Asset Backed Lending In Canada Is A Dynamic Way To Finance Your Business. ABL .. Works.

A Tale Of Two Business Credit Lines


OVERVIEW – Information on asset backed lending in Canada. How does this business credit method differ from other forms of financing, how does it work and what dos ‘ ABL ‘ cost




Asset backed lending in Canada just might be the way you ensure your business has the financing it needs. Simple as that. Let's dig in.

Often called ' ABL ' for short it’s a ‘niche’ financing that has come into it's own in the last 4-5 years in Canada. It's certainly been around longer than that and came our way from our good friends in the U.S. . . .

What exactly is this financing, how does it work, who is the right ABL lender for you, what does it cost?

Questions requiring a lot of answers, which we have.







Most business owners and managers know that their financing alternatives are much more limited than in the U.S. landscape. Our financial system is different, we have less ( but stronger?!) banks, and we're conservative in nature when it comes to lending, which has its pros and cons depending on whether you're the borrower or lender!

Part of the mystery around asset back lending/ABL in Canada is that the term in used in a variety of manners. In our case we're talking about a comprehensive business line of credit that allows you to borrow under one facility against receivables, fixed assets and inventory. Some people though use the term to denote the financing of equipment in a bridge loan manner, or even for describing equipment financing in Canada.

We've described then what the facility is, what does it cost and how does it work? Because ABL business credit is more generous when it comes to borrowing margins and because the qualifications are less stringent than bank criteria there are some cost and mechanics around the facility that the Canadian business owner / financial manager must consider.

In almost all cases there might be some sort of due diligence fee attached to the set up of the borrowing. We're already explained the ABL finances assets, so the asset backed lender wants to see the assets, Simple as that, so that often includes a due diligence visit or appraisal of some sort.

Almost any borrowing facility will come with some sort of legal fees to set up and collateralize the facility in the name of your lender - that pretty well goes for our banks also. Other miscellaneous fees might be monthly or yearly monitoring, and in some cases some sort of penalty for not using the facility that has been set up .

While the actual borrowing cost of this type of financing can be in some cases competitive or even lower than bank financing more realistically the costs are higher. They are often compared to mezzanine financing rates which typically are in their teens.

If the cost is higher what then are the benefits. They quite frankly are pretty dynamic. Your firm has access to more credit than you were ever able to achieve with the bank. This is basically because advances on a/r and inventory are more generous, and being able to then borrow daily, as you need it , against the value of fixed assets just makes things all that much better.

The reality is that many Asset backed borrowers in Canada either couldn’t achieve any or all the financing they need from our Chartered banks. Our banks place reliance on cash flow, owner’s credit, personal collateral, profits, and covenants. The ABL lenders only focus - assets!

Is this type of business credit for everyone? Probably not, but if you have a mix of assets, growth potential and the ability to present a strong case for a non bank line of credit it just might be your total solution to all your Canadian financing needs. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of success in asset based lending.




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 :

http://www.7parkavenuefinancial.com/asset-backed-lending-canada-abl.html





Have A Question Or Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Phone = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

Stan Prokop

Cash Flow Management Business Style . Here’s Some Success Formula Solutions

Need To Re-Engineer Your Cash Flow Financing Solutions?

OVERVIEW – Information on how business owners can implement cash flow management formula solutions for their company to enhance working capital and optimal financing for growth









Is there a cash flow formula (or formulas) that can help the business owner/financial manager with cash flow financing solutions. Your ability to re-engineer your financing as its needed is key to business success. Let's dig in.

It's your operating assets that fundamentally generate profit and getting the right financing in place for those assets is key. Understanding the relationship between sales on your income statement and accounts receivable is also critical


Although every aspect of the balance sheet, liabilities included affects cash flow we can place a lot of emphasis on financing current assets for cash flow. Those current assets on the balance sheet typically include receivables inventories, and your prepaid expenses.

