Are You Mismanaging Cash Flow? Fixing Working Capital Problems With Solid Financing Solutions

Getting The Bank Or Business Lender ' On Side  '

 

 Become A Good Manager Of Cash Flow Assets

 

As the Canadian business owner and financial manager well know it takes more than that to get lenders,  ( bank and non-bank) to get a good feeling about financing your firm and approving business credit for cash flow working capital finance solutions your firm might require. At the end of the day, it’s about  ' protecting ' their financing and collateral interests in your company.

 

Unfortunately, there are ways to be totally  ' not great ' at proving that you're a good cash flow business owner/manager.

 

  

ASSET TURNOVER HELPS DETERMINING WORKING CAPITAL HEALTH   

 

In financing, more often than not it’s about ' the assets '.   So while we can easily get caught up in fancy formulas are EBITDA and other calculations the reality is that it’s your assets and their turnover that determine your real working capital health. Mismanaging those assets makes you a great ' mismanager ' of cash flow and working capital.

 

One Of America’s great cash flow and investment managers ( Warren Buffett ) once said:

 

‘Does management think the tooth fairy pays for (future) capital expenditures'

 

Not all companies do the proper amount of planning  so when the inenvitable cash flow crunch happens a business is usually caught of guard for lack of that planning . Understanding your asset turnover will allow the business owner and financial manger to address needs  and identify proper business finance solutions.

Professional accountants and advisors call theis whole process the operating cycle, also called cash conversion . No secret to any business owner that  it takes a fair amount of time for a dollar to flow through the company coffers from the time that you created products or generated services all the way through to payment of your final invoice/contract.

At 7 Park Avenue FInancial we look at the whole picture and determine the critical relationships and timing betwee generating sales from inventory or providing services, to turnover in payable and receivables. Knowing the exact numbers in those relationships helps us dertmine financing solutions for our clients.

While our client might often view these calculations as complex, it simply know some basic formulas around how much days inventory is outstand, how long it takes to collect your receivables, ( thats ' days sales outstnading ' ) and finally days payable . Not all our clients understand that simply slowing your payables creates a positive cash flow - the actual formula for this is average payables multiplied by amount of time you are looking at , and then divided by your cost of goods.

If there is one very important number to keep in mind relative to some of the calulations we have shown it simply that there should be a commensute rise in certain accounts and relationships =

Example - if sales are stable or going down , and receivables you are carrying are up - that is a bad thing ! There should be a strong correlation to growht in sales and grwoth in receivables and inventories, as an example.

 

Naturally, term debt lenders focus on your long term viability to generate payment for their loans. At its very simplest it’s about your cash flow from the management of your working capital accounts (A/R and inventory) that pays bills, not the fancy EBITDA formulas that reflect how much your assets have actually depreciated.

 

So when profits and EBITDA calculations are positive we meet clients that still are having a challenge paying suppliers and meeting payroll obligations.

 

So what we are saying is that it’s important to understand that sales revenue and profits and the ' value ' of your company, if you're focusing on just those, have made you a great Mismanager of cash flow and working capital.

 

It's all about know how your firm can access cash from assets, as well as being able to plan for future needs.  That's where a bit of planning comes in - putting together a sales and receipts forecast, discussing these needs with a bank or non-bank lenders. The biggest mistake we see in this area from clients is they are not properly analyzing the cash timing of collections from accounts receivable.

 HERE ARE SOLUTIONS TO NEGATIVE CASH FLOW

 

If your cash flows are negative through this planning process the solutions are pretty clear, and limited:

 

 5 WAYS TO ACCELERATE CASH

1.Take on term debt

2.Have shareholders put in more money

3.Delay payments to suppliers

4.Really increase sales!

 

5. And finally - convert assets into cash via asset turnover focus

 

Converting assets into cash via :

A/R Financing

Inventory Loans

Access to Canadian bank line of credit

Non bank asset based lines of credit

SR&ED Tax credit financing

Equipment / fixed asset financing

Cash flow loans

Royalty finance solutions

Government Of Canada Small Business Loan Program  - The Guaranteed federal business loan

 

CONCLUSION

Use our solutions and tips to avoid being a " MISMANAGER " of working capital solutions for your firm.

