Mezzanine Funding In Canada . What You’ll Learn About Cash Flow Financing In Canada

The Math Of Mezz – Mezzanine Facility Debt Financing

OVERVIEW – .Information on mezzanine funding in Canada . This unique method of cash flow financing provides alternatives to traditional secured lending solutions


Mezzanine funding in Canada. This somewhat unknown and probably under utilized method of debt financing in Canada provides some unique differences for Canadian business owners and financial managers looking for capital solutions. Let's dig in!

The fundamental basic of ' mezz ' financing is that it best suits firms who have cash flow and growth prospects (and profits by the way) but just seem unable to secure all the financing they need from Canadian chartered banks.

We've often spoken on why our Canadian chartered banks are unable to deliver on the financing your company might need. Issues of quality of hard collateral, debt to equity ratios, or firms who are in turnaround or restructuring mode simply don't always lend themselves to bank financing. Enter Mezzanine finance!

Typical mezzanine structures tend to be in the 5 year range, although that time frame has the ability to vary. It's critical to note that the mezzanine lender is always attempting to figure out how they will be ' taken out ' of the facility they have put in place for your company. That ' take out' might take the shape of a public offering, or a change into a secured lending facility. In some cases the company may be purchased, acquired or re financed.

While it's safe to say that any lender of substance is always going to assess management strength the ' unsecured' position that mezzanine funding takes on simply requires even more of a focus on the management team of the borrowing company.

So when, and why should Canadian business owners and financial managers consider a mezzanine finance solution. The reality is that a number of different scenarios might be being faced by your firm. This includes:

Contemplating an acquisition
MBO's ( management buy outs )
Restructuring
High Growth Scenarios
Asset Purchases

Let's be clear that all companies who are considering ' mezz ‘are not going to qualify. If your firm is a start up, is in r&d stage, and cant provide the solid cash flow story to repay the mezzanine loan... well let's just say ' its not going to happen '!

The key point around ‘mezz’ funding is that it occupies the unique position of being right in between the concepts of debt and equity because its loan per se its structured and more commonly thought of as debt, but in reality it’s somewhat unsecured. Also important to understand that it is not an operating facility , so don’t view it as operating capital along the lines of a business line of credit or asset based lending solution . Best way to think of it? Permanent working capital! It's a 2nd position financing, behind your secured lenders.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your cash flow financing needs.

P.S. Remember always that it’s cheaper than equity




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 10 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 :





7 PARK AVENUE FINANCIAL = CANADIAN MEZZANINE FUNDING AND CASH FLOW FINANCING SOLUTIONS


CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com


















Stan Prokop

Government Business Loans. Here’s the Rules To Follow In SBL Funding Success

The Language Of The SBL Loan In Canada


OVERVIEW – .Information on the successful acquisition of government business loans in Canada . Funding for SBL loans just might be easier than you think if you know the lingo and rules!


Governement business loans in Canada. When you understand the ' rules ' and the ' lingo ' (the language of SBL Loans) you are of course well primed to achieve business funding success. Let's dig in.

There is no doubt that Canadian business owners, including start ups are more interested than ever in exploring govt small business loans under the Federal BIL/CSBF program. Those are the actual acronyms for the program that is offered/sponsored by Industry Canada in Ottawa. Most of us just call it the ' SBL' - the small business loan.

At the end of the day understanding the rules of being successful in government guaranteed loans comes down to just a few basic components

Qualifications

Documentation

Approval Requirements

So why is the SBL such a solid option when financing challenges are tough as ever? Of the 7000-8000 loans that are approved under the program we would venture to say that many of those are start ups or franchise acquisitions. Traditional financing for the start up or franchising acquisition is tough to get, so government business loans offer a perfect solution to that need.

While many business owners mistakenly think that they have to deal with ' the government ' for this financing the truth is all it takes is to seek out and find a Canadian banker that is knowledgeable and supportive of the program. (In our experience let's just say that some bankers either aren't interested or not qualified to successfully back you request - Enough said!)

All business owners and managers are in favor of increasing their odds of approval - making the program uncomplicated and straightforward is what we are trying to convey.

While we do basically agree that there are more choices than ever for non bank financing in Canada today we also recognize that the requirements from many commercial finance companies don't allow everyone to achieve financing success. So business owners/ managers seeking loans for their business are often asked for 100 per cent personal guarantees, outside collateral, co signers, etc. Other requirements might include strict covenants and ratio maintenance, and penalties when you get successful and want to prepay the loans!


So where do government business loans weigh in on in those areas. Well get ready, because it’s all good news:

100% Personal guarantees for SBL financing is not required

No outside collateral is required

Co -signers are not accepted by the program

No ongoing covenants need to be maintained

Pre payment of the loan comes with no penalties

Bottom line - It just doesnt get any better!

