Asset Based Financing : A Guide To Unfiltered Cash Flow & Business Loan Solutions

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Operation Business Financing : Cash Flow & Asset Finance Solutions

OVERVIEW – Information on asset based financing solutions in Canada. Completing Your Search for the right business loan and cash flow solution

Asset based financing is one of the newer terms business owners and financial mgrs keep hearing about these days. Growth in this area has been driven by the tightening up of banks and traditional lenders in the SME COMMERCIAL FINANCE sector when it comes to commercial business financing needs for the right business loan and cash flow requirement.

When times get tough it's critical for owners/mgrs to look at all the alternatives available to their business as it relates to funding needs.
When times get tougher businesses of all size look to alternatives in their overall financing strategy. The acronym for this form of finance is known by industry insiders as ' ABL '.

So who exactly provides this financing? Typically it's non bank commercial finance companies who are independent and unregulated relative to banks and insurance companies - who no doubt find themselves extremely regulated - given they don't take deposits and can take on more risk . Firms in the industry are a combo of Canadian, U.S. and even international.

The challenge? Sourcing the right type of facility that meets your needs and ensuring you've got the right advice and expertise to take on those funding decisions.


The most fundamental definition of asset based financing in the context of our information here is simply the provision of working capital and cash flow for your receivables, inventories, and in many cases equipment and real estate if that is applicable.

The ability to successfully finance A/R and inventory and equipment makes or breaks a business when it comes to financial success. Doing that properly avoids ' cash flow problems' - both short term and long term.

As a result, financing sales via Receivables and inventory finance tends to dominate the majority of this type of financing. Many firms have problems with ' growth finance '- and most business folks quickly learn that sales and paper profits don't pay bills!

Asset based lines of credit generally is available to all medium and larger size companies in Canada - generally start ups and very small firms simply don't have the bench strength in assets to warrant this type of financing .

Asset based lending is simply maximizing the true value of your assets without the same focus that a bank might place on your overall financial statement quality. The facility generally has a limit, similar to a bank, but the reality is that as your assets grow your ABL facility will grow also?


When clients ask what it takes to qualify for such a facility we simply advise that your business must overall be viable, and quite often ABL facilities can be uniquely structured to your specific industry and business model.


The benefits of asset based credit facilities are very significant - they include:


Improved cash flow and greater working capital

Shorter approval times to get the facility set up

Reporting is more stringent in asset based lending because it focuses on the assets, but many clients tell us this additional reporting helps them understand their business better.

Higher financing costs in asset based lending bring a higher cost of borrowing, but a huge portion of these additional financing costs can be offset by better purchasing , taking advantage of supplier payment discounts, etc - In some unique cases we have seen the entire cost of an asset based financing facility being nicely absorbed by those two scenarios alone!

There are numerous ' subsets' of asset based financing that can quickly fix any cash flow or sales finance challenge. They include:

A/R Financing/Factoring/Confidential Receivable Finance

Inventory Loans

Permanent cash term loans

Merchant advances/Short Term Working Capital Loans

SR&ED bridge loans

Royalty based financing

Sale Leasebacks


In summary, clearly the overall benefit of an asset based financing or lending facility is simply access to greater cash flow and working capital. It is an alternative form of financing that quite frankly is developing into a traditional method of financing in Canada.



Stan Prokop - founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :
http://www.7parkavenuefinancial.com




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 '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Stan Prokop

Working Capital Financing In Canada : Meet Your New Cash Flow Solutions

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How To Finance Sales Growth Via These Numerous Working capital financing solutions


OVERVIEW – Information on working capital financing loans and strategies for Canadian business. Cash flow solutions depend on various unique factors to your firm and industry

Working capital financing in Canada is provided via numerous traditional and non traditional lenders.

It's about time to meet those cash flow solutions that just might make sense for your business. Let's dig in.


Working Capital Financing in Canada is provided in a number of different ways to Canadian business owners and financial managers. The typical ‘go to ‘solutions are our Canadian banks and business oriented credit unions, but in recent years numerous non bank commercial lenders have populated the Canadian business financing landscape.


