Business Finance Solutions In Canada : The Rise Of Asset Based Finance Lending & Non Bank Lenders

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7 Solutions From Asset Based Lenders That Can Help Your Business

Asset based financing via non-bank lenders is one of the most popular and fast-growing business finance options in Canada. But why are these new paradigm asset loan lenders so popular with increased presence and visibility in all aspects of raising capital and cash flow today? We think we know exactly why! Let's dig in!

 

WHAT DOES THE WORLD OF ASSET BASED FINANCE INCLUDE?

 

One challenge though is that this type of finance term, i.e. ' ABL ' ( asset based lending ), is a bit of a catch-all term when it is first heard by many business owners and financial managers. There are, in fact, a very distinct number of solutions within the term 'asset based finance '  and asset based financing companies, including a business line of credit that delivers the same benefits as a bank loan and steps up with capital when you need it the most! Let's dig in on business asset based financing basics!

 

  

Solutions from asset-based financing companies include :  

 

Asset-based operating lines of credit - The asset-based loan revolver

Factoring / AR finance - Accounts receivable funding/ AR Loans - Asset-based finance factoring solutions include Confidential Receivable Financing

Inventory Loans

Sale Leasebacks / Asset-based equipment financing

Bridge loans - Custom-tailored asset-based bridge loan solutions

SR&ED Tax Credit loans

Acquisition/merger financing

Real Estate - asset-backed solutions for company-owned real estate/land

 

  

WHY ARE ASSET BASED LENDERS DIFFERENT FROM CANADIAN CHARTERED BANKS  

 

We think you can see the basics, though - it's borrowing power for cash flow and working capital secured by some or all of your business assets. Unlike Canadian traditional bank solutions, ABL lenders are more often than not commercial finance companies who operate for a profit and, unlike our banks, are not regulated by the government when it comes to asset lending and loans.

 

That type of regulation often limits borrowing!! Interest rates and cost of financing/asset based financing rates are always higher in ABL lending, but access to more capital is key to business owners. ABL rates are most commonly perceived as the main disadvantages of asset based financing.

 

So why consider this type of solution? The most common reason is your firm’s inability to get some of all of the credit from those traditional capital sources. In some cases, your firm might be in dire straits and is in the process of exiting the bank. (At their request!)

 

ASSET BASED LENDING VS. TRADITIONAL BANK LENDING

 

When it comes to understanding how does asset-based lending works, It is very safe to say that non-bank lenders take more risk, provide more capital, and come with a higher cost of borrowing.

 

For that reason, the ABL loan agreement is not focused so much on loan covenants, balance sheet ratios, owner credit score/credit history, etc. If your firm is still a startup or early-stage company, you're still often a solid candidate for financing. Hint: Sales revenues also help, as well as your asset based business loan collateral!

 

How does one access alternative finance solutions? That sometimes is a challenge in and of itself, as the players are small, large, the U.S. owned, Canadian owned, and occasionally geographically focused. All have different rates, structures, solutions, and programs around the asst based loan facility solution they offer.  In many cases enlisting the help of a Canadian business financing advisor makes total sense to save time and hone in on the right solution that is comparable to bank lending solutions.

 

When you do, in fact, focus on the solution that makes sense for your firm, benefits will often include flexibility and quicker access to capital. In a handful of scenarios, it's not uncommon for an alternative financier to also work within your current bank facility, although that's not the norm.

 

 

CONCLUSION

 

Want To Know More About Asset Based Financing Non-Bank Lenders  Finance? The bottom line? There is a whole new ' ball game ' when it comes to commercial business financing asset based loans via non-bank lenders.

 

If you want to know more about how asset based lending works versus bank lending, you're looking for lines of credit, cash flow and working capital solutions, or very specialized finance needs, speak to 7 Park Avenue Financial,  a trusted, credible, and experienced Canadian business financing advisor who can assist you with the asset-based financing structure that meets your business finance needs.

