Business Credit Facility Agreement : What You Wanted To Hear On Revolving Loan Needs

Don’t Settle For Business Credit Lines That Don’t Suit Your Needs


OVERVIEW – Information on the benefits and requirement for a business credit facility agreement . A revolving loan from a bank or commercial finance company assists in the financing of A/R and Inventory

A business credit facility agreement is often a necessity for any emerging and growing company. What are the qualifications for a revolving loan of this type, and are there choices in types of facilities? Or alternatives? Let's dig in.

In its simplest form a business credit line is a secured arrangement with a bank or commercial finance company to finance cash flow and working capital needs with Accounts Receivable and Inventory as an example. A facility works best for all parties when it constantly ' revolves '.

Your ability to manage such as facility as a borrower relates directly to your turnover of receivables and inventory. Those are key drivers in the approval for the amount and type of your facility.

In Canada business credit lines are offered both by Canadian chartered banks

as well as commercial finance firms, some of whom are called ' ABL ' lenders. That’s because those firms offer non bank asset based lines of credit.

What determines then your ability to get approved for the type and amount of financing you require? When it comes to a bank facility it’s the various components of what we call your ' risk profile '. They include quality of financials, size of current assets (A/R / inventory) and management depth and personal credit of business owners.

When you business can't achieve true bank financing, or, in some cases the amount of bank financing you need commercial finance firms can readily address your needs. Here the total focus and emphasis changes to basically only size and quality of those same busines assets.

While more costly business owners and managers we introduce this type of lending to are happy to hear that borrowing margins are much more generous. Typically that’s 90% of A/R and anywhere from 30-70% of inventory. And want another kicker - your facility can be significantly more increased if you choose to have other unencumbered fixed asset to be including into your borrowing base. That a true cash flow super charger!

You will be typically required to provide regular reporting capability vis a vis financials and aged inventory and a/r reports. For a bank this might only be one a year, sometimes more regularly. But when it comes to reporting on Asset based non bank credit facilities expect to report monthly all the time, and sometimes weekly. Various industries have different risk profiles associated with their inventories and receivables.

As a business owner or financial manager you should never have to settle for less when it comes to what you need for credit facility and loan needs. If your firm is not ' bankable ' in the amount of cash flow and working capital financing you really need seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success to ensure access to a proper business credit facility agreement.





Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :

7 PARK AVENUE FINANCIAL = CANADIAN 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

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop

Franchising Finance Canada : Don’t Settle For Less In Franchise Business Loans

Feeling Out Of Control On Franchise Business Loans ?

OVERVIEW – Information on critical elements of franchise business loans in Canada. Franchising finance in Canada requires specialized focus and knowledge

Franchise business loans in Canada can easily give the Canadian franchisee that ' out of control ' feeling when financing is needed. So when it comes to franchising finance where does one go to, who can you count on for assistance? Let's dig in.

Top industry experts tell us that over 30% of those folks considering purchasing a business in this industry rarely consider at the outset the financing and cost of the business!

Even more so of a predicament is that the average franchisee considers ' the bank ' as the logical (only?) source of capital for their business purchase. The reality? It's that very few franchises are financed by banks in a direct manner. Many are financing in an ' indirect' manner, more about that one a bit later.

So who then is doing the financing in this industry? Unlike our counterparts in the U.S. financing solutions for purchase of a franchise hardly abound, but the good news is that that are still available - you just have to know the lay of the land.

Certain specialty franchise financing firms have major programs in place for specific franchisors. More often than not these are ' tier 1' type names for major brands with strong brand recognition. If your business purchase does not fall into that category you're immediate challenged?

We spoke of an ' indirect ' manner to finance your franchise via a bank. That is achieved under the CSBF program that is sponsored /administered by INDUSTRY CANADA, a branch of the Cdn government. Commonly called the ' SBL ' Small business loan this program is run by the banks but the majority of the loan is ' guaranteed ' by the government.

While we think it's a great program for franchising loans our problem with the SBL loan is that each bank has their own twist and interpretation on the requirements. So it's incumbent on the franchisee to ensure they have the knowledge, or the help of an advisor, to maximize success in financing approval under this program.

Going it alone in business is never a great feeling, especially in start up or business purchase mode, so don't forget to draw on the experience of your contacts with a lawyer, accountant, a business advisor, etc. It's their skill and expertise that will change losing to winning.

Financing can also be significantly complemented via equipment financing, working capital term loans, working capital credit lines, etc.

Don't forget also that an existing franchise can also be financing in much the same method as a start up/turn key scenario. In some cases it reduces risk as you have access to financial statements, asset lists, etc of the existing owner. Naturally the approval of the franchisor is also required.

So, bottom line? You don't have to settle for less when you've got some knowledge and experience behind you. Eliminate that ' out of control' feeling in financing a franchise - seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you in your franchising finance needs.




Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :

7 PARK AVENUE FINANCIAL = CANADIAN FRANCHISING 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

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '































Stan Prokop

Commercial Bank Business Loan Success In Canada : Key Ingredients In Financing Businesses Properly

Hitting The BullsEye With Bank Loans And Financing In Canada



OVERVIEW – Information on the commercial bank business loan in Canada . Financing business needs comes via understanding key elements and alternatives



Financing businesses in Canada for the majority of business owners and financial managers conjures up more often than not only one thought - a commercial bank business loan. While other alternatives exist, more so today than ever our banks are usually top of mind when it comes to finance solutions. Let's dig in.

Whether it’s operating capital to run and grow their business or term debt of some sort it’s that external capital challenge realization that becomes your focus. For businesses in the SME Commercial (small to medium enterprise) sector that funding might come from personal resources or the proverbial ' friends and family ' but typically the owners focus is either a bank or commercial finance firm.

Does the typical owner / manager understand what drives bank approvals for financing requests? When we talk to clients it's usually listening to their negative experiences in accessing bank funding. We've always found that interesting as there is probably not a more straightforward system that banks use to scorecard and approve financing. Let's take a look at some of those key ingredients in properly funding a business.

Let's take a look at that system a bit, if anything it will provide the borrower with the ability to self evaluate , saving time and energy on getting the right financing. Oh, and by the way, in our opinion it's the banker not the bank, so focus on a relationship, not a logo.

While banks offer a number of solutions - typically revolving credit facilities, term loans, asset financing, etc. the focus for approval always comes down to looking at current and forecasted financials to determine the best method of structuring financing.

That is not to say that past performance is not also looked at, as well as the overall asset quality of your business in relation to the amount borrowed.

The actual 'net worth ' of a business is key in bank financing. The amount of debt you have, in combination with the amount you are requesting must make sense to the bank. One key rule of thumb for the majority of industries in Canada is that your total debt should not be more than 2 times the equity in the business. As we said though, that formula varies within industries.

Many businesses in the SME sector, particularly start ups and smaller firms can take advantage of bank financing via the Government Small Business Loan. Recent changes to the program make this financing even more attractive, but it already offered good rates, Borrowing limits recently increased also, with the previous limit being 350k.

When bank financing is not available for the firm that can’t meet the ownership equity issues and cash flow coverage that a bank desires non bank solutions usually can. They include:

A/R Financing

Inventory Finance

Asset based non bank revolving credit facilities

SR&ED Tax Credit Financing

Equipment Financing/Sale Leasebacks

Working Captial term loans

PO Financing


If you're looking to hit the ' bulls eye ' in a commercial bank business loan seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can help ensure success.




Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :

http://www.7parkavenuefinancial.com/commercial-bank-business-loan-financing-businesses.html









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

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '























Stan Prokop


.

Finance Companies And The Bank : Your Pre Flight Plan For Canadian Business Financing Has Changed

We’re Not In Kansas Anymore Dorothy .. Canadian Business Financing Has Changed


OVERVIEW – Information on changes in Canadian business financing . The solutions and roles of finance companies and banks have changed dramatically





Canadian business financing has changed. As we learned in the classic Wizard of OZ MOVIE what you expect in one world might not necessarily be the case. Sorry about that Dorothy!

Simple as that. So whether it’s ' the banks ‘, or commercial finance companies in Canada you need a 'flight plan ' of sorts, more than ever, for the finance challenges your company faces. Let's dig in.

Most business owners and financial managers recognize that the access to the financing they need is vey much dependent on the current state of the credit markets, economy, etc. As an owner/manager of a business you keep hearing about all the ' capital ' that is out there, it just doesn't seem to be anywhere close to you!

When accessing credit through banks or finance companies in Canada it’s all about terms, rate and structure that suit your specific business. That then needs to be broken down into the right delivery - from either a Canadian chartered bank, a commercial finance company or asset based lender, and in a small amount of cases equity financing from VC’s, PEG's ( private equity groups ) etc.

By the way, probably only one of every 500 or so firms is actually a candidate for equity type financing in Canada, so valuable time is often wasted pursuing this route. However, if you're one of those 500 Congrats!

So how do you know which funding alternative makes the best sense for your firm. It's important to realize what ' stage ' your company is in, which ranges from pre revenue start ups to mature growing companies , and in the middle of all the SME COMMERCIAL area - the latter probably being the largest sector.

Use of funds is important in consideration of financing. That might be all the way from acquiring another business, to acquiring new assets, monetizing cash flow, etc.

There is a very basic ' flight plan ' you probably should follow in seeking financing. That includes thing such as being prepared for the right timelines, as it ALWAYS takes longer than you think, so starting early is important. Knowing your competition is financed is also helpful as certain industries qualify much better for certain types of financing.

