Corporate Asset Finance - Feeling Overwhelmed ? How A Lease Company Addresses Your Issues

Ever Thought About Corporate Asset Finance Lease Company Solutions? 

 

Corporate Asset Finance has the ability to be very complex today - the positive news being there are a number of options for the Canadian business owner / financial manager to choose from. That might be a lease company, a bridge loan provider, or even a Canadian chartered bank.   The owner/manager can then be forgiven for not truly grasping the benefits, and risks, of asset finance.  Worse, more often than not available advantages and benefits are underutilized.

One way to take control of the asset finance concept is to utilize the services of a financing expert. Truth be told it is a rare breed of business owner or manager that has the background in credit, law,  finance, tax, and accounting that are all part of the asset finance equation.

One way in which the asset finance question is often overlooked is simply the inability of the owner and manager to look at asset financing from a ‘cradle to grave ‘point of view

So what are those starting to endpoints when it comes to corporate asset finance via your lease company or other alternative financial institution?  First of all the borrower has to have a strong sense of the general marketplace – that is probably one of the greatest areas of misinformation or confusion.

 

We talk to countless clients who simply don’t understand the lay of the land when it comes to asset financing – namely who are the players in the asset arena they are playing in?  We can’t count the number or times we’ve seen a client who has previously spent a lot of time dealing with the wrong players and the wrong offerings. To put it simply, they don’t understand the lay of the land!

After getting a strong handle on the overall market your firm has to have some sort of evaluation criteria. Those criteria involve rate, term, structure, useful economic life, etc. Documentation, tax and accounting issues, as boring or mundane as they might sometimes seem are critical to ‘best practices ‘in asset finance.

In entering a lease or asset finance transaction your company needs to know how this particular finance transaction can make or lose your company money. That might come from understanding applicable rate structures, or perhaps knowing your firm might have the bargaining power to issue a tender to solicit asset finance bids. The big boys and government does it - can you? Sometimes you can . Not always, but sometimes!

 

Key issues in accounting and finance play a key role in asset finance.

They might include depreciation policies, or simply your choice to enter into an operating off-balance sheet type transaction.

Part of the business of asset finance is of course knowing the long-term economic value of the assets you’re financing.  Your overall financing strategy brightens significantly when you’re keenly aware of asset resale values and obsolescence issues.

Want to get a solid handle on the pros and cons of corporate asset finance in Canada, dealing with a leasing company or commercial finance firm. If you don’t know it all  (who does?  ) seek out and speak to a trusted, credible and experienced Canadian business asset financing advisor who can assist you in getting un-overwhelmed!

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

Solutions For Optimal Financing Of Capital Structure In Canada

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Solutions For Optimal Financing Of Capital Structure In Canada

Substitute Failure For Success In Canadian Business Financing 

 

Financing your optimal capital structure might sound like a bit of an esoteric or technical term for many Canadian business owners and financial managers - in actuality, it's easier to understand than you might think, and .. Important!

 

The general idea of capital structure is for the business owner/manager to have a strong sense of whether money is coming from, or could come from your suppliers, your bank and other lenders, or your own owner equity in the company. That is the debt and equity balancing act!It's those three that comprise your capital structure! As debt increases so do those interest payments! Using debt properly and the cost of debt should always be top of mind with a business owner / financial manager. As debt increases, leverage becomes a double edged sword.

 

The manner in which you finance your optimal capital structure makes you successful or drives you into bankruptcy with too much debt. At 7 Park Avenue FInancial we prefer the former by the way - which is why we focus on delivering proper corporate finance structures.

 

In some ways, you might be managing your capital structure quite uniquely and successfully already. Case in point - supplier terms. Just getting a supplier to allow you to pay anywhere from 60-120 days brings you a solid source of cash at minimal cost. Hopefully, the ultimate cost isn’t the relationship you have with your suppliers of course!