In many cases the hard core reality is that SME COMMERCIAL FINANCE needs are best provided by non bank firms who have a greater understanding and higher risk appetite as it relates to sales growth, receivable financing, inventory loans, and PO Financing and equipment leasing.
We get a lot of questions from clients who are looking for ' government grants and loans' .There are some grant type programs out there but in general they do not serve the needs of the average Canadian business owner as they relate to working capital.
There are two very viable grant and loan programs in our opinion. They are the government guaranteed Small Business Loan , aka CSBFL , aka SBL loan, as well as the federal SR &ED program. The Small business loan provides equipment and leasehold loans to Canadian business owners, and is not capped at a new high of $ 350,000.00.


This in or opinion is a great term loan, and has excellent, we repeat, excellent rates, terms and structures. But the reality is that this is a term loan and is not a working capital loan per se. When clients come to us for ‘working capital loans ‘more often than not they are referring to cash flow needs for inventory, receivables, and equipment.
Companies that spend R&D capital and invest in research can take advantage of Canada's SR&ED program. This is a non – refundable grant that covers approximately 40% of all the cash you have spent in this area. We encourage all business owners in Canada, if it is applicable, to speak to an advisor in this area. By the way, SR&ED credits can be financed and a ' SRED LOAN' is a great way to augment working capital and cash flow. Many start up firms consider this a great source of initial cash flows in their business.


Most Canadian business owners are not aware of what is known as a cash flow loan. A more sophisticated finance term for this loan is a mezzanine or ‘sub debt’ loan. For smaller and medium sized businesses these loans tend to go up to the 250k range and are offered by a specialty lender which is funded by the Government of Canada.


Larger cash flow and working capital loans tend to be in the 1 Million + range and are offered by non banks. These loans typically are unsecured, are used for working capital purposes, and have rates in the low to mid teens due to their unsecured nature. These working capital financing credit lines typically go under the term ‘asset based line of credit '. This facility margins your A/R, inventory and equipment into one large borrowing facility that mirrors the bank line of credit.


The good news about asset based lenders in Canada is just that... they focus on assets, with much less or no emphasis on ratios, covenants and personal guaratees required by traditional bank type solutions , But we never forget of course that the lowest cost and most flexible form of financing is bank credit and term facilities. They are just a lot more difficult to attain in the amount your business might require, especial for faster growth or early stage firms - as well as companies experiencing challenges.


In summary, working capital means different things to different business owners. Our focus has been on real cash flow and working capital for your business. Certain government programs might meet your needs in the areas of term loans, leasehold improvements, etc. But true working capital is the financing of current assets such as receivables, inventory, and purchase orders.
Like anyone, you would prefer to deal with an ‘expert ‘in business financing, so we encourage you to seek and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success.


Stan Prokop - founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :
http://www.7parkavenuefinancial.com



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 '


ABOUT THE AUTHOR

Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Stan Prokop

Accounts Receivable Financing In Canada : Cash Flow Factoring Wins The Speed Test For Your Funding Needs

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Betting Your Company’s Future On The Right Cash Flow Financing Solutions

OVERVIEW – Information on accounts receivable financing in Canada. Here’s why thousands of businesses are looking to factoring cash flow solutions for their operating funding needs for growth and more financial stability

Accounts receivable financing alternatives were virtually close to unheard of some years back. How did ' cash flow factoring' become so popular and fast growing for business owners and financial mgrs who need to access working capital funding for their businesses. Let's dig in.


If your firm does not have traditional financing in place with a Canadian chartered bank, or, more importantly, can't negotiate that financing, then you are forced to explore alternative working capital solutions.

How long does it take to put an A/R financing solution in place in Canada? If you are well researched or use the services of a trusted and credible experienced advisor our experience is that you access that type of facility within a couple of weeks. This is significantly less time than it might take you to negotiate traditional bank type financing or a working capital term loan with banking / credit union or other traditional sources of capital.

So why then are owners/mgrs looking at this type of solution for their growth and operating needs. While historically some industries have used the financing more than others, we can quite safely say that almost every industry in Canada is currently utilizing this financing solution.