 

  

FAQ: FREQUENTLY ASKED QUESTIONS  

 

What is asset based finance?

Asset based finance is a financing solution that provides businesses with working capital solutions that include term loans and lines of credit. Typical assets that are collateralized by these loans include receivables, inventories, and fixed assets/equipment as well as real estate. 

 

Is it difficult to obtain finance with asset based lending?

 When it comes to asset-based lending vs bank financing asset based loans are more easily obtainable than traditional bank loans as the asset based lender focus is on the value of the collateral turnover and asset turnover in categories of receivables and inventories. Less emphasis is based on bank criteria that typically include balance sheet ratios and covenants and guarantees.

 

What is an ABL term loan?

 

ABL loans are asset backed loans that are structured in the form of a term loan or a revolving line of credit. The majority of ABL lending is in one of those two structures. Term loans are typically on a fixed installment basis, while credit lines revolve based on borrower usage.

 

Do Canadian Banks Offer asset based loans?

The rise of bank owners asset-based lenders has grown in Canada. Their solution acts like non-bank lenders and run specialty financing divisions within the Chartered bank regulated structure. Their product solutions are similar to non-bank lenders and are priced more aggressively due to their ability to access lower cost of funds. They are different in that the credit quality must be of a higher grade and deals often start in the 5-10 Million dollar range.

 

 

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

Asset Based Financing Non Bank Lenders Finance | 7 Park Avenue Financial

7 Ways To Finance A Business Acquisition in 2021

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To Finance A Business Acquisition In Canada - The Best Ways

 

Acquire a company?  That’s one way to beat the ‘organic growth ‘path to business success, and it can be a proven strategy  ... when done properly.  How then does the owner/entrepreneur successfully finance a business acquisition? Some experience in the area helps - given that different sources of finance in this area demand different approval criteria for successful advantages of acquisition to eliminate financing risk. Let's dig in.

 

 WHY BUY AN ESTABLISHED  BUSINESS? 

The ability to buy a company with a working and successful business model can't be overestimated - employees, existing assets and a revenue base are all good things! ' Time to market is virtually eliminated, via an established client base, given that building a brand and market share takes time!

Existing cash flows make it more feasible to attract additional financing to grow the business. These days it is all about the supply chain in your industry, so an existing network of suppliers, vendors and systems and processes is more than invaluable!

 

For more info from the Harvard Business Review on those ' rules ' and benefits to acquiring a business, click here for the article. We particularly like HBR's rule # 5 on how to acquire a business with a loan  - don't buy a failing business!

 

  

WHAT FINANCING STRUCTURE WILL MAKE YOUR TRANSACTION WORK?  

 

 

When buying/acquiring a business or merging your business into another (That’s the 'M ' in m&a), it’s important to visualize the company's ultimate structure. While it's preferable that your target business has little or no debt, strong cash flow, and valuable assets, the reality is that's not always going to be the case. Therefore different types of acquisition financing are required to shore up the overall ' business valuation' of the target company in connection with your process of due diligence and a better guarantee of being successful with acquisition financing lenders.

 

 FOCUS ON THE FINANCIAL STATEMENTS

As we have said in the past, financial statements don't provide a ' magic number ' for value, but properly completed (and available), they should show you the business's cash flow situation. Again, the past is not the future, so careful examination of future financial potential is key in a financial acquisition.

 

SHARE PURCHASE VS ASSET PURCHASE

 

Buyers must also determine if they are buying the ' shares' of the business or the ' assets.' There's a big difference in tax obligations here, and this is where it's best to consult your lawyer or external accountant.  Sellers need to consider the fact that there is no real ' market ' for private company shares.  The buying and selling of businesses rely then on proven ' formulas' for valuing a business.

HOW ARE BUSINESSES VALUED?