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you out with the rules of government business loans and funding approval for your business.

P.S. The loan maximum under the program is $350,000.00 and your start up or business must have projected or actual revenues less than 5 Million dollars.





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 10 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 :

7 PARK AVENUE = GOVERNMENT BUSINESS LOANS EXPERTISE



CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com





















Stan Prokop

Business Franchise Loan Challenges ? Here’s How Franchising Loans Really Work In Canada

Professional Tips on Franchise Finance In Canada

OVERVIEW – .Information on the business franchise loan in Canada. What You need to know about franchising loans for entrepreneurial success in this industry



Business franchise loan challenges in Canada? We're the first to admit that the concept of getting a ' tip ' in business is not always a good thing but we’re drawing from successful experience in franchising loans that assist clients who are serious about entering this type of business.. and being successful!


There is of course a long journey between the time you decide to purchase a franchise to the time that ribbon opening! Along the way you have been vetted by the franchisor, investigated and researched your purchase decision , probably spent some time in training and orientation, and... Oh yes, we forgot... faced the finance challenge of buying the business!

Many franchisees either struggle or are uninformed about how much equity, aka ' down payment ' they have to put in the business. We forgive them for this confusion because it’s a three pronged issue -

1. How much capital the owner can comfortable raise or put in

2. How much equity capital is required by the type of financing you ultimately enter into?

3. How much capital in some cases that the franchisor insists on as a prerequisite to entering into their program - typically that amt. is one to listen to carefully as its often based on the franchisors experience as to what it takes to be financially successful, not just ' sales and revenue successful '!

While Canadian chartered banks have in essence recognized and embraced the franchise industry as a key borrowing segment it is very important to note that almost never to they finance franchises directly - even less so when it's not an ' asset heavy ' deal . So what our banks do is to carefully tailor some large national programs around the franchisors willingness to work with them in a worst case scenario - i.e. The financial failure of your business!

If you are fortunate enough to acquire a business that’s a part of a very large and successful respected chain you should be congratulated and might find some financing solace. If that is not the case one of the best possible solutions for your financing decision comes from an acronym. And that acronym? It's the BIL loan program which hundreds/thousands of franchisees use to facilitate the financing of their franchise if the purchase price is under 350k - which is the program finance cap.

Whether you are borrowing from a specialty franchise lender (yes they do exist) or from a bank or commercial finance firm it’s important that the franchisee demonstrate reasonable personal financial history. That of course means that you can demonstrate that you have run your personal finances in a manner that reflects how you would run your franchise.

Lenders and even the franchisors themselves can easily verify your personal financials via credit bureau reports, statements of personal asset, etc.

Understanding the up front challenges of franchising loans will save you time, money and ultimately guarantee financing success. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your business franchise loan 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 10 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 :


7 PARK AVENUE FINANCIAL = CANADIAN BUSINESS FRANCHISE LOANS


CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com












Stan Prokop

ABL Business Credit Line ? Why This Financing Facility Is The New Normal For Operating Lines

Is Your Operating Line Of Credit Search In Meltdown Mode? ABL Is The Solution

OVERVIEW – .Information on the ABL business credit line . Why does this financing facility solve operating facilities challenges for every size and type of firm




An ABL Business Credit Line.Is this type of financing facility the ' new normal ' when it comes to operating lines of credit in Canada. Well perhaps not for everyone, but it sure bears checking out when hundreds, probably thousands of other businesses are utilizing this type of borrowing already... and successfully.

The ABL (A = Asset B=Based L= Lending) facility is almost always compared to Canadian chartered bank lines of credit. And quite frankly, that’s ok! In actuality this type of comparison quickly brings out the major difference between these two types of operating credit solutions.

Why is that? Simply because the nature of chartered bank borrowing is rarely all ' asset based ', while that’s what the ABL is all about. Simple as that.

We suppose you can call it a philosophy of sorts, but the fact of the matter is our strong, great Canadian banks have industry regulations that forces them to focus on an all encompassing type of lending when it comes to business loans and credit facilities. Those other areas we're referring to include heavy emphasis on personal guarantees and credit history of business owners, cash flow coverage, external collateral, key operating ratio metrics, and covenants that some might view as restrictive. We're tired even just going through that list!

The majority of ABL lenders in Canada are in fact non banks. They are commercial finance companies focusing on 1 thing: Assets! They therefore have the ability to finance your business when a bank cannot.

Two key points need to be made here. One is that banks also offer ABL facilities - it’s just that they seem to be a bit poorly advertised in our humble opinion. Secondly all of a sudden the thousands of companies that weren’t eligible for Cdn. chartered bank financing all of a sudden are welcome applicants for an ABL financing facility! We suppose that we could add a third point that there is a cost differential in ABL facilities (typically higher, but not always, and sometimes lower!).