The most typical firm will often be one that has expansion capital needs or is simply growing too quickly. It is somewhat of an irony that banks and more traditional lenders in fact frown on hyper growth because of the imbalance it creates in changing in working capital accounts.

The bottom line - you're simply forced to carry more A/R and inventories. That issue though is the simply reason that working capital funders like your business growth - more assets to finance

In some cases factoring can be a temporary ' stop gap ' solid in financial distress or restructuring - generally firms in this category use factoring for a period of time and then gravitate back to a more traditional type of financing .

Many clients we meet and speak to always want to discuss their perceptions that factoring is a ' costly ' method of financing. Congratulations! You are 100% correct and 100% incorrect!

While the face value cost of financing your receivables in a factoring solution might seem much higher than bank rates let’s make sure to cover off a few key points. First of all it is costing you to carry your accounts receivable. Customer we meet with who sell on thirty day terms are constantly telling us they are waiting 60 and 90 days to collect their receivables.

Remember that savvy business owners comprehend the cost to carry those receivables. All of a sudden factoring seems a bit less expensive. Also, consider this scenario, do you want to sell your product or service once, and wait 60 days to 90 days to collect your funds. Or ... would you rather sell your product or service, get paid the same day for those goods (that’s what factoring does) and then re invest those funds into more goods, allowing you to bill your customer, and generate more revenue and profit?

Firms that have respectable gross and net profit margins can fairly easily absorb the additional costs of A/R finance via a non bank commercial lender. If you have those decent margins you can quickly see that a strong case could be made that factoring is the cheapest method of financing! And remember it’s cheaper and easier than accessing more equity or taking on term debt on your balance sheet. The bottom line of factoring: It cash flows your sales instantly.

We strongly suggest you analyze your own ' costs to carry ' in the context of being able to sell your products and services and replicate that process 2-3 times in a 60-90 day period .

Don’t forget to also check out CONFIDENTIAL RECEIVABLE FINANCING , allowing your company to bill and collect it’s own A/R without any notification to clients, suppliers, other lenders, etc . It’s our recommended cash flow solution as a subset of factoring A/R in Canada.

Perceptions? Reality? Consider utilizing the services of a trusted, credible and experienced Canadian business financing advisor who can help you demonstrate the ' speed test '

success that comes with cash flow factoring.











Stan Prokop - founder of 7 Park Avenue Financial –

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :

http://www.7parkavenuefinancial.com


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 '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Stan Prokop

Business Loan Finance Solutions In Canada : Eliminating Anxiety Inducing Working Capital Financing & Funding Worries

Why Your Company Needs To Start The Search For Proper Working Capital Finance Solutions

OVERVIEW – Information on working capital financing solutions in Canada. The type of business loan your company requires and where you get that finance solution makes or breaks business success

Working capital financing and business loan finance solutions are always a challenge for Canadian business owners and financial managers. We can safely say after talking to many of our clients that challenge is in fact... you guessed it... anxiety inducing !!!

So it's about time to start the search for the right funding can capital for your business. Let's dig in.

Although many business folks believe their challenges are unique in many respects the reality often is that depending on what industry you operate in there are certain characteristics that always define your capital and cash flow needs.

But one thing is for sure, you do have more choice than ever in your search for proper capital to grow sales and profits.

There clearly in the mind of Canadian business owners exists a gap in financing solutions. Working capital is needed by your firm for both long term and short term needs. Many companies are capital intensive, while some are cash flow challenged in other ways - i.e. financing current assets that are generated out of sales - i.e. receivables and inventory.


One of the best programs, bar none in Canada is a government sponsored guaranteed loan that goes by the name of CSBF loan, or BIL loan, and most people commonly call it the SBL Loan, which stands of course for small business . There is only one problem with it, as we tell our clients. It’s simply the program covers only equipment and leaseholds and real estate. So while it's an excellent solution for start up or younger firms it clearly won't help in the cash flow challenge.


Working capital needs are commonly day to day needs - other terms for it are operating lines of credit and net working capital. The two most common assets in this category are receivables and inventories. So short term working capital needs need to be addressed within those two asset categories.