 

If you're looking for cash flow working capital finance solutions for short term or long term needs speak to a trusted, credible and experienced Canadian business financing advisor  at 7 Park Avenue Financial on how to achieve the right solutions for financing your firm for health, growth and success.

 

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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 100 Million $ of financing for Canadian corporations.

' 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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020

 

 

 

 

 

 

Two Unique Canadian Cash Flow Strategies

Canadian business owners and/or their financial managers might not necessarily be fully familiar with two sold financing strategies, the sale leaseback of assets, and the potential ability to enter into a securitization facility. Let's cover off some basics.

 

CONSIDER THESE ADDITIONAL IMPLICATIONS IN EVALUATING SALE LEASEBACCKS

 

When it comes to a  sale leaseback scenario there are some accounting, tax and financial statement issues that we also encourage clients to consider. It might be time to give your accountant a call!

 

WHY A SALE LEASEBACK

 

So when in fact does doing a sale leaseback make sense? Although it is often used when the company cannot obtain bank financing, that is not always the case and it's still a beneficial long term strategy when your company requires a capital infusion of some sort.

 

The interesting thing about this method of refinancing is that quite often the assets in questions are of value, and are not pledged to another lender. They belong to the company and can assist the company who is, as the expression goes ' asset rich ' but ' cash poor '.

 

WHAT ASSETS MIGHT BE CONSIDERED IN THE SALE LEASEBACK PROCESS

 

Typical assets that are used in a sale leaseback include phone and computer systems, manufacturing equipment, heavy construction machinery, rolling stock, real estate,  ... etc!

 

The strategy itself could not be more simple- your company sells the assets, or real estate,  to a leasing or finance firm in exchange for immediate working capital. The asset or assets in question are simply leased back to the business with the full intention of reacquiring the asset.

 

One area of caution is that complications can ensure when its time to confirm you have the ability to enter into a transaction such as this. Simply speaking, other creditors of your firm may be asked to confirm they hold no security in the collateral being refinanced... that just makes sense.

 

UNDERSTANDING THE TRUE VALUE OF YOUR ASSETS

 

Because different assets have different life cycles and value its important to get a firm understanding upfront as to the true total financing capability you can extract from this type of transaction.

 

Payments under a sale leaseback loan or lease are commensurate with your credit quality as well as the true liquidation value of the assets. That’s not how you might look at the transaction, but we assure you the lender does! It's all about the balance sheet!

 

WHAT IS SECURITIZATION

 

On to our other relatively unused and unknown financing,  ' SECURITIZATION '.  If your firm is over-leveraged or simply doesn’t have access to the liquidity you need.

 

In some ways securitization is a more complex type of sale leaseback - however, instead of financing your hard assets you are financing future cash flows that come from receivables, or what we can broadly call ' cash flow contracts '.  Oh, and by the way, larger public companies do this all day, every day as a way to enhance balance sheets.

 

Although some of the mechanics of a securitization might be viewed as complex by a small firm, medium-sized or larger firms simply collateralize those rights to collect in their A/R or contracts. They more often or note are responsible for any shortcomings in future collections.

 

Naturally for the securitization lender they are looking at both sides of the coin, the quality of your cash flows coming in, as well as the overall credit quality of your customer base. Here issues such as concentration, geography, type of asset, etc come into play for the final financing decision. Lenders can protect themselves even more by holding back some of the funds; in effect, they are over collateralized.

 

So, whether it’s a leaseback transaction of hard assets or securitization of cash flows your company might to well to investigate each method to see if it works for your firm.

 

CONCLUSION

 

More and more businesses in Canada, pandemic times included, are looking at commercial financing solutions such as the leaseback transactions to bring additional liquidity into the business. It is a complementary solution to existing credit facilities that might be in place such as senior lender credit lines, etc.

 

The ability to also potentially negotiate repayment under current cash flow circumstances is also appealing to business owners, as well as our aforementioned interest rate consideration.

 

While in some cases the consideration around a leaseback might be simply the current low-interest-rate environment, it more often than not is cash-flow considerations. The ability to use the assets in your business to evaluate cash flow options is simply additional financial flexibility in your capital structure goals.

 

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in evaluating these great, and unique business financing mechanisms.

 

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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 100 Million $ of financing for Canadian corporations.

' 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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020

Recognize These Symptoms? It Is Time For New Business Financing And Capital Strategy Options!