Those valuations typically include giving a multiple to cash flow, profits, sales, or some combination of those. In some cases, it's all about the business's assets,' so both a buyer and seller would benefit from a third-party independent appraisal of any assets on the balance sheet if required. While sellers will maintain an overall ' glossy ' outlook on assets... it's buyer beware when it comes to sellers risk.

On larger, more complex transactions, a 'fairness opinion' will help a transaction - that type of solution to value is much less rate in the SME/SMB marketplace for acquisitions and buyouts.

Example: Specialized assets will require additional due diligence. A good example of that might be intellectual property.  Additionally, real estate might often be a part of your transaction. That can be addressed in several ways - as that type of asset is typically, but not always, held in a separate holding company as part of a long-term owner strategy. 

The quality of the financials and the business's performance historically dictate what type of financing you will need to complete a transaction when financing an acquisition with debt. Poor profits, high levels of debt, and other operational deficiencies will dictate finance solutions. Ultimately understanding the working capital and assets is key. Remember also that in the small to medium enterprise area, ' Goodwill  ' is rarely, if ever, financeable on that balance sheet.

 

Oh, and by the way, the ability to  ' sell yourself ' as a manager with skills is key.

 

7 WAYS TO FINANCE  A BUSINESS PURCHASE IN CANADA /

 

Let's get back to our actual financing options when acquiring a business and those sources of funding. They include:

 

Canadian chartered banks

 

The Govt of Canada guaranteed ' Small Business Loan.'

 

Asset-based loans and lines of credit -  utilized for leveraged buyouts and asset-intensive companies, thereby providing maximum leverage on assets for another company

 

Sale-leaseback strategies on owned assets

 

Unsecured cash flow term loans / Mezzanine Finance

 

Seller financing participation - i.e. the 'VTB.' / Vendor financing - establishing a creative earn with the seller will almost always help your transaction.

 

Buyer equity - equity financing vs debt financing must be balanced according to your goals and capability to successfully completethe transaction.

 

One or more often, a combination of these finance solutions will help finalize a financing structure that works best for your purchase. The interest rate on any debt financing will vary based on deal size and type of financing.  A business plan for financing will almost always be required to effectively present your transaction most positively. 7 Park Avenue Financial business plans meet and exceed bank and commercial lender requirements.

 

Taken into consideration also must be the financing for equipment that might be needed to grow the business - that is most often accomplished via effective equipment leasing to conserve working capital.

 

While larger deals might be able to secure private equity or a public listing for financial success, the real meat and bones of the small to the mid-market area of acquisitions rely on those 7 strategies ( or combinations of them ) that we highlighted above. Many firms are also acquired via a management buyout - Click here to buy out financing solutions.

 

BALANCING THE ADVANTAGES AND DISADVANTAGES OF BUSINESS ACQUISITION

 

Most of the advantages of buying an already established business are obvious, most notably, eliminating the challenge of starting a  business from scratch. However, there are also some potential risks and disadvantages, such as the costs associated with the value placed on assets, brand, goodwill, proprietary technology, etc. If you as a buyer have limited expertise in the target company industry, the learning curve can be steep - As one of our mentors once said, ' tuition is costly in the school of experience'!

Other issues to contend with are the potential inability to address employee issues or properly assess future financing needs. We all hate surprises, and the surprise around potential product/service and client issues can be a major challenge. In the technology environment, reinvestment in outdated assets can prove to be a financial burden.

Naturally, with a proper level of due diligence, the vast majority of issues can be addressed in the early stages of preparing your offer to purchase.

 

CONCLUSION - NEED TO FINANCE AN ACQUISITION?

If you're looking for expert help and real-world financial solutions to buying a business, seek out and speak to  7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you in your business acquisition finance needs. When it comes to finance a small business acquisition, let our team help you finance the purchase of an existing business.

 

FAQ: (FREQUENTLY ASKED QUESTIONS)

 

How Do You Finance A Business Acquisition

After a potential purchaser establishes a value on the target company they wish to buy, a value/purchase price must be established. The most common way to establish value is the ability of the company new generate profit. A common formula is ' EBITDA' - which is calculated by earnings before interest, taxes and depreciation. An industry multiple is then put on that number.

