The ABL Asset Based Revolving Credit Line: The APP You’re Looking For In Business Borrowing

Behind The Scenes In Asset Based Credit Facilities

OVERVIEW – Information on the asset based revolving credit line in Canada. ‘ABL’ borrowing is a solid way for any company to achieve business lending success




The ABL asset based revolving credit line in Canada just might be the ' APP ' you're looking for when you require business financing and liquidity in a total solution sense. These days it’s all about ' APPS' we hear - they are handy, do the job more quickly, and are unique. That's why it occurred to us that Asset based credit facilities are our version of a business financing ' APP; let’s dig in.

There's not a lot of argument these days around the factor that business owners in all sectors, particularly SME (small to medium enterprise) at least feel that the prospects of business financing solutions are limited. That’s where the 'old ways' don’t work, and the 'new ways' are being searched out. Asset credit lines are the new way.

This type of credit facility embodies practicality. And truth be told while we are positioning it as a solid alternative to commercial bank credit lines the reality is that it can be used to acquire business, or even help a company rise from the ashes when it's been in somewhat dire straits. The only requirement? Assets!

So what is the facility and how does it work.

Think of it as borrowing power against your total pool of business assets. It allows you to borrow, at all times, against the collateralized value of your business assets - and that's the usual suspects: INVENTORY, A/R, EQUIPMENT, and REAL ESTATE.

While the business owner and manager might view this as a bit more of a specialized financing the reality is that it provides the same working capital and cash flow that you would get from a Canadian chartered bank. The only difference - more borrowing power!

It's been clear to us for quite awhile now that the ABL borrowing line has appeal to a broad brush of Canadian business. Those categories:

Companies who don’t qualify for bank credit
Companies who don't qualify for enough bank credit!
Refinancing of a business
Acquiring another company
Start ups
High growth scenarios
Management buyouts

While we speak typically of the asset based revolving credit line in terms of the ' total solution' encompassing all your business assets there are a number of, let us call them ' subsets' of this method of financing. These subsets include:

A/R Financing
Inventory finance
PO/Contract financing

The above niche type of financings are available at all times to business borrowers depending on your unique need and industry specifics.

ABL credit lines on a day to day basis work the same way as commercial bank credit lines. The ABL lender though imposes more reporting and in some cases funds coming in (not going out) may be directed to a blocked account that repays your ABL lender on a revolving basis.

If you want to get behind the scenes on that business ' APP' called ABL seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you make that work.




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 Asset Based Business Credit Line Expertise





Have A Question /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

Financing The Research And Development SR ED Credit : A 360 Degree View Including Film, Tv And Animation Credits

Don’t Worry : It’s Normal To Finance Sr&ed Tax Credits Or Your Film TV And Animation Credits

OVERVIEW – Information on the financing of the SR&ED ( SR ED) Research & Development Tax Credit . SRED and Film credits credits can be financed to help ‘ cash flow’ your expenses and provide valuable working capital





The Research and Development SR&ED tax credit , along with film financing credits can be maximized in another way. That way? You can finance both of these credits for cash flow needs. While not everyone in Canada these days agrees with these two very generous programs, it's safe to say those firms that use them do in fact appreciate them and often also don't recognize they can be financed. Let's dig in.

To be clear, we're talking about 2 specific programs in two VERY different industries - The SRED program in the industrial/tech economy, and the various film, animation, and TV tax credits that are available to the entertainment / Transmedia industry.

Billions is given out in SR&ED each year, and hundreds of millions are provided to the Transmedia industry in Canada.

Let's first focus on the SR ED program. Many clients we deal with have faithfully filed claims every year - while in some cases many feel that a large number of those who qualify haven’t even heard of the program or consider it too time consuming. We can only speak for ourselves, but if the government was handing out those billions of $ to our competition we'd be first to get in line.


One thing that is very common to both the SR ED and media tax credits is who prepares them. In the case of the former it’s a SR&ED consultant. His or her goal is to maximize your claim, which became more of a challenge in the last few years as the govt tightened up the program. When you finance your research and development SR ED credit a certain amount of weight in the approval process is always given to the quality and reputation of the preparer of the claim.



The software industry in Canada is a huge user of SR&ED credits. After all someone has to pay for all that ' bleeding edge development that is begging to be commercialized. In the case of media and film credits its all about utilizing the right program among several that pertain to incentives provided to the industry. It's interesting to note that it is very possible to use a SRED credit for gaming software, again re-enforcing the need for a great SR&ED or Media accountant.