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Canadian Business Financing – Techniques and Solutions

Canadian Business Financing . Or lack thereof?! Are there some symptoms for finance capital  strategy options we can look for, and fix for small business in Canada? We think there are. While some search for angel investors and venture capital at 7 Park Avenue Financial we focus on real-world accessible financial solutions.

 

Here's one for you. How many business owners would associate overdue receivables, poorly moving inventory, or underused fixed assets as a symptom of too much financing? We're pretty sure that few business owners (or even their financial managers) would associate those symptoms with having too much capital!

 

SYMPTOMS OF THE NEED FOR ADDITIONAL BUSINESS CAPITAL

 

Then of course there is the other side of the coin, which is what clients always are looking for - business loan and business financing solutions.  That might be bank loan/bank financing or a business finance solution via an alternative financing source - of which there are many. So what would some of those symptoms be?  They are pretty obvious more often than not:

 

Little or no cash on hand

 

Vendor payment issues

 

Manufacturing timing/shipment issues (You can't make ' em fast enough!)

 

Also, by the way, if you feel you are getting too little of a return on investment on all your assets its pretty clear that might be a symptom of a capital strategy problem.

 

THE ABILITY TO ACCESS CASH FLOW AND WORKING CAPITAL

 

It's safe to say that the right amount of cash flow, working capital, and other assets would probably fix any challenges your firm is facing. Naturally, every business is different; for example, a service company requires little fixed assets and tends to be more cash flow based.

 

  

UNDERSTANDING YOUR COMPANY'S DEBT TO EQUITY RELATIONSHIP IS KEY   

 

Here is one for you. Did you know that some analysis around your fixed capital can actually help you solve your problems? Take a good look at your long term debt and equity on the balance sheet and measure that relationship once in awhile - yearly would be a minimum timeframe.

 

MONITOR CURRENT ASSET ACCOUNT TURNOVER   - RECEIVABLES AND INVENTORY FOCUS

 

We're still looking for some other symptoms though, right. Here are some more.  If you feel on an ongoing basis that you’re experiencing large increases in receivable and inventory growth you are a strong candidate for some hard analysis of some new financing and capital options. It's those 'investments ' in receivables and inventory that devour your cash flow, forcing you to address new financing options. For the SME owner, those large growths in A/R and inventory actually mean you will probably be able to take less out of the company in the form of dividends, mgmt. bonuses, etc.

 

By the way, if you are looking at new purchases of assets ensure those assets will generate profits, not eat up capital or create losses. That's just common sense.

 

CONCLUSION

New Business financing options can be addressed if you have a strong handle on a very few basic calculations - those include some rudimentary things like expense per day, receivable turnover, inventory turns, etc.

 

Oh, and by the way, lenders of short term and longer-term capital are looking at those same things in your balance sheet, so being able to talk to those issues will help you... a lot. Note also that a business plan and cash flow projections will assist you in accessing financing more quickly versus being unprepared!

 

So whether your company is early stage or simply high growth and growing .. speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with capital options  and business loans in the short or long term (and crisis) situations.

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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 100 Million $ of financing for Canadian corporations.

' 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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial

What Is the Government Small Business Loan Program in Canada?

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The Latest News You Need to Know on Government Small Business Loans in Canada

The Government Small Business Loan in Canada is being offered! Why isn’t your company taking?!  We're talking about what just might be the best deal in town for Canadian small and medium-sized businesses - the government loan for small business - in our affectionate terms - 'The SBL‘! (Small Business Loan).

Do you equate business loans and the word 'success' in the same sentence when you think of your chances of business financing success? Most clients we meet don't!  They recount countless challenges in meeting their financing needs from what we term as traditional financing sources.

So, time to give up. Never, we say. One of the most viable options you can explore is SBL business loans for your company. They are offered (perhaps the better word is sponsored) by the federal government and the rates, terms and structures of this small business loan beat anything out there, and we'll show you why.

A word of caution though - you need to invest a little bit of time in understanding two key elements of the program - first, what it offers, and secondly, how you get to the goal line ... Quickly! (Many clients we meet are frustrated by their timelines in achieving this financing - you don’t have to be in their shoes if you follow our advice)

So, what is the program and what does it finance? That seems like a good start. The SBL government loan - small business is sponsored by the federal Industry Canada department. The program has been in place for many years, and last year almost hit 1 Billion dollars in financing for your competitors. (We want to put you on that same boat!). The program's official name is the BIL program, and it is a term loan, typically five or seven years in duration, at rates of 3% over prime.