Why is Goodwill An Asset?

Goodwill on the balance sheet of a company is the amount over the value of tangible assets of the business. It is viewed as an asset because its benefits are long-term and extend beyond the financial statements period. Components of goodwill might be brand value, client lists, propriety technology etc.

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

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 

Finance Business Acquisition Acquire Company | 7 Park Avenue Financial

The Secret Of Factoring & Invoice Financing In Canada

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Get Rid Of Cash Flow Problems Once And For All With Accounts Receivable Factoring Companies

Factoring in Canada continues to be more and more of a financing option for Canadian business owners and financial managers.  Generally speaking, factoring in Canada is a great synonym for alternative financing. When Canadian businesses cannot raise traditional financing for working capital and cash flow solutions, factoring via invoice discounting becomes one of several viable alternatives.  

 

IS FACTORING INVOICES  A GOOD IDEA? WHO USES FACTORING

 

Factoring invoices work for all companies that sell on business credit, require money for day-to-day operations and who have a creditworthy customer base. The cost of this type of financing is quoted as a fee and not an interest rate, and companies should be able to absorb this method of finance.

 

WHEN DOES INVOICE FACTORING WORK WELL?

 

Invoice factoring works well for business owners that need money quickly, have reliable customers that have a history of paying invoices on time and can afford the fees that come with selling invoices to a third party - that party is accounts receivable factoring companies. If this sounds like your business, you might benefit from an invoice factoring solution!

 

FACTORING FACILITIES CAN BE SET UP QUICKLY AND EASILY

Part of the appeal of a Canadian factoring finance solution is a firm's ability to put this financing facility in place fairly quickly. In our experience, the facility generally takes about two weeks to finalize, from start to finish. When we compare this against a firm's time spent negotiating traditional Canadian chartered bank financing, we can easily see this as a key advantage.

 

WHAT INDUSTRIES IN CANADA USE FACTOR FINANCE

 

Almost every industry in Canada has the potential for factoring invoices. The process is also referred to as invoice discounting.  Companies that maximize the factoring process are generally those that are expanding and growing very quickly – this is probably the optimal use of factoring as an alternative financing vehicle, but in many cases Factoring in Canada is simply a survival or restructuring strategy of a temporary basis. Factoring companies in Canada are often referred to as a 'bridge' back to traditional financing.

 

Most business owners and financial managers are keenly aware of both the cost of carrying their receivables and at the same time the amount of management time that is spent on monitoring this asset, which quite often represents the largest or second-largest ‘ current asset ‘ they have on their balance sheet. (Inventory is 2nd). 

 

 

  

WHAT IS THE TYPICAL CHARGE FOR FACTORING / INVOICE FACTORING RATES? 

 

The average costs of factoring is between 1-2% and depends on factors such as monthly volume, overall credit quality of your receivables and the average invoice value. These costs are expressed as a fee, not an interest rate.

 

So when you don’t want to wait 30 to 90 days, or in some cases 90 days as seeming the norm being the norm, accounts receivable factoring is the quick and effective solution. It is somewhat more costly than traditional financing, but savvy business owners can turn the perceived high costs of factoring around in many creative ways. 

 

This can be done in very basic ways, such as increasing pricing by 1 or 2% or utilizing part of the cash flow generated from factoring to take prompt payment discounts with suppliers and negotiating better pricing on goods and services. Imagine a financing solution that gives you unlimited cash flow and whose costs can be effectively managed by smart business decisions in your business and operational and purchasing model!

 

FACTORING FINANCE IS NOT DEBT ON YOUR BALANCE SHEET

The process of factoring is really one of the key issues around why factoring was much slower to catch on in Canada, and business owners are highly recommended to research this type of financing with an experienced and credible partner. If properly structured, your Canadian factoring solutions will not require additional collateral, and they should not be confused with term debt or additional borrowing. You are simply ‘monetizing’ immediately your largest liquid asset, those receivables!

