Why Is ABL Asset Based Financing The Rising Star For A Business Credit Facility In Canada?

A New Strategy For Business Credit Lines

Information on the business credit facility known as ‘ abl ‘. Why the asset based financing revolving line is the new choice for businesses looking for more liquidity .




An ABL asset financing business credit facility. Is it really the ' rising star’in Canadian business financing? We let clients be the judge, but let's look at some key facts around Canada's newest business credit revolver.

As a general rule we can say that ABL facilities compete with Canada's chartered banks when it comes to business credit. (There's more than a bit of irony there, because many of the Canadian banks have recognized that and set up small boutique divisions within their bank to offer the same service that ' regular ‘ banking does !) But we digress...

Canadian business owners and financial managers are famous for criticizing the Canadian banking system when it comes to access to capital. We're reminded of a U.S. comedians line ' before you criticize someone, walk a mile in their shoes, that way you're a mile away and at least you have their shoes ' ! From our part no one admires the Canadian banking system more than us... one simply has to accept the limitations that have made them the strongest banks in the world.

So why then does a non bank asset based line of credit work when a Canadian firm can't access the amount and type of financing it needs. The answer to that is quite powerful. It’s that asset based lenders provide receivable financing, high risk financing, debtor in possession/bankruptcy financing, acquisition financing, turnaround finance, and, dare we say it, growth finance. Wow and double wow!

The benefit to consider such financing is that it pretty well covers all Canadian industries, and, as importantly, no matter what stage they are in, i.e. start up, growth, or dire straits! By the way, out of those three growth is our favorite!!

There are a number of different, can we call them ' flavors’ of ABL asset financing business credit lines. We could call these facilities a 'hybrid ' in effect.

There are some other ' not ' so obvious benefits to this type of business credit facility. Financing costs under an ABL are of course covered by pre tax dollars. This is not an equity play! Different rate structures are available to the Canadian business owner. In some cases ABL rates are ' lower ' thank banks - we've seen that often. In general rates are higher though, and based on the overall credit profile. Facilities are generally open, although some asset based lenders might insist, or request a minimum term of 1 year or more. Finally, asset based business credit lines simply monetize your assets for more liquidity than a Canadian chartered bank would. This is not term financing - its business liquidity based on your current assets on the balance sheet.

Intrigued? Want to investigate the new ' rising star ' in Canadian business finance? Speak to a trusted, credible and experienced Canadian business financing advisor on why this unique mechanism might just be the solution you're looking for.

7 PARK AVENUE FINANCIAL
CANADIAN ASSET BASED LINE OF CREDIT EXPERTISE



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_financing_business_credit_facility.html

So How Much Working Capital And Business Finance Funding Do You Really Need ? Here’s How Much And Why!

So Exactly Where Is The Money ?


Information on working capital and business finance in Canada. How does the business owner determine how much funding he or she really needs?



Working Capital needs come out of your firm’s requirement to meet cash needs. This is of course not the type of business finance and funding that you need when you acquire assets such as equipment.

How then can the Canadian owner and business manager determine the amount of cash flow needs, as well as the best way to solve the problem... i.e. a solution!

The way to do that is to spend some time on whats known as your ' trading cycle ‘... aka ' cash flow cycle '.

It's all about understanding how your payables arise and how the products and services you purchase translate into either inventory or direct to sales. And here’s the secret - the speed, or total time it takes for all that to happen in effect determines your cash flow and working capital funding needs.

To make the actual calculation work you need to look at turnover in your receivables, inventories (if applicable) and payables. Payables are of course ' cash outflow ‘but still very important in our calculation.

Most business owners or financial managers probably intuitively know how long it takes them to collect their sales receivables . The days of sales you have tied up in receivables is calculated by taking your average A/R balance and dividing it by your average daily sales. Hopefully every business owner has quick access to that data... if he or she doesnt we suggest... there's a problem!

Not every company has inventory, but if your firm does the amount of additional product you have to carry translates into extra cash need.

Remember also that those two asset categories, receivables and inventory are your main borrowing collateral in working capital funding. Also note that typically with a standard bank arrangement you can typically borrow 75% of your total receivables and (hopefully) some type of percentage against your inventory.

One of the alternatives to traditional bank financing in Canada is asset based lending - here it's important to note that typical a/r advances are 90% of total a/r, and a healthy borrowing base against inventory . (Every company and industry is a bit different when it comes to inventories).