 

WHO ARE THE LENDER TO ASSIST IN OPTIMAL CAPITAL STRUCTURE / BUSINESS FINANCE

 

Canada's chartered banks, asset-based lenders, lessors, or working capital firms such as receivable finance and PO based finance firms are your short and long term lenders for capital structure as it pertains to debt. And that debt of course is short term, or long term, depending on the nature of the borrowing.

 

ISSUES AROUND COLLATERAL

 

Another point to be made is that the debt you undertaking within your capital structure has collateral attached to it -and there's only so much collateral to go around.  A positive aspect of debt is that you can leverage it to maximize returns on capital and investment - if done properly.  A great rule of them is that your long term debt is not greater than your shareholder equity. That the standard debt and equity relationship for  many industries And when it comes to total debt a typical bank requirement is that it should exceed equity by no more than 2 or three to 1.Naturally the cost of capital has to be factored into your analysis , and financial experts agree debt is cheaper than giving up equity ownership.

 

BUSINESS ACQUISITIONS REQUIRE PROPER TIME SPENT ON OPTIMAL FINANCING STRUCTURE

 

If you are looking to purchase a business for example it's important to understand that financing will come from a combination of lenders,  your firm or you personally, and potentially the seller - aka the Vendor Take Back.

 

BANKS AND CASH FLOW COVERAGE

 

In talking to a bank about financing your capital structure they are going to focus on cash flow stability.  Banks and other lenders use a simple cash flow analysis tool called ' coverage ' and they like to see cash flow exceed debt coverage by 1.25:1 typically.

 

Lenders, i.e. banks and other commercial finance firms will at the same time look to the balance sheet for collateral - which typically is going to come from receivables, inventory and fixed assets and even real estate. In your search to find the optimal business capital for your firm your firms 'net worth ' / market value will always play a key role.

 

CONCLUSION

We have seen that capital structure is all about the proper mix of debt and equity - the goal is to enhance the value of your company while ensuring you are taking on the right level of risk to ensure the proper ' ROE ' - aka return on equity.

Getting a handle on today’s subject will help guarantee business success. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with financing solutions within your capital structure.

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 '

Your Road Map To Success With Leasing Companies - Equipment Finance Rates And Lease Finance Solutions

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 How To Get Best Leasing Rates From Equipment Financing Companies

 

When it comes to using leasing companies for equipment finance in Canada is there a road map that Canadian business owners and financial managers can use to ensure they are getting the best solutions, rates and structures for acquiring business assets.  We think there is a basic road map that can be followed to ensure asset financing success.

 

6 Paths To Great Lease Rates & Equipment Financing Solutions

So what would the elements of that road map be? We think it comes to the following categories :

1.Solid  structures, interest rates and terms- typical lease terms are  36-60 months but for some assets 72 months might be available

2.Understanding the benefits, and yes the risks of lease finance

3.Ensuring you have chosen the right lease with a monthly payment and term that supports your financial needs

4. Understanding the accounting and tax implications of your transaction- documentation is key and the lease payment may include miscellaneous items not planned for, ie service agreements, etc.


5..Troubleshooting to ensure you're dealing with the right lease company

6.Utilizing Proper third part assistance when needed for purchase of the equipment and vendor negotations

When you have those points covered off we're pretty sure you are very close to having a solid road map in front of you for the equipment lease  journey.

There really isn't another more popular method of financing your business asset acquisitions in Canada and the U.S.  In fact billions of dollars of assets are financed every year, and the ability of your business to acquire assets with financing that comes with other benefits make this business tool extremely popular.
 

CAPITAL LEASES / OPERATING LEASES - WHICH ONE IS RIGHT FOR YOUR BUSINESS

The actual asset that your firm acquires has both a useful life and some economic and hopefully operational value to your business.  In many cases these assets will have a residual value. That's where it’s important for you to ensure you're still following some of our road map issues - namely understanding who to deal with and what type of lease you choose. Those two choices boil down to lease to own (capital lease) and lease to use (operating lease), and how you address the end of the lease options you have.