As we are focusing on non equity type options, it's important to know what debt financing makes sense, how it works, and what asset monetization strategies cost.

So what in fact are those potential sources of financing from banks or commercial finance firms? They include:

Bank lines of credit / term loans

A/R Financing

Inventory Finance

Purchase order/supply chain financing

Asset based loans/bridge loans

Equipment Financing/ Sale leaseback strategies

Monetizing SR&ED tax credits

Government Small business loans

Cash flow/mezzanine loans

Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you in matching and sourcing the right amount of financing for your company.






Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :

7 PARK AVENUE FINANCIAL = CANADIAN BUSINESS FINANCING SOLUTIONS FOR DEBT AND ASSET MONETIZATION







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

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '





























Stan Prokop

AR Finance In Canada : Avoiding Rough Waters In Receivable Services Purchase Financing

Take A Swipe Against One Of The Two Negative Issues In A/R Financing in Canada

OVERVIEW – Information on receivable services in Canada . When it comes to purchase financing and AR Finance certain negative perceptions around this method of financing can be easily corrected . Here is how

Receivable services as they relate to purchase financing are often a major point of discussion when it comes to two areas of consideration - how they work on a day to day basis, and of course... pricing.

Some might say there are some ' rough waters '

as it relates to this aspect of Canadian business financing. We've got some thoughts on pricing, but our real focus on AR finance today is really how a facility works. Let's dig in.

Many clients we talk to are simply not aware of the growing popularity of receivable finance - and it's a world wide movement by the way - if anything Canada was a bit late to the game. Confusion often exists in the mind of the business owner/financial manager as it relates to the differences in financing your A/R via the bank or a third party commercial finance firm.

We can say somewhat ' tongue in cheek ' that one of those differences is approval by they way!. But putting aside getting approved the real difference is how these facilities work.

The words ' purchase ' and ' collateral ' are key in understanding the financing differences. In the case of a Canadian chartered bank it takes your AR as collateral under a borrowing agreement. The paperwork around receivable financing in effect states you sell your A/R as opposed to collateralizing it. That's the key difference.

One benefit of receivable services is that you can utilize it on an ongoing basis for all your accounts, all the time, or, if you choose you can selectively only utilize what you need at any given time. In fairness that of course also exists at the bank under their facility - in both cases you are only paying for what you use.

For 99% of all purchase financing of receivables there is a requirement that your client be 'notified ' of the financing arrangement. This creates those ' rough waters ' for many business owners as they don't necessarily like to have the world see how they are financing their business, much less their competitors.

So can the owner/manager seeking cash flow financing avoid that whole issue of notification? The answer is a resounding ' YES YOU CAN ' - and that is achieved via Confidential Receivable Financing.

How does that work then? It's pretty basic - your firm and your firm alone are responsible for billing and collecting your own invoices. Naturally the better you are at extending credit and managing asset turnover in receivables lowers the overall cost of this method of financing. (These costs can be reduced big time in other ways - including your new found ability to take discounts with suppliers as well as the opportunity to negotiate better pricing with suppliers based on payment terms and ability)

The qualifications for Confidential A/R financing are still the same - your customers must be inside North America, you must have the ability to produce regular financials and your business must be in a steady or upward spiral as opposed to ' downward '!

AR Finance purchase financing of receivables makes total sense when you are unable to achieve the cash flow and working capital needs via a bank or owner equity. To re view how things work , costs, and benefits consider seeking out and speaking to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you in navigating rough waters in financing considerations for your company .



Stan Prokop - 7 Park Avenue Financial :
http://www.7parkavenuefinancial.com
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :


7 PARK AVENUE FINANCIAL = CANADIAN A/R 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

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop

Cash Flow Finance Needs : Behind The Scenes Solutions In Working Capital Financing In Canada

Here’s Your ‘ Eject Button ‘ For Bad Working Capital and Cash Flow Situations

OVERVIEW – Information on cash flow finance options for Canadian business owners and financial managers . Are you up to date with available solutions for your business working capital needs?

Cash flow finance brings out the curiosity in business owners and financial managers in Canada. That curiosity is often driven by wondering what the competition is doing, and, as importantly, have the company’s current strategies around working capital financing really worked out. Let's dig in.

Unfortunately in many cases you might feel that it’s about time to press the ' EJECT ' button from your current financing situation. Cash should be moving through you business... but it isnt. Part of the reason is the age old issue that sales growth and profit don't equal cash in a ‘business to business' environment. Over the long term things seem to always work out... it's the short term that is the challenge.

If you feel your business is ' failing ' in the cash area it boils down to your business model , how you manage your assets, and what type of financing you are or arent using to manage the whole sales/cash cycle.

In certain cases businesses need to either acquire or replace assets. Here some of those liquidity dangers we have been talking about get really exacerbated. That is because it's even more dangerous when you use daily operating working capital and cash on hand to acquire assets that will be used by your business over the long term.