In the case of the media tax credits the above role falls on the tax credit accountant, a specialized and focus individual or firm who maximizes your claim on your budgets based on numerous criteria that must be met and can be exploited for a richer claim. So as un - exciting as it might seem to many , when it comes to preparing, and financing tax credits in Canada ' beancounters ' rule!

An interesting part of the whole tax credit preparation and financing scenario is the fact that your firm (in the case of SRED), or your production (in the case of film, media, animation) does not necessarily have to be profitable or in the case of SR&ED successful. You must have to validate that it was money properly spent under the auspices of the program.


It's all about ' the spend' when it comes to tax credits and maximizing the financing around them. If your financials and budget can validate your research (SR&ED) or your production budget (film) tax credits can be financed in two key ways. For both types of credits it's almost a co incidence that they are financed in the same manner. Claims that you've prepared and filed already are typically financed at the 70-75% level of their full value.

In both cases the financing structure typically used is a ' bridge loan'. The good news here is no payments are typically made by the applicant, and things are ' settled up ' on final approval of the claim by the SRED or film authorities (CRA and your province). At that time a typical claim has you receiving the balance of your claim, i.e. the other 30%, less financing costs.

Because only a very small handful of niche divisions of our banks actually will consider a tax credit financing a large amount of tax credits in both sectors are financing by non bank entities with people and expertise pertaining to each type of credit.

If you’re looking to maximize the full benefit of tax credits in Canada (via financing them!) seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your 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 Tax Credit Financing expertise







Have A Question /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

The Sale Leaseback Option . Here’s What The Business Doctor Says About An Asset Financing Lease Back

Searching For The Right Reasons To Consider A Sale Leaseback?

OVERVIEW – Information on the sale leaseback transaction in Canada. When it comes to asset financing what considerations and issues does the lease back require Canadian business owners/managers to consider




A Sale Leaseback asset financing option works best when it's done for the best reasons. What then are the considerations the business owner or financial manager makes when executing a lease back option. Let's dig in.

All types of business have the ability to consider a sale lease back strategy. While the core of the transaction is the asset itself a number of other considerations and issues arise. While the transaction typically is done for fixed assets of a firm, we must point out also that even real estate is a prime candidate for this method of refinancing.

The asset or assets are the heart of the sale leaseback - these assets must be unencumbered and free of all lines and collateral registration by other lenders. In some cases when it makes sense current financing on assets can also be paid out in the course of the new financing. This typically is done when a relatively small balance is still owing and the asset itself still has considerable value.

More often than not we are in fact seeing company owned assets being refinanced under our strategy. The primary reasons for that tends to be a realization by the business owner that owning real estate is in fact not the core business of the firm, and capital could be better deployed elsewhere.

In some cases the main purpose of the refinancing is simply to pay down debt that has come due, matured, or is weighing down cash flow and working capital.

How then can we summarize the key benefits

of asset financing under a sale leaseback. Key reasons are as follows:

Owners of the company wish to take out capital in the business while not depleting operating cash flows

Capital in the sale lease back can often be used to enhance the marketing and revenue prospects of the company

Funds from a leaseback can be used to grow profits and more strongly enhance the firm’s ability to enhance returns on investment and capital

Additional assets can be purchased with the lease back funding, and funds could also be used to grow the firm’s investment in R&D

In certain cases it might make sense to refinance the business at lower rates than were previously available - currently business interest rates are at an all time low

It's important to understand the manner in which a leaseback is created. As the lender, typically a bank or commercial finance firm is focused on the asset itself (real estate, equipment, technology, etc) an appraisal is typically required. Various types of appraisals exist and are mandated by particular lenders. In some cases it can simply be a ' desktop ' appraisal, where informal research is done on the asset. (Thank You Mr. Internet).

In other cases extensive analysis and diligence is carried out by a professional appraisal that focuses on current market values, liquidation values in a worst case scenario, etc.

It's important to note that two, let us call them ' subsets' of the lease back exist. One is that the transaction can be structured as a bridge loan with varying terms. The other is in the context of an Asset based line of credit, where your asset/assets are monetized within a revolving credit line. Same benefits, different paperwork.