How you shape and negotiate your payments around that asset is what makes you a winning in dealing with leasing companies. Equipment finance rates themselves are important, but at the essence of this financing, tool is the fact that you have access to a lot of structuring tools that come with both risks and opportunities for you and your chosen lease company.

When it comes to types of equipment that you can finance almost any asset can be leased, and that includes technology your firm might need, medical equipment, personal protective equipment, or even application software. Yes, software leasing and financing is available. New equipment, as well as used equipment, can be financed -  Note though that used equipment should be part of a commercial business to business transaction.

 

LEASE FINANCING IS ALL ABOUT MONTHLY PAYMENTS TAILORED TO YOUR NEEDS

Typical benefits associated with a leasing company include the ability to match monthly payments to cash flow streams that make sense for your firm relative to the original purchase price. Many industries are capital intensive and use leasing extensively to conserve cash. Despite all the flexibility that is offered with lease structuring more often than not the business owner and manager simply want to know that a regular fixed monthly payment is a known factor they can readily deal with.

 

USE THESE LEASE TOOLS TO MANAGE CASH FLOW IN ACQUIRING ASSETS

When equipment finance rates and monthly payment values from a  leasing company are critical you have access to a number of solid tools -. They include lengthening the lease term, including a residual value in your structure, or negotiating lower down payments.

 

CONCLUSION

If you want to maximize the leverage your firm has in acquiring assets through leasing companies spend some time on our key road map points and protect your interests and assets. Approvals are quick and flexible in lease finance and it is not unusual for smaller deals to be approved within 24 hours! Using your business line of credit due to a good interest rate is not the best allocation of cash and you are making the mistake of matching short term cash availability to long term assets.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with commercial equipment leases or a business loan to meet your asset acquisition 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/2020

Franchise Loans In Canada . Don’t Let A Franchisee Financing Loan Be A Disaster

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How To Finance A Franchise In Canada

Franchise loans in Canada. Either not getting the one you want or need just might be a disaster when it comes to your entrepreneurial dream for a franchise purchase which all of a sudden appears to have gone up in smoke!

 

When all of your plans for a small business loan go awry when it comes to your franchisee financing loan almost everything is at risk, including your planning, potential franchisee fees or down payments you have made, deposits on a premises, etc. Let's examine some key elements of Canadian franchise finance success.

 

KEY ELEMENTS OF FRANCHISE FINANCING SUCCESS

 

Financing success in the franchise industry will come from both you and one or a combination of several franchising lenders.  A common belief which we can dispel pretty quickly for you is that your franchisor is not going to be the one that plays a major role in the financing of your business -  We guess you can say they are with your morally and spiritually, but not financially! Any form of assistance your franchisor might provide will typically be indirect in nature, sometimes in the form of a referral to a lending institution or a Canadian business financing advisor.

 

OWNER CONTRIBUTION PLUS EXTERNAL FINANCING

 

All businesses require start-up capital from the owners, so don't think that franchising in Canada is any different.  That is your owner contribution when it comes to financing the key elements of your new business - items such as construction, leaseholds, equipment, the franchise fee, opening inventory, and potentially even real estate. Franchise owners should have a clear idea of funding both the purchase as well as day to day working capital needs to run and grow the business.

 

DON'T  MAKE THE MISTAKE OF NOT PLANNING PROPERLY!

 

Right about here is where many franchises make a huge mistake. And that mistake? It's not focusing or planning for working capital for items such as salaries, wages, lease and loan payments, franchise royalties, etc.  When working with clients we are always focusing on the ' working capital ' component of your business plan, not just the start-up financing, which often seems to be the sole focus of the franchisee.   Ensure you have a solid business plan and executive summary and cash flow projection package. At 7 Park Avenue Financial, we prepare business plans that demonstrate your ability to make franchising a success.

It's important that franchisees demonstrate a good personal credit score and work history and experience as lenders rely on that as part of the franchise formula for long term success.