So if you company has the assets and sales growth, but not the equity or some of the other bank requirements we have touched on and identified then you are clearly a candidate for the ABL business credit line .

Although its often referred to , or thought of as a ' loan ' by the business owner or finance manger its actually simply a monetization of your current and fixed assets " a/r , inventory , equipment , real estate' if applicable .

We quickly point out that the ABL also has some other super powers! You can use it to acquire a company, stage a turnaround, or even come out of a restructuring, formal or otherwise. The higher borrowing base and ' margining power ' of such a financing allows you to bridge the gap between additional equity and simply waiting for your money from your client base.

So our bottom line today? Simply that you may strongly wish to consider maximizing borrowing power of your assets to facilitate your specific needs: growth, restructuring, inability to borrow at bank, etc. While the lower limit of such a facility is often 250k there are quite frankly no upper limits to ABL facilities in Canada. Oh yes, and some of our largest and most successful corporations utilize the method of financing - it’s just as we said, somewhat poorly advertised.

If your firm is in ‘ MELTDOWN MODE ‘ on business borrowing seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your operating facility needs , bank , or … ABL!



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 10 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 :



7 PARK AVENUE FINANCIAL = ABL BUSINESS CREDIT LINE FINANCING

CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com



















Stan Prokop

Business Cash Flow . Are You ‘ Pro’ ? The Case For Working Capital Finance Solutions And Management

The Oldest Words In The World - Not Cash Flow .. But Perhaps ?

OVERVIEW – .Information on business cash flow and working capital finance management . It’s all about the new tools for cash flow financing and understanding cost and management of current assets



Business Cash Flow in Canada . It always seems to us like a bit of an understatement when you talk to clients about working capital finance solutions and their importance. Business owners and finance managers know the challenge of raising capital or monetizing existing assets... or both!

Naturally financing needs are diverse. It could be operational cash flow, replacing existing assets, etc.

Is there a SME drought of some type in Canadian business financing? The commercials , stories, and ads we see everyday seem to say not, but in talking to owners and managers finance often seems just a step away from crisis mode.

When it comes to cash flow and working capital resources it comes down to two basic issues - managing your assets and accessing traditional or alternative finance to meet your needs. Top experts tell us that surveys of business indicate that well over 50% of all businesses in the small to mid market sector in Canada, in all industries are either worried or concerned about their ability to finance operations.

While simple mismanagement of your business assets is one reason for that the other is simply your inability to collect promptly from late paying clients. In some cases your clients actually might be temporarily unable to pay! Our traditional lending institutions such as Canadian chartered banks are risk averse - that has made them very strong in global profiles, but has left Canadian business shall we say ' unfulfilled '!

Rather than wait for the government to step in resourceful business owners/mangers have simply gone out and accessed alternative financing to meet their cash flow fluctuation needs. Thos sources include:

A/R Finance
Asset Based Non Bank Lines Of Credit
PO / Supply Chain finance
Sale Leaseback strategies
Securitization or monetizing contracts
Inventory Finance

Invoice (A/R Finance) is probably the most popular method of addressing the working capital challenge.

While owners and managers are justifiably concerned about the cost of financing they sometimes forget that how you manage your assets can significantly decrease your overall financing cost. And while some ' alternative ' finance solutions are viewed as too expensive there are numerous ways to offset costs of any financing you undertake.

Don't forget also there’s a huge difference between taking on new long term debt versus monetizing assets for cash flow. Let's utilize a quick example:

Consider a firm who borrows 100,000.00 as a term loan over 5 years, putting new debt on the balance sheet. Interest on that debt might easily be 15,000.00 over a 5 year term, even at excellent rates. Consider the business owner who monetizes 100k of A/R for a 30 day period. Cost is approx 2000$, and new sales creates profits over and over again as sales are generated and assets turned.

Don't underestimate the need for business cash flow and the power your firm has when it’s utilized properly. While ‘ cash flow ‘ may not be the oldest word or term in the world we cant underestimate its importance to business survival .

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your business cash 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 10 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 :


7 PARK AVENUE FINANCIAL = BUSINESS CASH FLOW AND WORKING CAPITAL FINANCE




7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com













Stan Prokop

Equipment Finance Canada. Finance Success Via A Leasing Company . Up Up And Away With Asset Finance Smarts

There’s No Real Dark Side When It Comes To Asset Finance !


OVERVIEW – Information on equipment finance solutions in Canada . What does the business manager need to know and look out for when selecting the right leasing company for asset finance needs

Equipment finance in Canada . It's probably just us but there is no real ' dark side ' when it comes to using this method of financing assets. So what do you need to know about the ' right ' leasing company, along with other key aspects of lease finance? Let's dig in.