While many larger corporations are required to provide full personal guarantees of owners for their business financings the SBL loan does not, requiring only that the business owner guarantee only 25% of the loan amount - how about that!.

Misunderstanding. That’s what we run into a lot when we explain to clients what the loan can be used for. Unfortunately, it is not a cash flow, but a loan that can be used for 3 separate categories of assets, equipment, leaseholds, and real estate also. Our own experience is that it is rarely used for real estate, but it’s nice to know that that facility is available to your firm.

Timelines. Time is money - who hasn’t heard that one? You can easily facilitate your SBL utilizing the motto of the Boy Scouts of Canada - 'BE PREPARED!'

When you are ready to commit to the loan ensure you have a crisp business plan ready, one that addresses the needs of your business and has a financial model in place showing repayment of the loan. Your own respectable personal credit rating is key also, and the loan typically requires a credit bureau score of 650 to gain approval.

While we speak in terms of a government loan the reality is that the feds charge our chartered banks with the actual administration of the loan - so in actuality, the loan is available on almost every street corner in Canada - where there is a chartered bank branch of course!

Want to learn more about Industry Canada's most popular finance program ... and, even more importantly, fast track business finance success? Speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business finance success on government loans for small business - Get the SBL working for you... today!     

 

 

 

 

  

Stan Prokop

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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 100 Million $ of financing for Canadian corporations.

' 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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial

Creative Debt Financing Sources For Canadian Business. Canada Business Loans And Monetization Strategies

Debt Financing In Canada

 

YOUR COMPANY IS LOOKING FOR DEBT FINANCING SOURCES!

Business Loans & Business Financing Canada

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the biggest issues facing business today

ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

 

'The entrepreneur funding challenge '

 

Debt financing sources in Canada. Most business owners and financial managers would agree that a little creativity can sometimes go a long way in helping a business achieve the stability and financial resources a business needs to succeed.

Whether it's Canada business loans or monetizing assets on the balance sheet it's all about business financing and sourcing the right business capital needs when it comes to financing a business in Canada. By the way, we aren't talking about venture capitalists / equity financing, but instead  just  ' real world ' finance for SME COMMERCIAL FINANCE concerns.

Whether it's government loans or a financing program from a commercial lender business capital is always needed.

 

Let's take a quick ' tour ' around some of those sources which include term loans, leases, and some other less known types of financing.

 

DIFFERENT FORMS OF DEBT WILL ADDRESS DIFFERENT FINANCE NEEDS

 

The reality is of course that different sources of debt meet different needs when it comes to business funding for , so you need a sense of the ' lay of the land' when you're evaluating solutions.

 

It's also all about not ' wasting time ' and there is no better example of this in Canada than spending a lot of time, and in some case dollars in pursuing Chartered bank financing in Canada that will not happen.

 

CANADIAN CHARTERED BANKS

 

Canada's chartered banks are the backbone of Canadian business finance. They are trusted proven providers of capital... if, and it’s a huge if, you can meet their criteria. However in fast-moving or tough economies, while the banks would, in fact, be the best solution for your business, the reality is that on occasion they aren't suited to very specific needs.

 

Are there some quick ways to evaluate your ability to positive secure bank debt? There definitely are, and if you feel you can meet   4 - 5 key criteria then you should absolutely pursue Chartered bank debt in Canada, for small businesses and established firms.

 

What are those criteria then? Simply speaking they are profits,   assets and collateral,  sound operating ratios,   repayment with outside collateral ( personal net worth issues, etc.), and finally your ability to summarize all that, typically in the form of a business plan or executive summary.

 

2 KEY BANK REQUISITES - COLLATERAL AND CASH FLOWS!

 

Banks look for positive cash flow.  When you line up ' cash flow lenders' with ' balance sheet lenders '   banks typically are in the cash flow line up, required a positive cash flow ratio of typically 1.25: 1.

 

When it comes to collateral required for loans banks focus on the more liquid ones, such as receivables and verifiable inventory (not always inventory though).

 

Operating and liquidity ratio calculations play a key role in bank loans. They include leverage via debt to equity calculations, our aforementioned cash flow ratio, working capital ratios, etc. Whether your firm is a new business or an established firm owners must understand their financials.