It's a truth in Canadian business that if your business is growing it needs money. And don't forget that a lot of businesses also have to juggle seasonality of sales and buildups in A/R and inventory. Think of it this way - Receivables Eat Cash! Thats one reason why high growth companies that seemingly are making money are in huge negative cash flow problems that need to be addressed.

How does the Canadian business owner address these challenges? The solutions are readily available:

Receivable Finance

Inventory Financing

Supply chain finance

Asset based lending

Tax Credit Monetization


Speak to a trusted , credible and experienced Canadian business financing advisor when it comes to determining both what your working capital and business finance funding need is, and .. where to get that problem solved!

7 PARK AVENUE FINANCIAL
CANADIAN WORKING CAPITAL BUSINESS FUNDING EXPERTISE








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_business_finance_funding.html

Here’s Your Leasing Equipment Checklist . Use This Info For Great Lease Finance Rates, Terms, And Approvals In Canada

When Is The Right Time To Utilize Leasing ?


Information on lease finance in Canada. A checklist for leasing equipment for the business owner contemplating an asset transaction.




Leasing equipment in Canada. When it comes to lease finance of assets how though does the Canadian business owner and financial manager know when this method of financing assets is both the right time ... and let's not forget ' how to '!

Interest rates are always a key factor in borrowing of any funds for business. If your alternatives for borrowing for business are limited then lease finance becomes a desirable form of finance - it has now become a working alternative!

Don't forget though that interest rates in leasing equipment in Canada are dictated by overall credit quality - so although you may be approved for leasing not withstanding your firm’s credit, you may also have a higher rate within the lease. But its all about access to capital, not cost of capital for the majority of business borrowers.

Don't forget to speak to your accountant about the tax benefits of leasing assets in Canada. Also, in many cases you might find that your bank might want additional collateral, commitment fees, or compensating balances, or outside collateral. Many of these are requests are not within general lease finance offers in Canada.


Is there a checklist the business owner of finance manager can utilize to finance assets via leasing? There definitely is, and here are some solid pointers:

- Always consider the obsolescence factor when it comes to acquiring an asset - and definitely consider lease finance if your asset has a somewhat defined useful life

- If you need the asset for a project or a shorter period of time asset finance is a solid strategy. We would point out though that, in general, the shorter term you can acquire in Canada tends to be 24 months. Typical amortizations by the way tend to be 3-5 years , but larger assets or assets that hold their value can in fact often be leased for terms up to 7 years , or longer .

- In business it's all about capital preservation, so always consider your access to operating funds when acquiring an asset - that’s when leasing equipment becomes the optimal solution

- Don't forget to review the type of lease you want to enter into - In Canada we keep it pretty simple, it boils down to lease to own, or lease to use . The terms for those two leases are capital and operating, respectively.

Who can you lease from in Canada? In Canada it boils down to private lenders, non bank independent finance firms, captive firms, and bank leasing subsidiaries.

So how do you go about making that choice? A good option is to use the service of a Canadian business financing advisor who can add solid value to the choice of term and overall rate, term, and structure.

There are many factors that are involved in the choice of financing an asset. Use this checklist to better understand your options.

7 PARK AVENUE FINANCIAL
CANADIAN LEASE FINANCING EXPERTISE



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_lease_finance_canada.html







Stan Prokop

Critical Aspects of AR Finance In Canada . Factoring Of Accounts Receivables - The Right Way!

Factoring In Canada - ‘ Doin’ It Right ‘!


Information on AR finance in Canada . 6 Critical things to consider in the factoring of accounts receivables .


AR Finance is a very valuable method of financing a company in Canada. The process goes under various names, and there are some subtle and not so subtle differences in the terminology - aka the ' factoring of accounts receivables '. Other terms are receivable finance, invoice discounting, etc.

The arrangement is pretty basic, and in fact has been around hundreds of years. In Canada we appear to be ' catching up '! The arrangement is as follows - the finance firm enters into an agreement to purchase accounts receivable from your firm. That right there is an immediate well publicized benefit - even if your firm can’t access bank financing, or is a start up, etc you immediately have found the ability to finance your firm, based solely on your sales.

Although the actual ' cost ' of AR Finance seems to be subject # 1 when it comes to discussing factoring but this cost is balanced against some pretty major benefits - your firm now has pretty well all the cash it needs, supplier discounts can be taken to reduce up to half of your financing costs, and your competitors who seemed to be taking business away from you ( perhaps they are factoring also ?!) are now in your firms rear view mirror .