 

THE FUTURE IS UNLIMITED!

 

We could even take that one step further and say that you might want to even start considering at this point an expansion plan if you choose, down the road, to acquire multiple franchise locations, in the same or another industry. Franchise financing options get better with more success in your initial purchase.

 

That brings us to the key point of ' experience '. When we apply for jobs and positions in the corporate world our potential employer is focusing on our EXPERIENCE.  So that's why it's important also to ensure your franchisee financing loan is adjudicated with the idea that you as a business owner have relevant experience in your industry. A solid example is the restaurant and hospitality industry, where long hours and people and operational expertise are critical.

 

4 SOLID SOLUTION TO FINANCING YOUR FRANCHISE

 

In Canada, your franchise loan is not necessarily going to come from a conventional lender. In fact, it almost always will not. Your financing will come from various financing options -

 

Specialty franchise lenders

The BIL/CSBF program - (Our preferred choice!) This is the Canadian version of  U.S. ' sba loans' !

Leasing companies

Private investors

 

COST OF FINANCING

 

Interest rates and terms will vary depending on the type of financing you choose and your overall personal credit history. The interest rate in funding your franchise may be a blended rate as often different types of financing are cobbled together. In some cases, you might be buying an existing franchise and a seller financing component may also be an option based on the nature of the franchise agreement and approval of the franchisor.

 

Repayment terms themselves will vary based on the nature and amount of financing you need, and whether it's a debt of cash flow type of funding. In certain cases, there may be a real estate component to your transaction, which is often financed separately in a special purpose entity type of legal incorporation.

 

CONCLUSION

 

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in ensuring your franchise business finance needs become not a disaster, but a success! Whether it's bank loans or non-bank business loans we want to help the entrepreneur in the franchise industry - a key part of Canada's economy.

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

The Cost Of Factoring Shouldn’t Be A Hot Potato ? A/R Rates And Funding Receivables Is Not What You Thought!

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A New Look At Factoring Pricing In Canada

 

Does the cost of factoring finance, i.e.  AR rates for funding receivables really have to be a  ' hot potato ‘? We don't think so, and here is why.

 

THE ACTUAL COST OF ' FACTORING RECEIVABLES ' IS A FEE - NOT AN INTEREST RATE

 

The cost to finance a receivable via invoice factoring of course revolves around the ongoing sale of your A/R at a discount. That discount is essentially the core of our cost perception issue. Factoring fees are often very misunderstood and confused with interest rates.

 

 Otherwise, things are pretty much the same, meaning that in the ordinary course of business you are still responsible for collecting your accounts in a timely manner, and furthermore, in a worst-case scenario, the customer’s inability or refusal to pay your firm still incurs a bad debt for your company. So far so good, right? We should mention that you can get what is known as non- recourse AR finance, but that is obviously a bit more expensive and essentially tied to the concept of credit insurance.

 

HOW DOES A FACTORING COMPANY ASSESS YOUR TRANSACTION

 

A Finance factor firm is going to look at hopefully the same issues that you look at when you enter into extending credit into your clients - i.e. client references,  credit limits, collection history, etc. That's just Business 101 and the reason why large corporations invest hundreds of thousands/millions of dollars into credit and collection departments that will ultimately drive the company’s cash flow and operational results for sales and collections.

2 KEY BENEFITS OF AR FINANCE

Benchmarked against the costs of funding receivables are of course the benefits. The key benefit is pretty obvious; your firm receives cash essentially the same day as you make your sales. You're now in a position to do something that many of your competitors may not be able to do, and that’s to offer terms and credit limits to many of your clients that even your competition might not be able to do.

 

Second benefit. It's virtually unlimited credit to your firm - you're not going cap in hand to apply or renew Canadian chartered bank lines.