In theory it's possible to have a ' lean' working capital position. While the business owner/manager wants to have optimal working capital and cash flow just simply turning over your inventories, keeping lower inventory on hands, and collecting accounts receivable when due helps you stay ' lean'.

What are the methods that Canadian business utilizes to finance current assets? Typically they are bank operating lines, non bank working capital facilities (they finance a/r and inventory and equipment under 1 credit facility)... as well as certain key ' niche ' financing solutions such as tax credit financing and Factoring .

Business owners / managers quickly realize that almost never does profit equal cash flow. There's a great old saying around that: ' IF WE'RE IN THE BLACK WHERE THE HECK IS THE GREEN?!)

The reality - cash flow from your firms operating profits move in the opposite direction to your changes in operating assets. That’s tough one for many of our clients to grasp sometimes.

What you do with your cash flow also affects your cash flow, right? Typical uses include replacement of assets. (This cash outflow can often be alleviated through the use of EQUIPMENT LEASE FINANCING. Surplus cash can also go to the owner’s accounts or to pay off term debt. The actual ' cash flow statement' of your financials (rarely read by the business owner by the way?) shows you exactly how all that transpires.

You can achieve a better cash flow management formula for your company by spending a bit more time on cash flow planning. That saves a lot of emergency running around when growth kicks in and you haven’t planned for it. Most lenders you will deal with will also respect you more (and lend you more) if you show better cash flow planning.

Never forget that all the benefits of sales and additional profits are offset by a cash flow drain on your business. It’s a common saying in business that you have to spend cash to get cash, right?

Can you honestly say your business has a total handle on cash working capital challenges and solutions? Consider seeking out and speaking to a trusted, credible and experienced CANADIAN BUSINESS FINANCING ADVISOR who can assist you in developing the right finance ' formula' for your business growth


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 Financing Cash Flow Solution Expertise

Have A Question Or Comment On Our Blog Or Canadian Business Financing Alternatives ?








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 Financing Options Are Worth More To Your Business Than You Thought. Finance Sources 101

Heres A Backdoor Entry To Business Finance Options In Canada


OVERVIEW – Information on business financing options in Canada. Knowing Your Finance Sources And Their Value .. Counts!




How much are Business Financing Options worth to the Canadian business owner/ financial manager. Top experts agree it’s quite a bit, so let’s provide the owner / manager with some privileged ' backdoor entry' into some key information and source for financing your business in Canada. Let's dig in.


The issue of knowing where your capital is coming from (term debt or operating cash flow) is pretty well top of mind for most business owners, whether they are in start up, or growth mode. The reality is that depending upon the type of business and industry you is in there are different levels of capital need. It goes all the way from one extreme to the other, capital intensive businesses, or high cash flow / working capital needs based on investments in receivables, inventory, technology, etc.

There is no discussion on Canadian business financing in Canada that happens without talking about the pros and cons of chartered bank financing for commercial loans and operating lines of credit. While large credit worth corporate borrowers have really unlimited access to bank capital the challenge for business in the SME / START UP sectors is much greater. There the focus is on personal credit history of the owners, collateral, length of time in business, etc.

Very few transactions in SME banking are done around inventory financing, equipment finance, and equipment lease needs. In fact, while some of the banks have their own independent leasing divisions the great rates and structure they require necessitate you moving your entire banking relationship over to them, which often is undesired or impractical.

Business owners in start up or SME (Small to medium enterprise) sectors should always also be cognizant of their personal credit history status. Banks and other lenders often immediately disqualify a borrower who has unsatisfactory personal credit history. TIP: Credit bureau scores of 650+ are typically desired.

One of the great mistakes business people make is to not have a plan for growth. Often that revolves around having a solid business plan and cash flow forecast, the latter being more important in some ways. Knowing when you will need more financing is a valuable commodity in business.