Oh and by the way, all the lending covenants and restrictions that come with Canadian chartered banks simply don't exist in AR finance. Time is also critical to clients we talk to, and solid ar financing transaction can be completed in one or two weeks - if you're dealing with the right parties or advisor.

There are three drivers that pretty well secure the fact that your firm could significantly benefit from ar finance - they are your ability to demonstrate good gross margins, reasonable overheads, and the ability to potentially increase your prices a bit or take supplier discounts at the other end of the spectrum.

Perhaps your firm is having some serious financial challenges; and at the same time you just might be experiencing a solid growth period in revenues. Even more so you might be coming out of a turnaround phase in your firm and you're not quite ready for the bank yet. In those cases the cost of factoring of accounts receivables can easily be justified around the speed, flexibility, access to capital, etc.

Speak to a trusted, credible and experienced Canadian business financing advisor on how your firm can benefit from this accepted business financing strategy.

7 PARK AVENUE FINANCIAL
CANADIAN AR FINANCE EXPERTISE




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_finance_factoring_of_accounts_receivables.html

SBL Loans . Great Rates , Terms , Structures . The Canada Government Small Business Loan Ticks Off All The Boxes!

Why The Government Small Business Loan Makes Sense For Your Company Or Start UP .

Information on the Canada government small business loan . Why do SBL loans work for a solid Canadian business financing solution



The Canada government small business loan. In our opinion the Canada the SBL Loans program is, bar none, the best business financing vehicle in Canada. Why is that? As we say, it ' ticks all the boxes ' when it comes to what the Canadian SME Canadian business owner or manager is looking for. Here's why.

So why should you know about the program, how do you access it, and what is involved. Entrepreneurs and growing business are always looking for funding, and that’s what this program provides.

Can the SBL government loan program make a small company a big company? We won't weigh in on that one, we're not even sure that that’s the goal of all business owners. But small firms, restaurants, service companies and other business categories have no where to go when it comes to start up or interim financing. That's where the SBL comes in.

The program is run and administered by INDUSTRY CANADA, a branch of the Canadian federal government. It's goal, vis a vis the program is to assist business in finance loans they might otherwise not be able to obtain.

Many business owners in Canada are concerned about the ' personal guarantee ' when it comes to pledging their personal assets against loans. Here's the good news on the SBL - you are only asked to provide a 25% personal guarantee on the transaction, and that transaction can go up to a maximum of 350,000.00$ in borrowing. The limit is actually 500k if the transaction involves real estate, which is one of the asset categories that can be financed under the program.

And by the way, getting back to that personal guarantee of 25%... none of your personal assets are pledged or collateralized, it’s simply your promise to pay... in effect make good... on the portion of the loan you guarantee.

There are three parties to SBL Canada government small business loans. Your company, the bank that originates the loan, and of course INDUSTRY CANADA folks who are in the background. You actually never deal with Industry Canada on a direct basis.

As we said, size eligibility in Canada for the loan itself is 350k. As far as the size of your company, it can either be a start up or an established firm with no more than 5 Million in sales.

Maybe it's just our clients, but they seem to hate ' paperwork '. The perception that this loan is time consuming is, in our opinion, just that, a perception. All you need is some solid advice around putting together a business plan / executive summary, a proper financial forecast, and misc back up info related to any standard business loan application. Those ' misc ' items might include your lease agreement on premises, a list of the equipment or leaseholds you're financing, etc. That’s not bad, right?

So, great rates, terms and structures? You got them with SBL loans. Speak to a trusted, credible and experienced Canadian business financing advisor for up to date advice on Canada government small business loans. And check your list, because this program ticks all the boxes!

7 PARK AVENUE FINANCIAL
CANADIAN SMALL BUSINESS LOAN EXPERTISE






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_government_small_business_loan.html




Stan Prokop

Secrets To Business Loan Success In Canada . Financing A Company The Right Way

A business loan when you're financing a company... your company..... can be a heck of a challenge in Canada. Let's focus in on some proven ' secrets ' to Canadian business financing success.

Loans are for different purposes, and that’s actually our first point, the ability to focus in on the differences in the type of financing you believe you need. That comes down to the differences between equity and debt.

We often talk to clients who have spent a lot of time putting together a package or business plan that feels like it is focused on equity or some sort of venture capital, when in fact its a debt financing, or ' loan ' that they are really attempting to close .