At the end of the day what makes a good sale leaseback when it comes to asset financing/refinancing. We think it’s when both the lender and the borrower are properly satisfied with the financial benefits of the transaction -simple as that.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can ensure you're doing the deal for the right reasons for this valuable business finance options for many firms 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 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 Sale Leaseback Financing Expertise


Have A Question /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

The Canada Small Business Financing Program : Exploding The Myths Of SBL Loans In Canada

What’s So Smart About Government SBL Small Business Loans

OVERVIEW – Information on SBL loans in Canada . Why is the Canada small business financing program loan ‘ smart’ financing for many business owners and entrepreneurs





Is the Canada Small Business Financing Program a smart way to finance your business? We think it is, if you understand what it is... and what it isn't! Let's dig in.

The SBL govt loan program in Canada is in some way a ' preferred' program when it comes to the SME sector. While some SME businesses in Canada can in fact be a fair size we would quickly point out that our first fact here is simply that the program is geared toward businesses that have actual or projected revenues under the 5 Million $ threshold .

It's a customized program that provides financing for a small handful of asset categories; those include equipment, leasehold improvements, technology equipment and application software, and even real estate. The typical mis-interpretation of the program is that it's a cash loan, a working capital loan, or a revolving line of credit. The answer is a categorical ' NO IT IS NOT ' to all 3 of those!

How does the program work? It could not be simpler. The SBL loan funds 90% of anything you buy in the approved asset categories, which of course mean that your ' down payment' or a better term ' equity component' is a minimum of 10 per cent. Careful attention in your business plan and financial projections needs to be made around ensuring your working capital and debt to equity ratios are considered reasonable.

While many business owners wish funds could be used for working capital and cash flow needs that simply is not the case. So if you're ' smart' on SBL loans you'll take some time to know what it covers relative to what can be financed.

Terms typically sought by our clients tend to be in the 5-7year range.

In the U.S. many institutions partner with the government on their version of this loan program. That isn’t the case here in Canada - the main partner is your local chartered bank. Your application and approval process will in fact be much quicker, and smoother when you've found a banker or Canadian business financing advisor that understands the program and knows how to ' fast track' you toward approval .

There are a couple other key advantages of the program - they include the pricing, which is very favorable relative to overall credit risk in the SME sector ( that includes start ups also by the way ) and is currently in the 3% over prime these days. With rates currently so low that’s a solid cost of funds.

Many franchises in Canada are well suited to the SBL govt loan program. We suspect it wasn’t intended for that, it’s simply turned out to be the case. Banks won’t finance 95% of all franchises directly, but are happy to do so under the auspices of the Govt Canada Small business financing program.

‘Will I have to guarantee the loan personally? ‘Is a key question asked by clients we meet in the SBL process? The answer is... partially, as only 25% of the loan will be under your personal covenant.

There are many myths around SBL loans:

Myth # 1- Do I have to work with or meet or present to the government
Answer - NO

Myth #2 - Is the process complicated
Answer - It will absolutely be complicated if you're not prepared. However if you have a business plan, reasonable personal credit history, a list of assets you need financed, and some other minor documentation you're off to the races !

So are SBL loans ' smart financing’. In the right circumstances, absolutely. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you navigate

Govt loan waters!


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 = Candian SBL Canada Small Business Financing Govt Loan Expertise

Have A Question /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

Stalking Business Financing Options In Canada : Commercial Lending Options For Canadian Firms

CSI Business Financing .

Solving The Great Canadian Capital Mystery

OVERVIEW – Information on business financing solutions when it comes to commercial lending needs in Canada . What game plan must be in place to ensure optimal access to business finance





Business financing in Canada must often seem like a ' CSI ' like capital mystery to the Canadian business owner and financial manager. If he or she is on the right track they can almost be looked upon as ' stalkers ' when it comes to searching for the (right) business capital to financing their growing businesses. And it sure feels sometimes that the whole financing process feels like a ‘ crime scene ‘ of sorts . Let's dig in!

Planning business finance strategies allows your firm to stay ahead of the game. And your ability to put the right strategy in place will always allow you to bargain with strength when it comes to financing your company.

One question business owner/mgr's face is the issue of getting financing with their own internal resources and expertise, or to seek the in put of an external financial advisor. That role can be filled by your accountant, lawyer, of a business financing advisor with a track record of success and one with whom you are comfortable with.

A suitable amount of planning has to be in place- simple understanding where your firm’s balance sheet is at today, and where it needs to be when it comes to planned growth.

One part of the whole planning process that can more easily be defined is your need to plan for equipment asset needs. Here the cost of these assets, their useful life, and the cash flow implications can all be addressed by EQUIPMENT FINANCE / LEASE solutions. Whether it’s a 5k copier, or a million dollar production asset for the shop floor it's all about achieving the right lease finance solution.