There are of course a couple of methods to utilize when financing business assets. They might include a bank term loan, a bridge loan of a temporary nature, and even a spin on currently owned assets, i.e. the ‘sale leaseback '.

Every method works, but there are a number of reasons that top experts tell us that 80% of all North American firms (hey isn’t that Canada also?!) utilize lease finance.

Can the business owner and financial manager fast track equipment financing success? We think so, and it comes down to understanding who the players are, what the offering is, and what the upside and downside benefits and risks are.

Risks? While we can say that the downside risk of lease financing is small, it becomes only apparent due to a lack of misinformation by your firm, the lessee. If you enter into the wrong type of lease (there are only two choices - capital and operating) you run the risk of losing money on the final residual value of the asset. Also, if you weren't ' tending your store ‘properly and didn’t attend to the maintenance and insurance issues that come with any lease obligation that could also pose a problem.

Other risks? Well they might include improper tax and accounting treatment on your financials, or worse, losing out on the benefits that do in fact come with accounting and taxation issues as they relate to lease finance. One final point - non payment results in asset repossession - surely that one was obvious!

So, while some of those above referenced issues could be deemed ' the dark side ' the reality is that it should be obvious to Canadian business that a leasing company can provide a strong springboard to business success - i.e. it’s our ‘up up and away '!

You need to know how leasing works and that essentially comes down to understanding common lease structures and ensuring they make economical sense to you , in terms of both cash flow and the life and usefulness of the asset . To us it’s a bit unfortunate that owners/managers continually focus on interest rates only when they are searching for lease solutions. While that is an important part of the equation they forget that the documentation, their obligations, who they are dealing with, and end of term flexibility is key to asset finance success.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in meeting equipment finance needs via expertise that makes this method of financing a winning solution.


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 :

7 PARK AVENUE FINANCIAL = EQUIPMENT FINANCE
















Stan Prokop

Invoice Discounting And Factoring Are One Solution To Working Capital Cost

Is Working Capital Cost Somewhat Disturbing? Understanding the True Cost of Factoring and Invoice Discounting For Canadian Firms

OVERVIEW – Information on working capital cost and how invoice discounting and factoring solutions bridge the gap between the cost to carry current assets and the cash flow you need to run and grow business



Working Capital Cost? Most business owners understand that their largest working capital assets are accounts receivable, often followed by inventory. ( On occasion inventory might be larger - that is not the norm)

If the largest working capital asset ( and the much needed cash!) is tied up in accounts receivable then does it make sense for customers to utilize factoring and invoice discounting, despite their concerns ( and perceptions ) around cost of using this method of financing. A rought estimate of payment terms in business might be that probably 90% of the worlds firms run on 30 day payment terms. Most business owners will quickly respond that while the worlds terms are 30 days, most customers pay in 45-60 days, and, unfortunately, sometimes longer!

Business owners need and want to convert those receivables into cash. When business owners hold receivables for 60 days this becomes a more costly scenario than they think. This is one of our main points around customers perception and lack of knowledge of the true cost of carrying receivables versus converting them into cash utilizing a factoring or receivable discounting facility. We will take a look a solid example of reality and perception of reality!

Let us say that a company has a 30 day payment terms. Let us also assume that they generate a 20% overall return on equity on their business model. Finally, lets say that the customer pays in 44 days. ( Not the 30 they promised!)
$100 x 1.20 44/365 = 100$ x 1.02 = 102.22
Therefore the company can earn a 2.2 % return on the funds in those 44 days. ( Example courtesy of Standard & Poors )


If a company factors or discounts their receivables at the time those invoices are generated then they have the true ability to immediately reduce the overall period that it takes a dollar to flow through their company. The new working capital / cash can be used to expand operations, buy more inventory, etc. If a customer is charged a discount rate of 2% / month on the factoring any new financial statement will show that days sales outstanding have reduced significantly.


The most important point in our example is as follows: The longer a business owner waits to convert receivables the lower the overall return on equity is for the firm.

Business owners and financial managers are strongly urged to investigate a Wall Street term, or ratio, known as the DUPONT FORMULA. While the analysis of that formula is not the subject of our information today the business owner will see that the formula is an incredibly great way to see how asset size and asset turnover impact RETURN ON EQUITY. We would quickly note that Return on Equity is one of the strongest measures Warren Buffett uses to measure financial success. The essence of the formula is simply that if a company can turn assets more efficiently then return on assets and equity increases.


In summary we have shown that while customers many times focus only the factoring rate or price, this type of analysis is very short sighted, as the ability of a firm to utilize factoring or invoice discounting great enhances their overall asset turnover and return on equity. Factoring/Invoice Discounting reduces a company's collection period, allowing the company to finance growth.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your working capital and finance needs.






Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 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 :

7 PARK AVENUE FINANCIAL = WORKING CAPITAL FINANCING




7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com












Stan Prokop