 

THE TRUE COST OF FACTORING YOUR ACCOUNTS RECEIVABLE

 

So let's get down to the nitty-gritty . The cost of receivable finance. The key point we want to make today is simply that many Canadian business owners and financial managers don't really understand the true cost of what they are paying already, even when they are not factoring. Let’s look at our key example today:

 

EXAMPLE OF THE COST TO FACTOR A RECEIVABLE

 

Let's say your firm has a made a $10,000.00 sale and has generated an invoice for your client. Let’s say the customer is very late and pays you in 100 days. If we assume your company can borrow money at today’s rates in the 6% range as an example the cost to carry that receivable, i.e. just wait! is approx. $160.00.   

 

What we have just demonstrated is what is known as the cost to carry a receivable. If your firm had a receivables funding factor facility in place a typical cost to fund that receivable for a 60 day period might be 300.00. With that new found cash that you have obtained immediately, you are in a position to take supplier discounts, buy more inventory, generate another sale, and make more profits.

 

Doing nothing and just waiting for a client to pay, carrying your clients, is obviously not a great thing.

 

FACTORS THAT DETERMINE OF OVERALL A/R FINANCING RATES

 

Generally in Canada factors that determine your AR rates and cost of factoring are your sales volumes, average invoice balances, number of clients, and general perception of creditworthiness of your clients and your industry.

 

IS CONFIDENTIAL RECEIVABLE FINANCING THE BEST AR FINANCE SOLUTION

 

At 7 Park Avenue Financial Our recommended solution is confidential factoring, which allows you to reap all the benefits we have hopefully noted, with your firm being in control of billing and collections - i.e. no third party involvement.

 

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your financial needs when it comes to receivables funding.
 

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

Looking For User Friendly Debt Capital And Asset Based Financing Choices? Strategies For Successful Business Financing

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When corporate partners and venture capital aren't available or don't make sense the Canadian business owner/manager turns to debt capital and asset-based financing choices for working capital and asset monetization. Wouldn’t it be great to have some solid choices in that area? The reality is that you do but just might not know it. Let's explain some key things around asset based lending.

 

We suppose we can make the case that when it comes to asset based loans debt is lower risk than equity, plus we always know what’s going on vis a vis payments of principal and interest.  The potential danger is that by virtue of your covenants and the collateralization of assets they may be claimed by your lender who is primarily interested in protecting their capital.

 

We sometimes think that the above scenario is how the business owner/manager believes the lender wants to behave. That certainly is not so, as what lender would really want to be repaid from the normal operations and cash flows from your business.

 

THE ASSET BASED LOAN  IS COLLATERAL LENDING OF SALES AND ASSETS

The actual ' assets' of your business are what normally drives most of the business financing in Canada. Because these assets have specific values balance sheet accounts such as buildings, inventory, and receivables are in fact the collateral behind your borrowing when it comes to ' asset based lending '. No mystery there. It's a classic example of balance sheet finance.

 

The alternative to hard asset collateral is the cash flow monetization of assets. And, oh yes, you can actually borrow against future cash flows, sometimes even on an unsecured basis if you can prove that historical and future cash flows are real and reasonable and carry a normal element of risk.

 

CAN YOUR COMPANY MEET THE TWO KEY CRITERIA IN CASH FLOW LENDING

 

How does the lender in Canada measure the risk of cash flow and debt repayment?  This is primarily done via two rules of thumb

 

The cash flow formula is known as EBITDA 

The ratio of total debt to your total shareholder equity

 

These ratios and calculations are then typically embedded into a loan document that makes them, in essence, a condition of the loan. The bottom line, a healthier business with good cash flow and low or reasonable debt has a great chance of achieving more debt capital. If EBITDA and debt/equity are ' out of whack ' then it's safe to say that challenges in obtaining debt capital and asset financing will ensue!

CONSIDER SHORT TERM FINANCING OPTIONS VERUS LONG TERM SOLUTIONS

When accessing both debt capital and asset financing it's important to determine what category or timeframe you are looking to address. By that, we mean short term financing of one year or less, typically business credit line solutions, or long term financing that typically might be 3-5 years, and finally an ongoing line of credit financing for your daily ongoing operations. The asset based lender establishes an ongoing borrowing base certificate on which you can draw down against accounts receivable and inventory.