 

SOME BACKGROUND AND HISTORY ON FACTORING

 

So why has factoring become a cash flow solution of choice for Canadian businesses? If it’s so great, why haven’t you heard more about it? The truth is that factoring has been in place for hundreds (some claim thousands!) of years.  When I first heard of factoring is was always in conjunction with the textile or garment industry in Canada, much of that out of Montreal. Nowadays, factoring is pervasive in every industry.  We can easily maintain that if your firm has good receivables and your overall gross margins can handle factoring, you should consider this financing a potential alternative.

 

So what’s the ‘Canadian’ spin on factoring? We know that in the U.S., there are probably over a thousand-factor firms - these firms are looking for financing relationships with U.S. businesses. In Canada, the market and the players are, as usual, smaller in size.

 

We strongly believe that one of the reasons factoring in Canada did not catch on as quickly was simply that Canadian business owners did not like the concept that their receivable is managed via a notification process to their customer.

 

DO BANKS OFFER FACTORING

 

Banks do not offer factoring as a general rule. Instead, they take an assignment of your accounts receivables, and these ongoing receivables are collateral security for the loan or line of credit. They have security on your A/R receivables loan, unlike the factoring process, which sells a receivable.

 

So if your overall business philosophy does not foster the idea of a finance company notifying and collecting your receivable for you, you should strongly consider a non-notification financing factoring facility. This again is where you need the services of a trusted, credible, and experienced financing advisor to steer you through the Canadian factoring process.

 

In summary, Factor companies in Canada are, relatively speaking, a  newer form of financing – but has been in place in Europe and the U.S. for hundreds of years. It has major cash flow benefits, is a great alternative financing strategy, and, if managed properly, is cost-effective. 

 

One of the best Canada factoring solutions is Confidential Receivable Finance - allowing you to bill and collect your own receivables without any notification to any clients, suppliers, etc. Companies can choose between non recourse factoring and recourse factoring depending on what level of typical bad debt risk they wish to maintain of transfer.

 

Are you looking to fast-track your liquidity as a small business? Factoring services will turn your outstanding invoices into cash immediately, either the same day or within 24 hours. Talk about accelerated working capital via factoring financing!

In some cases, PO financing might be an additional service that is complementary to A/R Finance.

CONCLUSION

Processes that Canadian owners may not necessarily like around the paperwork and customer intrusion from ar factoring companies can be managed and negotiated carefully with the assistance of an experienced Canadian business financing advisor like 7 Park Avenue Financial, with a track record of success in this area of factoring program and accounts receivables as a key asset of your business.
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/2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Factoring In Canada | 7 Park Avenue Financial

Lender Finance - Lending Power For Changing Needs

Funding For Lenders - Lender Loans Financing Solutions 

 

Like most firms with a specific financial offering to your clients, you want to ensure you have a customized lender finance solution to your ongoing capital needs. The ability to grow a financial firm as in  either the consumer or commercial space while maintaining flexibility is Job 1!

While  lending by banks, such as our Canadian chartered banks or traditional insurance companies might be the obvious choice for low-cost capital, numerous factors might prohibit your firm from accessing bank credit facilities.  The 7 Park Avenue Financial team will ensure a solid understanding of your current portfolio and future needs - in a business that is all about liquidity, we will take the time to understand your product offering and business model around its assets/loan receivables

Specialty Finance / loan provider opportunity  has never changed so fast and so quickly when it comes to who is a lender in these times  - Whether it's a global financial crisis or a Pandemic or changing technologies finance companies are constantly challenged - they want flexibility in capital and interest rates commensurate with their overall credit quality. Companies such as your want to unlock portfolio value, maximize liquidity, and grow!