What business person doesn't embrace the term ' free'?! There's actually some free financing! Its supplier financing, because the credit suppliers grant you has no financing charges applied to it, and by delaying payment of your payables you are in effect generating cash flow and working capital. But that must of course be balance off by the need to maintain positive supplier relations in the context of a long term business relationship.

A great problem to have is of course growing sales, and often the biggest challenge in the working capital environment is fast or dramatic growth of revenues. Sales are great, fast growing sales are even better, but at the end of the day they require your additional investment in receivables and inventory.


How can your firm finance receivables and inventory?

A number of solutions exist. They include:

Bank operating lines

Inventory financing

Floor plan financing

Asset based lending - Non bank full fledged business credit lines

A permanent cash flow loan that injects working capital but is paid back on a long term basis

Sale leaseback financing


Most small and medium sized business we talk to have a major challenge in obtaining the proper overdraft or line of credit facilities from their banks. Quite often they also have a hefty inventory component in their working capital needs and are unable to get proper margining on inventory.

Alternative non bank financing is increasing popular in today’s Canadian business finance environment. Alternative finance comes at a higher cost but often times can be the source of financing that takes your company to the next level of sales and profit growth.

In summary, yes working capital challenges can be complicated. You need to determine what your cash flow needs is, how they will be met, and if they aren’t being met by your current financing strategy consider alternative methods of working capital financing. And, as we stated, you can talk to a non-expert in this area, but we don’t recommend that!

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you end the search for working capital financing & funding for your particular business needs.



Stan Prokop - founder of 7 Park Avenue Financial –

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :

http://www.7parkavenuefinancial.com

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 '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Stan Prokop

Business Lenders In Canada : The Hunt Is On For Your Working Capital Financing & Loan Solutions

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Engineering Your Company For Proper Business Financing Via Traditional & Alternative Lenders - The Hunt Is On!

OVERVIEW – Information on working capital financing solutions in Canada . Approaching alternative or traditional business lenders for a loan requires this ‘ need to know ‘ info

Working capital financing and the right business loan / loans for their company has many Canadian business owners looking to either leave or search for new business lenders that meet their financial needs. The hunt is on. Let's dig in

A Sept 20 /2016 report in Canada's Globe & Mail indicated massive dissatisfaction with financial institutions - referencing a 40% amt as the number of borrowing businesses that are ' likely ' to leave their current business lender. Of great interest is that the main perspective of business owners/financial mgrs is that their bank or credit union does not understand their business - as well as indicating a lack of confidence in the expertise of their lender.

The other harsh reality is that firms looking for SME COMMERCIAL FINANCE and loans don't have the option that major corporations do - that's for both short term operating needs and long term growth financing. Those ' big boys' of course can tap into public and private equity as an example.


What then are realistic options for the small and medium sized business in Canada for generating working capital and cash flow? It's the lack of proper business financing in place that holds your firm back from accepting larger orders or new contracts. That also of course entails having to wait 30/60 or sometimes even 90 days for A/R to be collected.

The right working capital financing in place assists your firm to meet its daily requirements and allows you to grow the business. It also allows your firm to extend credit on favorable terms to your customers.

Solution? There are a number of solutions to consider. If all firms were the same size and had the same problems we might have some easier decisions. The fact is though that when we meet with clients to outline working capital solutions each company is in a different industry, they have different business model, and their funding needs vary by size and nature.


Let's recap some of the solutions available:


A/R financing / factoring/Confidential Receivable Finance

Inventory loans

Bridge Loans

Sale Leasebacks

Non bank asset based lines of credit ( these facilities combine your a/r, inventory and equipment assets into on borrowing facility that is margined much higher than bank facilities ) These facilities are often the best solution to overall operating financing needs - This type of borrowing does not put debt on your balance sheet - it monetizes /cash flows your assets!

Tax Credit Loans ( SR&ED,etc)

Royalty Financing

Equipment Financing / Leasing

P O / Contract financing


While some firms in the SME sector will always consider angel investors, going public options etc these solutions are in practicality very limited



Canadian chartered banks offer a number of programs, but you should ensure you feel you can meet bank requirements. Some of those requirements are that you have been established and the owners of the business have a good reputation and reasonably solid credit history.