Because many business owners don’t understand their alternative financing options they spend a lot of time chasing ' equity or venture captial'. If the business owner takes some time to understand how private equity groups and VC's work they will save themselves a ton of time and understand very quickly that only 1% of all transactions submitted in this sector get financed
. Do we even need to mention that giving up equity in early stages of your business dilutes ownership and future returns on your work and investment?
Hopefully not.

What then are the alternate sources of capital for business -?

They include:

A/R Financing
Inventory finance
Asset based non bank lines of credit
Sale leasebacks
Tax Credit Financing
Unsecured Cash flow Loans
Bridge loans
Royalty finance schemes
Govt SBL loans - Hint - They are not offered by the govt itself!

So whether you are going in the front door of a Canadian bank or the back door via alternate finance strategies seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your finance sources that make busines financing options make sense.



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 Financing Options Expertise





Have A Question Or Comment On Our Blog Or Canadian Business Financing Alternatives ?


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

The Business Line Of Credit . Opening The Suggestion Box On Revolving Credit Needs And Choices In Canada

Do You Need Status Quo Or Status Grow When It Comes To
Business Credit Facilities?

OVERVIEW – Information on business line of credit access in Canada . A revolving credit line is critical to business survival and growth





The business line of credit . When it comes to revolving credit facilities in Canada is the ' status quo ' good enough? That status quo is of course your ' existing state of affairs ' and more often than not that ' same old' just isn’t good enough when you're growing or expanding your business.

So we've decided to open the SUGGESTION BOX

today and see what's happening in the world of corporate credit lines, including one solid alternative you might not be aware of. Let's dig in.

Top experts agree this type of borrowing; the ' revolving facility ' is both valuable and critical to your business.

It of course does make sense that our Canadian chartered banks is the one ' go to ' when it comes to business borrowing.

(SPOILER ALERT - ' What, there's another alternative?!) Bank credit is plentiful, flexible, and, top of mind for most business owners and financial managers, low cost! Commercial lending of course is big business when it comes to our Chartered banks.

So what factors determine your ability to get a business line of credit that works for your firm? There are a number, and some are more important than others. As simple as it sounds this includes clearly demonstrating you need one.

If you're in an all cash business with no receivables or inventory, which is the case for many retailers, your company is going to have a hard time demonstrating the need for revolving credit. That’s simply because this type of financing typically funds current assets such as receivables, which don't come into play in retail/cash.

The key to demonstrating your need for a corporate credit line is a cash flow forecast that shows proper assumptions in sales growth and build up in receivables and inventory. It's those assets that typically make up your borrowing base. By the way, we hate to be the bearer of bad news but it is exceedingly difficult to get such financing if you're a start up. Canadian banks are just not set up to take start up risk in corporate credit without strong collateral or equity involvement of the business owner/owners.

What are then some of those key characteristics in business credit? It should be little or no surprise that the banks focus hasn’t changed in a 100 years, and it’s the timeless adage of:

CHARACTER
CAPITAL
CAPACITY
COLLATERAL

Businesses with good commercial credit ratings, track records, and clean financials are always in a position to apply.

What about that alternative though that we mentioned to bank credit facilities. It’s called the ABL, the ' asset based loan / line of credit'. It's non bank in nature, more generous in borrowing power, easier to get 99% of the time and available in all sizes, typically from 250k to the many millions.

There is no doubt any growing company needs the cash or working capital supplied by a business line of credit. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your borrowing needs and alternatives that make sense.




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 Line Of Credit Expertise





Have A Question Or Comment On Our Blog Or Canadian Business Financing Alternatives ?

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

Tax Credit Financing In Canada .... Maximized

How To Not Wait A Long Time For Your SR&ED Or Film/TV/Animation Tax Credits . Finance Them!

OVERVIEW – Information on Tax credit Financing In Canada . Whether your tax credits are SR&ED , Film, Tv, or Animation they can be financed for valuable cash flow





Tax Credit Financing in Canada is a great alternative financing solution for Canadian firms who wish to maximize their Government tax credits. These tax credits typically arise out of the SR &ED (Scientific Research & Experimental Development) program, (commonly called SR ED) as well as various film tax credit programs that are Canadian based.