 

THE LENDER FINANCING PROCESS

Typical funding needs revolve around either a revolving operating facility or a term loan structure - what makes sense for your firm .. or is it time to change and re-evaluate your current funding model. In some cases, it might be taking our current private investors or creating a partial liquidity event for owner/ owners.  In all cases, it's the collateral value of the present and future portfolio that will drive your funding capability.

 

WORKING THROUGH THE LENDER FINANCE PROCESS

 

The ability to demonstrate collateral value in our portfolio will maximize funding eligibility. Monetizing current facilities allows for additional funding to allow the portfolio to grow via your current and prospective marketing strategies.

 

ARE YOU FINTECH?  TRADITIONAL LENDER?

 

Over a period of time  2 major classes of finance companies have emerged in the Canadian landscape. We can broadly characterize them as ' Fintech' or Traditional. Which one is your firm? No doubt both models employ and capitalize on numerous online marketing activities.

 

In some cases, management might be considering an equity investment  - in other cases, a more traditional term loan structure that has defined minimum drawdown of approved facilities and repayment structure to your business model and cash inflows.

 

The other major alternative to a term loan structure is revolving facilities. The revolving facility's appeal is the ' pay for what you use ' business model as you generate loan growth knowing you can increase profitability with the confidence of a line of credit backing loan growth in your facility - versus fixed-term loan payments on a senior loan scenario.  Whatever model you chose will allow your company to grown and maintain portfolio equity.

 

EQUITY OR DEBT  

 

The aforementioned equity option, by its nature, is a more costly  form of business capital, thereby giving up your firm's stake in future profits as the portfolio grows or matures. Business financing is a constant balancing risk, though, and equity will always enhance traditional borrowing power. Sources of funding can best be summarized as combinations of owner equity/commercial finance facilities from non-banks or traditional bank funding.

In some cases your firm may be looking to merge with or acquire another firm , or you may be starting a finance business and looking for both a working capital component as well as loan book funding.

 

 

 

UNDERSTANDING THE BASICS -  YOUR LENDING FINANCE SEARCH

In the current low rate environment of the North American, even global economy, the offering of all-time fixed low-interest rates has tremendous appeal to commercial borrowers seeking lender finance solutions. That ability to still pick either a revolver or loan provides maximum repayment flexibility.

WHAT TYPE OF FUNDING DOES YOUR COMPANY PROVIDE?

 

The explosion in business and consumer financing services for Canadian borrowers as well as the partial exit of the ' bank lender '  has created  a broad competing playing field for :

 

Short Term Working Captial Loans

Merchant Advance

Accounts Receivable / Factoring

Refundable Tax Credits ( SR&ED/Film/Mining)

Equipment Financing

Asset Based Lending

Non franchise Automotive

Online / Peer To Peer / prime and subprime credit quality

SAAS / Recurring Revenue

Strata/Condo Financing

Captive Retail Finance

Other ' Esoteric '  Specialty Finance Providers!

 

TALK TO 7 PARK AVENUE FINANCIAL ABOUT YOUR FINANCING NEEDS

You are looking for specialty finance expertise and insights into solid funding possibilities whether your firm is early-stage or mature. If lenders have the management team, business processes, and a track record of portfolio performance we want to help you grow. Borrowing from non-bank regulated capital allows your firm to be more creative in its market offering.

We want to be a proactive partner in your lender finance needs. Our long-term track record in business financing success and our understanding of different business models will help ensure you can access growth finance in your portfolio. In lender financing, it's all about leverage and access to capital to fund future growth.

Seek out and speak to 7 Park Avenue Financial, a trusted, credible and experienced business financing advisor who can assist you with lender loan solutions that fit your business needs.

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/2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lender Finance | 7 Park Avenue Financial

Start Up Sources Of Finance In Canada: Early Stage Sources Of Funding & Financing Is Your New BFF

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Is Start Up & Growth Financing Keeping You Up At Night

 

Start-up sources of finance in Canada easily keep the business owner/entrepreneur up at night.  Let's dig in.