While a formal business plan and cash flow forecast isn’t needed when it comes to ' stalking' those financing options we can say that it sure helps. A proper plan or cash flow will allow you to clearly understand what funding you will need, and when.

There are probably about 15 quickly identifiable sources of financing for your firm. They are boil down to 3 simple categories - debt, equity, or asset monetization. Looking for a ' shopping list' for these financings?

Here they are:

Receivable Finance
Inventory financing
Sale leasebacks
Equipment leases
PO / Contract financing
Asset based bridge loans
Commercial bank lines of credit
Royalty finance arrangements
Working capital term loans
Government SBL loans
Subordinated debt/cash flow/mezzanine type financing
Private equity


And the $ 64,000.00 question?

Which one... or ones are right for your firm. That comes down fundamentally to two issues - your capital structure and your overall credit worthiness. If there is any good news in Canadian business financing its that your firm can be a start up, high growth, mature and doing well, or in bankruptcy or receivership proceedings - the bottom line ? .. There's still a financing option for your firm.

A good way to prepare for that ' stalking' process we've talked about is to simple understand what stage of business life your own firm is in - as per above, and ensure you focus in on the financing alternatives that are REALISTICALLY available for your business. It’s simple addressing the cash issue in the context of where your company is in its life cycle.

Is there a perfect financing strategy available for your firm? Sorry Virginia, but the truth is that some work better than others, and some cost less... or more than others. If you want to address what commercial lending options are available for your firm consider seeking and speaking to a trusted, credible and experienced Canadian business financing advisor who can assist you meeting the capital solutions that make sense for your firm, right here and right now.




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 & Commercial Lending Options



Have A Question /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

Growth Financing Challenges Shouldn’t Be A Meltdown: The Right Business Finance Solutions Are Key

Is The Ability To Grow Your Company Falling Apart Due Lack Of Or Improper Business Finance?

OVERVIEW – Information on growth financing strategies when it comes to which business finance solutions meet the goal of the Canadian business owner/financial manager



Growth financing in Canada usually revolves around 2 key issues: Business finance solutions that are available and managing those solutions relative to their cost and structure. Those issues should not be the cause of your firms ' meltdown ‘.

Let's dig in.

While every business in Canada isn’t obsessed with growth we can make a reasonable assumption that business owners and their financial managers do in fact want to increase the size and value of their business. We supposed the balance of the owners and entrepreneurs in Canada are obsessed with managing even worse matters, sales decline, operating losses etc. So we're all for a focus on growth.

When it comes to financing and specifically in terms of growth the status quo rarely works. We constantly meet with clients who find themselves challenged as they strive to increase revenues - the old ways of financing their firm aren't working. In some cases, remarkably, they have been self financing and didn’t even need external capital solutions.

What are those capital / cash flow/ and working capital solutions needed for. Typically they are for purchase new assets (equipment lease financing) and current asset growth in receivables and inventory. (Bank credit lines, non bank asset based lines of credit).

Any new capital or working capital resources is going to come from 1 , or a combination of 3 things - new owner equity, some sort of debt financing, or one our recommended favorites - monetizing assets .

Monetizing assets can come in the form of the bank and non bank credit lines we have mentioned. Other current assets that can be monetized are SR&ED tax credits. Two other options to consider are sale leaseback strategies of assets you have purchased and owned, but not subject to any liens or encumbrances; the final strategy is to explore a PO/Contract financing scenario.


All of these 3 different capital sources should come with the usual pros and cons analysis. That’s simply because of the following:

Debt financing is a long term permanent obligations that must be addressed with future cash flows

Equity financing and ownership dilution is expensive

Bank and commercial financing companies offer different rates terms and structures all of which must be assessed relative to cost and the obligations that come with them (ratios, loan covenants, external collateral, etc)

When it comes to both debt financing and bank and commercial finance company solutions the dreaded owner personal guarantee is always going to be an issue. Often it can be negotiated in some manner, but not always.

The general rule of thumb of course is that debt and asset monetization strategies are always going to be more expensive than equity, especially in the early years of your business when you're building value.

When we sit down with a client to assess business financing alternatives the key issues on the table are as follows:

Asset valuation and quality
Profit and Loss status
Sales prospects
Operating issues relative to asset turnover


If you don’t want your firm to face the growth meltdown challenge seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist in ensuring the ability to grow your business, without falling apart, with the right financial solution, is key.


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 = Growth Financing Expertise



Have A Question /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