 

PERSONAL GUARANTEES

 

You can absolutely be expected to be asked for a personal guarantee when it comes to bank debt financing in Canada. Other sources of financing may also include personal guarantees, but they play less of a role in final approval.

 

You have to be able to summarize a bank proposal effectively. This can be done via a Canadian business financing advisor, your accountant, or some other third party. It’s critical to put forth a realistic financial and operating document that demonstrates repayment and viability.

 

OTHER SOLID SOURCES OF DEBT FINANCING VIA A BANKING OR COMMERCIAL BUSINESS  FUNDING SOURCE

 

Other sources of debt financing for business loans include

 

1.Asset-based lenders

2.Lessors 

3. The government SBL program - aka  ' The Canadian Government Small Business Loan ' - a solid way to consider funding to start a business  - Loans, not bdc grants ( they are not grants ) are also a solid quasi-government solution. Some business owners will also pursue business grants through a federal government or provincial program  - at 7 Park Avenue Financial we have always found this pursuit is both time consuming and often not successful

4. Cash flow loans / Small business loans

 

CONCLUSION

It's clear that it becomes a case of identifying what you need, and what you realistically can qualify for. For example funding for business startup scenarios are always more challenging and heavy reliance is placed on the credit history and net worth of the borrower.

Different commercial funding companies have specific solutions for certain industry needs outside of Canadian chartered banks, and price their solutions accoridngly with potentially higher interest rates than banks. The business owner must choose between cost of capital and access to capital !

 

Small business funding will probably always be a challenge by its nature. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in identifying sources of debt finance and loans in Canada that make sense...  specifically for your firm, whether its start up funding Canada - or ongoing business needs to profit and grow your company.

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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 100 Million $ of financing for Canadian corporations.

' 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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020

Excuse Us For Getting Fresh... About The ABL Business Credit Line Revolver Facility. Asset Based Lending… Works. Here’s Why!

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Fresh counts, whether we're at the grocery store or in today's example, the business credit line known as the ABL revolver, aka ' asset-based lending '.


Canadian business owners and managers don't often realize that that they have more of a choice in business credit lines than they think. And when it comes to choice and flexible terms all of a sudden asset-based lending facilities are getting... you guessed it... popular!


That's of course great news for companies in Canada who are looking for alternatives for day to day operating financing. The traditional small handful of firms who offer this type of financing is growing to the point where you might not realize it, but there are people willing to fight for the ability to provide you with business credit. That's the type of competition we like.



Cost is always a factor in business financing, and there is a broad spectrum of pricing in Canada that is primarily based on two factors you can pretty well guess - facility size and credit quality.


In case you haven’t heard of this method of business credit it’s simply a comprehensive credit line based on the asset of your business - those assets include inventory, receivables, fixed assets, and land and buildings if that fits into your overall capital structure.


The Canadian business owner/manager can use the ABL revolver facility for a number of reasons, and they include day to day operating capital, restructuring, acquiring another firm (yes, buying your competitor!) and our favourite reason - growth! That growth reason is one of the most important because the asset lending line of credit allows you to grow your business without the constraints you face sometimes with chartered bank commercial facilities.




We're often asked about the ' size requirement ' in this type of business borrowing. In general, we tell clients that they qualify from a low of 250k all the way up to facilities in the many millions of dollars.



Quite frankly there isn’t really an upper limit, as long as you have the total assets to back up the facility. The reality is that ABL credit is very close to becoming ' mainstream' in Canada, and that’s a good thing we think.


To be honest many firms in Canada tend to use asset based credit lines as a bridge to other financings. This often means that the facility is used for a year or two, sometimes longer, as the business owner’s work towards the more traditional financing that is recognized in Canada, i.e. our banks. Many simply s are very comfortable with asset-based lending lines and choose to remain with ABL!

As we said, the bottom line is ' ASSETS ', so if your firm has them consider Canada's newest form of business financing, the ABL REVOLVER, whether you're looking for something new, or an alternative to your current situation.


Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your total financing needs when it comes to the business credit line.

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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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 100 Million $ of financing for Canadian corporations.