 

BANKS VERSUS ASSET BASED LENDERS AND NON BANK COMMERCIAL FINANCE COMPANIES

 

While debt capital in Canada primarily comes from banks, insurance companies and pension funds for medium-sized to larger corporations there are numerous independent commercial finance companies and asset-based lenders that address the start-up and SME sector in Canada. It' all about knowing who to turn to and when. The key point to remember? It's a simple one. Assets can be financed!

 

CONCLUSION

 

The bottom line today. Pretty simple - simply that asset financing and cash flow financing for debt capital is available through collateralizing your receivables, inventory, equipment, real estate, etc. The trick is knowing who, what, when, and where! Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in your debt capital and asset finance needs and choices.

 

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

Know How To Finance A Business ? Financing Choices Are About Timing And Strategy In Funding Choices

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Properly Forecasting Your Business Finance Needs ?

Is there a right way and a wrong way to finance a business in Canada? We definitely think we can show you there is ... as well as pointing out those risks and benefits. And by the way, it is in fact possible to change horses in midstream to adapt to today’s changing times when it comes to business financing and your company.

 

WHAT TYPE OF FINANCING DO YOU NEED - SHORT TERM OR LONG TERM ?

 

As we have been prone to say lately the concept of ' term' is critical in both assessing and choosing the right business finance. By terms, we simply mean short, intermediate and long term, as all of those have a number of different implications.  And to compound the challenge for the business owner and manager both the type and  ' term ' of the financing can impact the amount of funds that flow in and out of your business.

 

FACTORS TO CONSIDER IN FINANCING

 

So what in fact are some of the things you need to consider when choosing a financing solution?  There are a number of factors, probably all as equally important. They include:

 

Cost/rates,

Amount of risk you are taking

How your overall business capital structure changes with any one particular sort of financing

What cash flow, working capital and profits that that financing will deliver... or take from your company!

 

It's easy sometimes to get confused about the timeframe when you're in the middle of searching for a finance decision. We meet and talk to many clients that are looking to solve an immediate problem and somehow miss considering the growth and future of their firm.  A simple example might be a banking arrangement - i.e. not considering whether you can live through the tough times based on covenants, guarantees and collaterals that you have either offered up or have been demanded of you.

PLAN YOUR CASH FLOW SHORTAGE !

 

One of the most proactive things the business owner/manager can do is to focus on planning to be short of cash and what solutions might be available. Why? Because cash flow shortfalls always happen, for pretty well everyone!

 

The toughest decision many business owners have to face if giving up equity and ownership of some sort in their business because debt levels are too high or the right financing is not available.

 

4 FINANCING SOLUTIONS YOU CAN ACCESS TODAY

 

So what are some of the short and intermediate financing solutions available - They include:

 

Supplier financing

Bank lines of credit

Receivable financing

Equipment leasing

 

DON'T OVERLOOK SUPPLIER FINANCING AND HOW IT AFFECTS CASH FLOW

 

Supplier financing is almost always overlooked when it comes to cash flow financing. Just negotiating better payment terms or taking supplier prompt pay discounts can save firms many thousands of dollars.

 

IS TRADITIONAL BANK FINANCING THE SOLUTION

 

Bank financing in Canada takes many forms - when you can achieve approval. Those forms include lines of credit, term loans and fixed asset financing for long-term assets.  

 

 We caution clients that the crux of the bank relationship should revolve around what you need to provide in the form of collateral, covenants, and reporting.  Many Canadian business owners simply don’t know that alternative financing for their businesses can in fact be arranged outside of Canadian chartered banks. While these solutions might be more expensive they solve problems!

CONCLUSION

What financing solution suits your business? Seek out and speak to a trusted, credible and experienced Canadian business financing advisor today.

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