When you finance a tax credit such as SR ED you are in effect generating cash flow and working capital for your company and of course recovering monies that have already been spent! As most business owners pleasantly discover when they determine they are eligible for SR ED or film tax credits, these funds are non repayable, in effect they are grants .

The acronyms for these programs are SR & ED, FTC, (film tax credit) and OIDMTC.

Customers that we work with typically generate financings through us after they have filed their claims. With respect to the SR &ED financings these claims are filed at the same time you file your corporate tax returns. Typically we can generate and successfully complete these financings within 14 days, sometimes it takes longer due to the complexity of the claim and other financial issues your company might be facing. It is critical there are no CRA tax arrears; otherwise your claim will be offset against the arrears. In cases where the tax arrears exist, and are smaller than your claim, we can arrange to pay Ottawa and provide you with the full financing benefits of whets left in your claim.

Canadian business owners and financial managers typically use these funds for short term working capital purposes.

In some instances, particularly in the film tax credit financing area your project can receive funds under the film tax credit financing prior to filing the final claim, provided your project can confirm eligibility. In these instances it is recommended that you can successfully prove you have filed and been approved successfully in previous years.

In cases where your corporate SR & ED claim is a first time claim there is a bit more due diligence put into the quality of the claim and your overall financial position, but categorically these claims can be filed and financing originated on a first time claim. Most companies use the services of well known SR &ED preparers, which accentuate the positive nature of your claim.

With respect to SR &ED claims that are financed, typical financing is generated at 70% loan to value. That of course simply means that you receive, on financing approval, approximately 70% of the total provincial and federal claim as working capital. These funds are repaid in entirety when you claim is adjudicated, approval, and funded by the government, so you are not paying ‘ monthly payments ‘ – you simply receive the working capital injection which is offset on final approval .

Canadian companies who are interested in tax credit financing and film credit financing should speak to an experienced advisor in this area who can assist them in the financing of the claim. It’s a great Canadian alternative financing strategy!




Stan Prokop - founder of 7 Park Avenue Financial


http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 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 SR&ED And Film Tax Credit Finance Expertise





Have A Question Or Comment On Our Blog Or Canadian Business Financing Alternatives ?



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

Business Acquisition Financing Shouldn't Be Harrowing. When Buyout Finance Works Properly

Here’s Your Storyboard For Buying A Business

OVERVIEW – Information on business acquisition financing in Canada . What info and analysis makes a good buyout finance strategy successful






Business acquisition financing in Canada needs a better storyboard. Buyout finance opportunities exist all the time in the Canadian business landscape .Certainly buying a business and either growing it or turning it around is an exhilarating experience. What works and what doesnt for the would be buyer/owner? Let's dig in.

Proper acquisition finance should be done strategically - making sure the right tools and agendas are in place to make the new business work.

If you're either an entrepreneur looking to buy a business or a current business owner looking for diversification and non organic growth that typically is driven by sales and profit motives. When you enhance the value of another business both revenues and profits will grow if managed properly.

Numerous clients come to us with what they feel are ' undervalued' situations. Some of those can become overvalued if not dissected properly. Most businesses in the SME sector in Canada tend to be purchased or bought in a somewhat ' friendly ' negotiation. SME is rarely the hostile takeover environment.

A lot of the focus on your initial pricing and value of the business you are looking at will always come back to cash flow. That cash flow is going to come out of how you will mange the business relative to current assets (inventory and A/R) as well as the financing you need for current and future investment.

How then does the purchaser/buyer create that ' storyboard' we've been talking about? It's done by taking a close look at finance operations - that includes gross margins on sales, expenses, and the turnover of assets.

Business purchasers often go wrong when they don’t spend enough time on the required investment in new asset needed. That could be technology, plant equipment, vehicles, etc. All of those will require financing, which can typically be properly funded via equipment finance. The cash flow required to make those payments must be taken into account in your cash flow analysis of the acquisition.