' 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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020

A Tale Of Two Business Credit Facilities – ABL Asset Financing And Bank Revolving Secured Facility Business Line of Credit Alternatives in Canada

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UNDERSTANDING 2 DIFFERENT BUSINESS LINE OF CREDIT SOLUTIONS

Both public and private companies in Canada feel the squeeze when it comes to achieving the right financing for their firms in the current economic environment.  Both the business owner and his or her financial managers can be forgiven for being a bit confused on alternative methods of line of credit finance.

So should you be doing what everyone else seems to be doing, or should you strike out on your own with some solid investigation in alternative business models when it comes to lines of credit for Canadian business?

Let's look at what some of those key issues might be in considering alternatives, the ABL FINANCE asset-based loan facility, and the Canadian chartered bank offering. Clearly in both cases you want to be able to ensure you can grow, not just survive in business. So asset-based lending should always be compared to the possibilities of accessing bank finance.

Price is a factor also; you want to know the total cost when it comes to acquiring the right finance facility. Naturally, relationships are important also, you want to be dealing with the right people, it’s as simple as that.

WHAT IS ABL?

In recent years ABL Finance has become a valuable source of financing for Canadian businesses who have been unable to access traditional financing. Utilizing assets such as receivables, inventory, unencumbered fixed assets, and even real estate allows the company to borrow against all these assets on an ongoing basis based on the current values of the assets. Asset based lending is one of the most flexible types of financing in that it can grow as the business grows in sales.

ASSET BASED LENDING CREDIT LINES

So let's take a first pass at asset based lending via an ABL facility.  It is just a business credit facility secured by the assets of your company. Many firms that either cant raise bank financing, or, more importantly, cant raise the amount of financing they need from banks consider ABL.

 Hundreds of Canadian firms now use ABL finance as there preferred method of leveraging their assets for a credit line. Those assets are used to bridge the timing of cash in, and cash out in your business. ABL is available for companies of all size, from major public and private corporations, right down the pecking order to startups.

The facility fluctuates with the amount of asset that your firm generates, typically around A/R and inventory.  Funds are typically managed through a blocked account - that simply means that you deposit all your inflows into one account, while your balances to reduce the line are managed through a separate account. It's not as complicated as it seems. Key benefits are higher margins on receivables and inventory.

CANADIAN BANK LINES OF CREDIT

The more traditional alternative to business credit via a secured facility is the Canadian chartered bank. Facilities are low cost and can be combined with term loans. Banks are cash flow lenders, the ABL facility tends to be asset based, not cash flow based. Your financial statements and current financial history will dictate whether your firm is more cash flow or asset oriented.

Banks will look to what they call secondary forms of repayment and are highly regulated with their offerings. ABL lenders for asset based lending tend to be independent commercial finance companies that are none regulated.  It's a little known fact that many of the banks have small boutique divisions of ABL finance that in some ways compete with their peers in Commercial business credit.

NOTE - Asset-based lending banks do exist in Canada - they have tended to be smaller boutique divisions of Canadian banks and one perceived disadvantage of accessing ABL via a bank is that minimum deal sizes are often pegged in the 5-10 Million dollar range, which eliminates many companies seeking SME COMMERCIAL FINANCE    working capital solutions.

ASSET BASED LENDING RATES

AT 7 Park Avenue Financial we advise clients that for the vast majority of cases ABL asset-based loans will always cost more than traditional bank lines. Additionally, the facilities might in some cases have an appraisal or due diligence fee. Bank ABL's will always cost less than non-bank commercial lenders but the overall ' credit bar ' to access a bank ABL is significantly higher, as well as what we have already mentioned - namely that bank ABL's often tend to start in the multi-million dollar range. 


Note though that dealing with a non-bank asset-based lender still allows you maintain your deposit relationships at a Canadian chartered bank - that is accomplished by a system known as ' blocked ' accounts ' allowing loan advances to be made into your account under the ABL arrangement, as well as ensuring the lender has access to cash inflows from sales.  Well managed bank lines in ABL or banking .. fluctuate! 

CONCLUSION

Investigate both the ABL secured asset financing revolver, and the more traditional Canadian chartered bank line.  Weight the benefits and potential disadvantages of both in coming up with your preferred method of business financing. Speak to a trusted, credible and experienced Canadian business financing advisor today on differentiating that ' TALE OF TWO FACILITIES '!





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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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 100 Million $ of financing for Canadian corporations.

' 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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial