bank financing these advantages should have significant appeal to your firm.

First of all, it’s a classic short term funding strategy without additional collateral requirements or major emphasis on guarantees of the owners of the company.

The second advantage is timing, and we're firm believers that timing is everything in business. The hard reality is that invoice financing provides you with cash flow on the same day as you generate sales. That shortens your overall credit extension cycle by... you guess it, 100%.

Our third advantage of AR Accounts receivable finance is simply flexibility. No debt goes on your balance sheet, you’re just monetizing assets and funds can be used for any general corporate purpose.

Our 4th advantage is somewhat of a double edged sword. Traditional AR finance in Canada has the busines factor funding your receivables as an extension of your credit department. We would point out that under the right circumstances your firm can acquire a confidential AR Finance facility which allows you to do all the billing and collecting yourself. Bottom line, it’s your call.

Finally, if your firm as a lot of U.S. or foreign receivables invoice finance is a solid way to address this business challenge. Even the exchange rate is taken care of in this situation.

You owe it to your yourself of check out and understand AR Accounts receivable finance in Canada. Do any of our listed advantages make sense for your firm? If so, speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in the solution for a proper facility.

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/ar_accounts_receivable_finance_business_factor.html

Overlooked Leasing Equipment As A Source Of Business Finance ? Lease Financing Works. Here's Why!

Don’t Forget One Of Canada’s most popular business finance mechanisms



Information on leasing equipment in Canada. Canadian firms can utilize lease financing as a valuable source of business finance and funding.


Overlooked? You tell us, but we're never more amazed at why leasing equipment is such an often overlooked source of business financing in Canada. Here's why we think the ' unconverted' need to reassess this popular method of financing their businesses when it comes to asset acquisition.

Hopefully you've got your short term working capital and cash flow needs sorted out. They might include bank lines, receivable finance, working capital facilities, asset based lines of credit, etc.

But what about long term capital when it comes to financing your needed asset acquisitions? It's an entirely different form of financing and you just need to know some solid basics when it comes to eliminating any surprises. Let's cover some basics.

In general Canadian business owners and financial managers need to only know there are basically two types of leases - operating and capital. But the difference between the two of them is huge! When you engage an operating lease scenario you essentially have no ownership or acquisition rights - think if it as leasing your landline phone.

A capital lease on the other hand is a non-cacheable commitment to make a series of payments over time for the purchase of the asset; it’s as simple as that. The usual (but not always' end result of a capital lease is the transfer of ownership of the asset from the lessor to your company.

Strictly speaking, leases are a form of long term debt, but depending on the type of lease you structure, and how it's structured it doesnt necessarily have to show on your balance sheet.

Why then do we think that many businesses in Canada overlook some solid advantages in leasing equipment? And what are those advantages?

First of all leasing as a source of business finance frees up working capital that you quite frankly could use in a more productive matter. A quick example is that if your lease rate is, say 7% and you can generate returns on profit in equity of 10%, as an example... well... enough said!.

Other methods of business finance as a source of financing often require hefty down payments - leasing more often than not is 100% financing or pretty close it depending on your firms overall credit quality .

Naturally if you utilize a business leasing equipment firm you are therefore not disturbing any other credit facilities you might have in place, such as short term revolving lines of credit. And again, with decent credit you don’t have to pledge other collateral and solid credits can often negotiate a limited or no personal guarantee.

Have we made out point? We hope so. Don't overlook lease financing as a valuable source of business funding. Speak to a trusted, credible and experienced Canadian business financing advisor on solving your asset finance need 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/leasing_equipment_business_finance_source.html

Don’t Make Mistakes In Sources Of Capital And Financing For A Canadian Business Loan. Debt Or Equity? What’s Best?

Financing Sources And Their Implications in Canadian Business Finance

Information on how the Canadian franchisee entrepreneur can be successful in franchise financing in Canada . Key elements for franchise loan approval .


You're looking for sources of capital and financing for you Canadian business. A Loan? An equity arrangement? A monetization of assets ? What works best is of course the nagging question that continuously faces Canadian business owners and financial managers.

Many Canadian businesses who contemplate equity type arrangements simply aren’t ready, and it’s also the most expensive form of financing when you consider the ownership dilution that comes with that strategy.

There is usually never an easy or obvious method to get rid of financial challenges. In fact if you're looking at bank financing, which is of course ' debt ' you may well find that the bank feels that more equity from yourself is in fact required in order to obtain that debt. That's a bit ironic sometimes!

Are there any tools available to help the Canadian business owner understand both the cost of debt and equity? There are, of course.

Whenever any Canadian firm looks for financing outside the business there is a cost to the owners. Naturally if you borrow in terms of term debt the additional interest financing costs reduce profits. Selling equity of course reduces no profit, but, and it’s a big one, ownership is proportionately reduced.

We are always preaching to clients that many forms of business financing outside of equity in act do not reduce earnings if in fact you're monetizing assets and have a healthy turnover in key areas such as receivables, inventory and fixed assets relative to overall sales. That’s why we're big proponents of strategies such as A/R financing, supply chain financing, asset based lines of credit, etc.

Earnings and cash flow analysis is a solid way of evaluating debt and equity alternatives.

What then are the key areas you should always focus on when it comes to debt vs. equity analysis? Some solid ones are overall risk with respect to your ability to make payments under any debt scenario.

And whether its debt or equity consider what flexibility you have with respect to any covenants the lender or equity partner might insist on. Always watch your leverage, there is only so much debt your firm can manage and handle.

The irony in either borrowing or looking for some equity is that you're usually in one of two positions, success, or failure! That one never escapes us, as we meet clients who are successful and have a need to finance new growth or expansion, of alternatively, they are currently losing money and have some real deficiencies in their company that need to be fixed.

When you are looking for debt you can be sure the lender will focus on working capital coverage, leverage, and operating efficiencies. Equity lenders will focus on management, growth potential, and why your business is unique.

If you want to properly understand available sources of capital when it comes to business financing, a loan, or an equity arrangement consider speaking to a trusted, credible and experienced Canadian business financing advisor.




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_capital_financing_business_loan_equity.html

Good Bye Failure – Hello Success In Franchisee Financing In Canada . It’s All About Who And What In A Franchise Loan

Canadian Franchise Finance . Tips and Insights


Information on how the Canadian franchisee entrepreneur can be successful in franchise financing in Canada . Key elements for franchise loan approval .



Franchisee financing in Canada. It goes nicely hand in hand with our contention; we're often told that it’s now what you know, it’s who you know. However, in the case of a franchise loan we think that both of those count.

It is very easy to see the appeal of franchising in Canada. In many ways it’s one aspect of the entrepreneurial dream, in effect ' no boss'. But the amount of time, effort and knowledge in being successful is of course critical.

The cost of a franchise in Canada from an overall point of view can be anywhere from small to very significant, depending on the type of franchise you purchase and its perceived financial potential.

The reality is that many smaller service type franchises can be purchased for a few thousands dollars, going all the way to some that might require a total investment of debt and equity in the millions. And everything in between!

You can solve a lot of the challenge that come with buying and financing a purchase by simply surrounding yourself with a small expert team. Some of the team might cost you something, other parts of it, like some solid professional and experienced advice is pretty well free.

So who's on first? as the old comedic saying goes. Your team might well consist of mentors and peers in your own business and personal life, or a lawyer, banker, accountant, or business financing advisor. It's safe to say that pretty well all of your team, if they are the right person, will dispense some very solid advice for little or no cost.

We're often asked by clients if there is a difference between purchasing from a Canadian franchisor or a U.S. firm, given the U.S probably offers hundreds, if not thousands of additional opportunities to purchase.

Most potential franchisees we talk to want to limit financial risk when it comes to a franchise loan and franchisee financing in Canada. How can they do that? A couple of instant suggestions would be to ensure you are incorporated, which just makes common sense also from a tax and financing perspective. You do intend to generate a profit after all!

You also need to seriously consider the right amount of debt and equity you are prepared to commit to. Too much of both is generally not a good thing, not enough of either is pretty well the same story. Your equity contribution has to be based on what you can personally commit and temper that of course with what you could potentially lose in a business failure. But let's stay optimistic for goodness sake, right!

Thousands of franchises in Canada are financed by the SBL government small business loan. Formally it’s known as the BIL/ CSBF program. We recommend it to many clients simply because it also limits your personal guarantee on the loan, and has fantastic, yes fantastic ( in our opinion )rates , terms and structures, including that limited personal covenant that we just mentioned.

So, hopefully you agree. It's a classic case of both who and what you know. Speak to a trusted, credible an experienced Canadian business financing advisor who can assist you in a franchise loan for your franchisee financing needs 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/franchise_loan_franchisee_financing_canada.html

ABL Asset Based Finance - Recognize These Early Warning Signs For Your Need for The New Paradigm In Revolving Lines Of Credit

Solve A Lot Of Business Finance Challenges With An ABL Facility

Information on ABL asset based finance in Canada . How does this new revolution in business revolving lines of credit work . P.S. It’s not new!


ABL asset based finance can be the solution for business revolving lines of credit when your current finance strategy isn't working. And what are those early warning signs? They include situations where your financing currently just isn’t working due to financial challenges you have experienced in the past. They also include acquisition scenarios, turnarounds, and the proverbial double edged sword, high growth.

The simple reality is that although the ABL credit lines have essentially the same goal they in fact get to that goal line in a very different manner. Both the chartered bank facility as well as the ABL line provide you with a bridge for financing from the time you receive customer payments while all the while generating expenses.

Receivables are often the primary component of an ABL strategy. The ABL facility is not capped, so as your sales grow so can the facility, it’s as simple as that. All of this might seem similar to a bank solution, so whets the real difference. One is in fact margining, in that asset based lines of credit, with respect to the a/r component, are usually margined at 90% - typically the bank is at 75%. Although the reporting is generally stricter with ABL the reality is that the tradeoff is significant, you can borrow more and are not focused on staying within any pre set credit limit.

Many clients we talk to don't understand the daily mechanics of how the asset based lender operates given they are not a bank. (The ABL is generally not a bank, but it actually can be sometimes). The typical way this is handled is via a separate blocked account where all the deposits you receive are handled separately from your operating account. Simply speaking you get money from the ABL via your operating account, and your receipts go into the other account. Naturally both accounts are fluctuating all the time.

While some of these terms and the actual ABL facility itself might seem ' new ' the reality is that this type of financing has been happening for decades in the U.S. and is enjoying more popularity everyday. In effect it has become ' mainstream'.

While we have focused on receivables as one component of the ABL strategy the other parts are inventory, equipment, and even real estate. All of these are neatly combined into one revolving facility, enhancing your overall borrowing power. The fact that they are margined at much higher rates than a chartered bank facility simply becomes a ' win ' for your firm.

While banks focus on profits and cash flow, which sometimes are difficult to achieve! the ABL asset based finance revolving lines of credit focus on Assets! Therefore typical bank requirements such as debt to equity, tangible net worth, cash flow coverage, etc simply don’t apply in ABL finance.

ABL can cost more (it can also cost less by the way), and as we noted it require more reporting to your ABL partner. However, if it can provide solutions to growth, turnaround, acquisition, and survival we think it certainly merits your investigation. Often times the higher price of the facility can easily be offset by proper usage of funds to generate profits and savings.

Speak to a trusted, credible and experienced Canadian business financing advisor if you with to look at the new paradigm in business 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/abl_asset_based_finance_revolving_lines_of_credit.html