You should be able to produce financial statements and demonstrate that your receivables and inventory are turning. It's great to produce a forecast or a business plan, which also assists you as a good planning tool.



Smaller firms should try and avoid credit cards, merchant advances, or friend and family loans - they all work but often are not the best alternative.


The government of Canada offers a Small Business Loan program that is one of the best programs in Canada for Canadian business. The one technical point on this program is that it covers only equipment and leaseholds and real estate, so you should ensure these programs meets your exact needs.


One other government entity on the federal side offers working capital term loans; these are cash term loans and are generally unsecured, with only the promise to pay of your company and yourself as owner. Rates are excellent for what you are getting.


If you're ' on the hunt ' for business lenders that make sense for your operating and capital needs seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your loan needs.



Stan Prokop - founder of 7 Park Avenue Financial –

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :

http://www.7parkavenuefinancial.com


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 '


ABOUT THE AUTHOR

Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 45 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Stan Prokop

Asset Based Financing Loans In Canada : How To Achieve The Right Mix Of Business Credit

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Quick Question : What Exactly Is Asset Based Financing In Canada ? We’re Glad You Asked !

OVERVIEW – Information on asset based financing in Canada . The ability to achieve the proper type and mix of business credit and loans is key to financial success for growth in profits and sales

Asset based financing is a unique part of the business finance landscape in Canada. So much so we sometimes get the question: What is it! More importantly business owners and financial mgrs want to know how they can utilize these types of loans for cash flow and working capital purposes with the goal of funding their business. Let's dig in.

The reality is that asset based lending means different things to different business folks. The truth is that it's a part of the non traditional method of financing a business in Canada that might be temporary or in some cases more permanently challenging.

Although the owner.mgr might think their need is somewhat unique the reality is that financing needs typically revolve around sales growth or key balance sheet issues that need a fix. We've never missed the true irony around how fast growing or even explosive sales can become a huge financial and operational challenge, as many have experienced.

Fixed assets are often a key part of an asset based financing solution. The equipment your company either requires, or has already can be in a broad range of asset categories. Owners/financial mgrs are looking to acquire new or used equipment, or refinance existing assets. That ' refinancing ' can often be part of a ' sale leaseback ' which is one of the key categories in asset based lending. That strategy allows owners to ' free up ' equity in assets and harness that equity via new cash flow and working capital.


How does that sale leaseback strategy work? It's quite simple. Although business owners in many cases have a strong sense of what some of those assets are worth quite frankly that is not what counts. It all comes down usually to an appraisal being done on the equipment, and when the appraisal comes back a loan is made against the appraised value. Usually business owners can expect to receive a fairly high percentage of the liquidation value of the equipment, but this amount tends to be less than the fair market value of the asset .It is very important to understand that the asset has to be free and clear of any liens or charges. In cases where a small amount might be owing to another lender that amount can be paid out and bundled into the new loan transaction.

A key point in equipment refinancing is that the commercial lender will place a combination of emphasis on both the asset value as well as your firm’s ability to prove cash flow for repayment.

There is a huge difference in how an asset based lender looks at your asset and advances funds against it, versus a Canadian chartered bank.

There is technically no limit as to the amount that can be advanced against equipment, although most transaction we see in the marketplace is certainly less than 5M dollars.

In summary, asset based financing means different things to different people. One of the key context areas of this type of financing is equipment financing - yet numerous other key categories in asset based lending play a key part of solutions your firm might require and have access to .

They include:

A/R Financing solutions: Factoring, Confidential Receivable Finance

Inventory Loans

Tax Credit Financing (Primarily SR&ED)

Cash flow loans

Equipment Leasing

Royalty Financing

Bridge Loans


Whether your firm is growing quickly, has restructuring issues, or other unique situations you will benefit from seeking out and speaking to a trusted, credible and experienced Canadian business financing advisor with a track record of success.



Stan Prokop - founder of 7 Park Avenue Financial –

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :
http://www.7parkavenuefinancial.com


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 '

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Stan Prokop