Sales in most companies always comes back to a working capital requirement. This is the balance that comes from managing your payables and vendors as well as collecting receivables and purchasing inventory / goods.

Here's a quick way to look at that. Let’s say a company has 100,000 dollars in current assets and 80,000 dollars in current liabilities. That business has a working capital position of 20,000 dollars. Bottom line? For every dollar of sales your business needs 20 cents of working capital. You need to project that out into your future sales growth. Keep your ' capital turnover cycle' top of mind.

What are those key storyboard questions you should be asking yourself? They include:

What debt levels are in place or needed?

What amount of owner equity needs to be in the business at the time of purchase?

Are short term solvency issues a critical item? What type of financing can be put in place to solve those?


They might include:

RECEIVABLE FINANCING
INVENTORY FINANCE
BANK OR NON BAN LINES OF COMMERCIAL CREDIT

Remember the maxim ' Growth penalizes Cash ' when you're planning an acquisition for growth. That punishment can be brutal.

Methods of acquiring a business in Canada through finance include_

GOVERNMENT SBL LOANS
BRIDGE LOANS
ASSET BASED LINES OF CREDIT
BANK TERM LOANS

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your buyout 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 = Acquisition And Buyout Financing Expertise





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 Financing In Canada. Are You Addressing Banking And Credit Needs Incorrectly?

Business Finance Alternatives – Use As Directed


OVERVIEW – Information on business financing . How does management choose the right credit and banking alternatives that are available




Business financing choices in Canada. To many business owners and financial managers it must seem like they spend a tremendous... aka ' too much' time searching for the credit and banking alternatives they need to run and grow business.

What then are some of those decision points when your business is looking for capital of any type? Let's dig in.

Easy to say, but fundamentally it's all about finding the right financing in the amount that you need that carries an acceptable level of risk and cost. As we said, easier talked about than done.

More often than not it's about taking on the wrong kind, or too much debt and therefore risking business failure.

There are a number of ways in which business finances itself. They include:

Vendor / Supplier credit

Lease Finance

Bank Financing

Asset monetization

New equity

Many business owners often underestimate the power of supplier finance. The terms and credit needs you're able to negotiate contribute greatly to business cash flow. Supplier credit stems the outflows of cash. The bad news here is that everybody's in the same boat at the end of the day, as everyone, including your clients attempt to stretch payment terms.

Instead of paying with cash for equipment and technology assets business can choose to lease those assets on a lease or rental basis. Terms of anywhere from 2-7 years, sometimes longer, are available to leases assets such as rolling stock, computers, heavy equipment, production machinery, etc. Bottom line... any asset can be financed.

Canadian commercial banks offer significant financing choices when your firm seeks business credit. The most desirable bank facility is typically the ' revolver' allowing you to draw daily against the cash you need up to a set limit. The danger of breaking a bank arrangement often leads many businesses into a death spiral.

While in many cases it's desirable to get new equity into your company the challenge here is that it dilutes ownership at the expense of current owners.

Many owners and finance managers who focus on getting new equity don't fully realize that numerous ASSET MONETIZATION strategies exist as an alternative to equity in many cases.

They include-

Receivable financing
Inventory Financing
Tax Credit Financing
Royalty financing
SR&ED Tax credit monetization
Non bank asset based lines of credit
Sale leaseback
Bridge loans

4 or 5 key issues typically should come up in your overall financing decision. They include:

Flexibility of the financial offering
Risk
Cash flow and profit concerns
Control exerted by the lender based on the finance offer
Timing

At certain times in any company’s history it can't always get the financing it needs. Issues such as your overall leverage and your capital structure need to be addressed carefully. Growth, while always desired by almost all firms requires proper assessment of your financing needs.


Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with business credit and banking decisions that make sense today and tomorrow.



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 Financing And Credit Banking Expertise


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