The solution to that problem is typical leasing finance - With either no o minimum cash outlay your business has the ability to acquire production assets, new technology, and rolling stock. Etc. Almost any asset can be financed under different ownership or renting structures. So if you're focused on long term survival and growth that won’t come at the expense of a cash flow crisis investigate the equipment lease finance option.

The textbooks, as always, have the tools to tell us where our business is at in terms of cash flow and working capital. They do this through the use of financial ratios which pinpoint the businesses overall solvency. However even when those ratios they give us are positive a cash flow crisis can be just around the corner. That's because your investment in receivables and inventory look great on paper, they just aren't converting to cash. That's when investors, lenders, bankers, and suppliers start to sense a problem and in business it's all about your reputation, especially when it comes to suppliers and lenders.

How does the business address ' bad ' working capital and cash flow situations. Whether you qualify for a traditional solution or alternative solutions a number of scenarios can reverse the upcoming cash flow crisis you are sensing.

They include:

A/R Finance

Inventory Finance

Traditional bank credit lines

Non bank asset based lines of credit

Sale leaseback of owned assets

Working capital term loans

Purchase order financing

Tax credit (typically SR&ED) monetization


Which one of these, singularly or together will give you the ' EJECT ' button from that bad cash flow scenario? The answer lies in seeking out and speaking to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your working capital challenges.


Stan Prokop - 7 Park Avenue Financial :
http://www.7parkavenuefinancial.com
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :

http://www.7parkavenuefinancial.com/business-cash-flow.html







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

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '






























Stan Prokop

ABL : Business Credit Lines Everyone Should Be Talking About : Here’s Commercial Line Of Credit 101

Choose Wisely, Not Randomly when it comes to Business Credit Lines

OVERVIEW – There are different solutions to a need for a commercial line of credit . ABL ( asset based lending ) business credit lines offer a solid alternative to traditional borrowing needs .

Business credit lines or more specifically, the lack thereof! ... Can be a major business and growth challenge for Canadian companies.

Top experts tell us a commercial line of credit is in fact a necessity for any business that sells on credit and has investments in one or either of receivables and inventory. ABL facilities compete with Canadian chartered bank facilities to try and satisfy the thirst for business credit. Let's dig in.

It should go without saying that commercial credit facilities differ significantly from consumer borrowing. There the emphasis is on personal credit, payment history, credit reports and scores.

The business of commercial borrowing revolves typically around your own firm's lending practices to your accounts, as well as the peculiarities of your own business model/business cycle.

Credit lines for business really come down to two key areas - how you are managing your assets, as well as what type of commercial borrowing best suits your asset base.

Canadian chartered bank credit line rates are currently at historical lows - so the ability to qualify and borrow against those rates is a win for any business. Businesses that seek out ' ABL ' (asset based lending ') fall into two basic categories:

1. For a multitude of reasons they don't qualify for bank facilities

2. They qualify for bank credit - but not for the amounts they need!

Businesses can also be considered for ABL lines if they are what the industry calls ' story credits '. Conditions for story credits typically include:

Explosive growth that doesnt allow for ' traditional ' financing

Erratic profit and loss history

Turn around

Management buyout

Businesses that have had their bank loan called - they are in the so called ' Special Loans' category at the bank

Numerous types of ' ASSET BASED LENDING ' players exist in Canada - they range from divisions and subsidiaries of our banks, U.S. owned commercial finance firms, Canadian finance companies focused solely on ABL lending, and... Sorry for making things more complicated... subsets of asset based loans that focus on niches.

Those ' subsets "? They include A/R financing , inventory finance solutions, Purchase Order Financing , SR&ED tax credit financing , and combinations of all the above !

So how do the Canadian business owner and financial manager choose ' wisely ' NOT ' randomly ' when seeking business credit lines?

First, get comfortable with how asset based lines of credit work. Typically they bundle your A/R, Inventory and Equipment values into one basic borrowing facility and you borrow as you need from there. By the way borrowing margins are more generous with ABL - receivables are margined typically at 90%, inventory anywhere from 30-70%.

Also, ensure you deal with a firm you are comfortable with from a management and reputation perspective. Some ABL lenders are divisions of asset liquidation firms - and in the past there have been examples of a focus on asset liquidation as opposed to client servicing via lending! Ensure also you're not paying monthly for borrowing facilities you are not using.

Firms that consider bank ABL facilities sometimes have found those facilities not dissimilar from traditional bank credit. And while rates are (almost) always higher for ABL lines of credit that must be balanced against your ultimate access to capital - don't just focus on cost. The good news - ABL rates have tended to come down.

If you want to better understand what thousands of business owners have been talking about, i.e. ABL... seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you in choosing ' wisely '.




Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :

7 PARK AVENUE FINANCIAL = CANADIAN 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

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '


























Stan Prokop