 

WHAT IS THE CHALLENGE OF EARLY STAGE FINANCING

 

Is anything more uniquely challenging than the financing needs of a startup? Is it even possible that early-stage financing could turn out to be, as they say, your new BFF? Nothing is truer than the fact that capital acquisition chances are less certain in an early-stage environment. A traditional bank loan from financial institutions such as banks and credit unions is a major challenge in the source of funding solutions.

HOW DO YOU BALANCE DEBT AND EQUITY OPTIONS

The key to understanding the ' capital raise' is ensuring your business has a suitable match of debt and equity.  When you are up and running, the good news is that many capital sources to monetize assets and sales are fairly plentiful. They typically include debt and asset monetization vehicles that allow you to generate internal cash.

 

 

LET 7 PARK AVENUE FINANCIAL SHOW YOU THESE FINANCING SOLUTIONS

 

Those typically include:

 

PO/ Contract financing

 

Monetization of SR&ED tax credits - these bridge loans are a great way to cash flow refundable tax credits under the govt R&D program for those that file claims

 

Receivable Financing / Inventory Finance / Confidential  Accounts receivable funding

 

Asset-based credit lines that turn receivables/inventory/hard assets into on single business line of credit

 

Those 4 methods are ' asset monetization' strategies - also available is debt in the form of a Government small business loan or a working capital term loan from Canada's crown corp. bank.

 

Many business owners, some of whom are ' newbies,’ are not 100% sure of the amount of financing they require, much less they could get approved for. Potential clients, we meet who state ' as much as we can get ' requires... well... you guessed it... a lot of work.

 

DO YOU NEED A BUSINESS PLAN FOR STARTUP FUNDING?

 

A good business plan is almost always a requirement in startups - 7 Park Avenue Financial business plans we prepare for clients meet and exceed bank and commercial lender requirements.

 

The proven way to calculate the amount of start-up financing you need is to prepare a proper opening balance sheet and cash flow projection. Properly complete, it will give you a strong handle on the inflows/outflows and, most importantly, the timing of the funding you will need - either in term debt for new assets or business credit line needs.

 

Sales typically drive cash flow needs, so being realistic in your forecast is key. An old mentor of ours once said, ' I NEVER MET A PROJECTION I DIDN'T LIKE.'

 

  

WHAT IS THE IMPORTANCE OF MANAGING WORKING CAPITAL AND ASSET TURNOVER  

 

Can a realistic, even conservative projection fail? It can if it doesn't allow for the timing of working capital flows. Businesses in the SME sector can generate a lot of cash, more than they might think, by properly managing receivables, payables and utilizing sources of funds such as equipment leasing. It's then that the owner/manager must consider external capital. And as expensive as debt might seem too small or emerging businesses, it’s always cheaper than diluting ownership equity.

 

GOING THE BIG BOY ROUTE? FINANCING FOR ENTREPRENEURS

 

Forget the somewhat painful journey of start up business grants ,venture capital, VC firms,  angel investors, venture capitalists' equity demands, and focus on real-world solutions for a new business in Canada. These financing sources are looking for high growth and traction that exists already.

 

FOCUS ON REAL-WORLD AVAILABLE SOLUTIONS / FUNDS FOR STARTUPS

 

At the seed stage, it's all bout the right amount and type of debt and your ability to monetize sales via effective cash flow solutions. Over a period of time, the entrepreneur will realize this journey is for the smallest amount of businesses. Make sure you understand the dilution of equity and ownership that comes with those types of finance sources.

 

CONCLUSION - FINANCING A STARTUP

 

If you're searching for the right amount of start-up, growth, and early-stage financing for your businesses, seek out and speak to 7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor who might be the bridge to your new BFF - solid start-up sources of finance - someone who will be able to help you fund your business.
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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Start Up Sources Of Finance Early Stage Financing |7 Park Avenue Financial