Bankers and other commercial debt lenders in Canada focus on collateral and cash flow . The private equity and angel type investors focus in on in things like product sales, customer acquisition, and exit strategies... What a difference!

So in focusing on your plan of attack, when it comes to a business loan, emphasize collateral (internal and external), some basic ' ratio' analysis, and historical financial statements or projections.

When we look at plans and packages that customers have shared with us they seem to focus on product and market ... what they really should be focusing on is management, profitability, and repayment of loans via cash flow generation.

When approaching Canadian banks for financing, either by you or with an advisor focus not on the bank, but the banker. Our experience is that good business bankers are in many ways a part of your team in the long run. Remember also that unlike 20 years ago, your banker probably does not have the authority to approve a loan, so you need their support and the ability to piggy back on their credibility with the underwriters.

Are there a couple of tried and tested rules for business loan packages -?

Here's a couple:

It's actually impossible to give a bank or another commercial lender too much info

Consider Canadian financing strategies when you don't need the capital or a loan, not when you’re in dire straits

Be prepared to answer all the gaps in your package - loan approvals flow towards zero risk

Loan packages should identify the amount of funds you need, the term, use of funds, and repayment ability. 99% of the time your repayment will come from internally generated cash flow and profits.

Canadian business owners and financial managers deserve business credit. The challenge is ensuring you know how it looks on the ' inside ' when it comes to dealing with your bank or any other commercial lender.

Extra assistance needed? Speak to a trusted, credible and experienced Canadian business financing advisor for a business loan when financing a company in Canada. A little expertise in finance goes a long way.






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_loan_financing_a_company_canada.html

Restaurant Financing In Canada. From Business Plan To Finance Approval. Franchise and Non Franchise . Here’s How!

Restaurant Financing In Canada. From Business Plan To Finance Approval. Franchise and Non Franchise . Here’s How!


Restaurant Financing In Canada. From Business Plan To Finance Approval. Franchise and Non Franchise . Here’s How!



Restaurant financing in Canada. If it's your choice to enter the hospitality industry lets examine how you can increase your chances of success, from business plan to that most important element... Approval!

Quite frankly we can' think of any industry that seems to be growing more quickly, and we're of course talking about both franchise restaurants as well as independents , both of whom seem to have a solid chance of success these days.

It's not ours to judge or offer up why this industry is growing so quickly or is so popular, - reasons in fact might be that we ' seem ' to be out of a recession ( key word = seem!), the economy is getting better, and those restaurants that didn’t make it now seem ripe for the pickings vis a vis locations, etc.

Pricing is of course critical in your overall strategy. While prices of franchise restaurants are of course fixed relative to franchise cost and turnkey cost to build many non franchise restaurants can be purchased for a great price - sometimes it’s just the cost of assuming the lease from a co operative landlord.

That of course brings into play the question of equity - just how much do you need to put together a proper financing, i.e. the classic mix of debt and equity ... more simply put ... a combination of borrowed money and your own money. In Canada that seems to range from anywhere from 10 - 50 per cent. depending on a number of factors which we will discuss.

One of the most popular methods of financing a hospitality venture is utilizing the Canada BIL/CSBF loan program. While it requires a 10 per cent permanent equity injection you must be in a position to demonstrate additional access to working capital, which just makes sense as your venture ramps up on sales and working capital needs.

It is also important to demonstrate that you have some industry experience, as that seems to be a key factor in the ' KEYS TO SUCESS ' column for this industry.

It all starts with a solid business plan of course - we tell clients not to worry if they don't feel they can complete a proper plan, as that assistance can come from a Canadian business financing advisor, their accountant, or any other qualified part. And these plans have a relatively speaking nominal cost relative to the risk and important you place on getting your venture financed properly.

Key elements of the business plan are your own bio, industry info, financial projections, and an overview of your business model, whether its franchise or independent, and some info on the local competition. It's really as simple as that. Demonstrating how you will run and grow the business is also important.

Typical restaurant financing includes the finance of equipment, leaseholds, working capital, and in some cases real estate. That brings up the point of lease negotiations, which must be completed prior to your financing ... for some reason lenders like to know you have a location!!!

The double edged sword of the hospitality industry is risk and reward, the ability to be your own master.

What you don’t want to do is to be part of the falling wounded when it comes to restaurant finance in Canada. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in your needs.

7 PARK AVENUE FINANCIAL
CANADIAN RESTAURANT FINANCE EXPERTISE





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/restaurant_financing_business_plan_finance_canada.html