Considered An ABL Asset Based Secured Business Line Of Credit ! Is The New Year The Right Time For Your Company?

Looking For A New Way To Master Business Financing?

Information on a secured business line of credit for Canadian business financing . Let an ABL asset based facility solve working capital needs.. differently .



What Canadian business owner or financial manager hasn't wondered if they have properly considered all the financing alternatives available to their firm in today's challenging borrowing market? One mechanism not fully known or understood properly is the secured ABL asset based business line of credit. Is it for your firm? You'll decide shortly!

Although Canadian commercial bankers still proudly trumpet the fact that chartered bank commercial credit facilities are widely available hundreds or thousands of businesses in Canada are unable to meet the qualifications for such financing. Basic qualifications for a bank credit facility that margins receivables (and hopefully inventory) are not complicated to understand. They are of course difficult to achieve or provide! They include clean balance sheets, income statements that show profitability, and positive cash flows, both historical and current. Oh and by the way, owners must often back stop these facilities with guarantees that often require personal assets to be either pledged, or collateralized.

Don't get us wrong. Bank financing in Canada is available, it’s cost effective, it’s simply just a bit harder to get if you can't qualify under out criteria we set out above.

So, enter the secured ABL facility. Here's business working capital and cash flow financing with an emphasis on only one word: ' Assets'! The ABL lender is focused. That focus? Your key business assets of receivables, inventory, unencumbered fixed assets. You borrow against the total current market value of these assets via a revolving secured business credit facility. If there is a bottom line it’s a simple one - a focus on collateral, not ratios, covenants, or outside collateral.

A common question from clients revolves around what dollar level of facilities is either the entry point or the cap on such secured facilities. The good news is that there is no upper limit on ABL deals in Canada. In fact, unbeknownst to many some of Canada's largest companies utilize ABL facilities, having forsaken bank facilities which no longer make sense for their business.

We consider a solid entry point for such facilities to be in the 250k range, which more often than not is a combination of receivables and inventory. We hasten to add that there must be a reasonable mix as typically A/R has a higher borrowing value. However, there is always an exception to the rule, so a good example of a great ABL solution is the financing of inventory for retail chains, etc.

Pricing on secured ABL facilities fluctuates widely in Canada. Pricing can be either below bank comparables, slightly higher, than or as high as 1.5-2% per month depending on whom you choose to deal with. Mid market firms who have assets are great candidates for this type of business financing,

A proper submission for an ABL facility should include financials, proper aged payables, receivables and inventory, as well as miscellaneous information you would associate with any type of business finance application.

So why consider an alternate method of financing in the New Year? It's about increased borrowing power, easier qualifications, and competitive pricing commensurate with your overall credit and asset quality. Speak to a trusted credible and experienced Canadian business financing advisor on reasons to make a change in your finance strategy.





Stan Prokop - founder of 7 Park Avenue Financial –


http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/bank_financing_commercial_business_banking.html

How To Avoid Business Operating Cash Flow Problems And Improve Financing Success

Note From The Trenches – Working Capital Traps To Avoid


Information on operating business cash flow and solutions on how to improve business financing problems and challenges .




Many Canadian business owners and financial managers find out the hard way that business success is almost always also tied to having, and improving their operating cash flow. It's when sales and profits don't match cash and working capital that the problem begins. Bottom line, getting rich on paper only is not all that fun!

In order to avoid cash flow problems we can quite simply say that it’s a ' matter of time '. When we say ' time ' we mean it in the context of how your firm operates, in essence it's operating cycle. Many new or inexperienced business owners often find out painfully that the cycle of time from getting an order to collecting the sale can be significant!

In a perfect world, (and we know it's not) your business wants to have the flexibility to allow your business bank account to fluctuate in a constant manner, from surpluses to positive balances.

One fallacy often missed by the entrepreneur is that deficit cash flows are a sign of weakness. In reality, if you are selling, and growing, it’s simply a case of the ' timing ' we have spoken of. You have built up an investment in receivables and inventories, and are waiting to get paid, converting those into operating business cash flow.

But, if you don’t fail to recognize and manage how to improve asset management business cash flow problems occur. It's at these times that your bank or other lenders you might be dealing with may attempt to rein in your business, in essence cutting off future working capital requirements.

One of the most obvious ways to effectively manage your cash cycle is to ensure you have a Canadian chartered bank operating line of credit. This facility in effect is in a position to totally manage your time horizon when it comes to getting an order, shipping or delivering a product or service, and then waiting 30... 60... well... you know what we are talking about!

Many businesses , particularly those that are either small, or start up in nature quite frankly don't qualify for business cash flow lines of credit in the manner that they might wish . Can this challenge be solved?

Yes, it can. In order to improve your cash position you can do one of two things. First, you can manage more effectively, and secondly you can access alternative financing vehicles.

Are we saying you can actually fix your own problems via management? Absolutely. You can tighten terms and credit policies, take discounts when available, and enforce stricter collections from clients. For whatever reason many clients we talk to can't or are reluctant to manage as above. We'll never know why.

The solution then? Enter alternative financing . By using such methods as receivable financing outside the bank, inventory financing, merchant advances, tax credit monetization, etc you can still be successful .

In fact some of these financing vehicles, even if more costly can make your business more successful if properly managed . For instance you can incrase sales by providing longer payment terms to clients, something your competitor might not be able to do . Additionally you could take trade discounts with the funds you receive from receivable financing, increasing profits if the discount is more than the cost of financing .

Tuition is often high in the school of business operating cash flow . Mistakes can be costly if you dont take measures to improve and recognize cash flow problems. Speak to a trusted, credible and experienced Canadian business financing advisor on business cash flow challenges that can be fixed .. properly.






Stan Prokop - founder of 7 Park Avenue Financial –


http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/operating_business_cash_flow_problems_improve.html

An Equipment Loan Might Not Be What You Think! Kick Starting Asset Financing Success With Canadian Leasing Companies

You’re One Step Away From The Benefits Of Lease Financing Approval


Information on effective strategies to deal with leasing companies in Canada. Equipment loan and asset finance tips for financing success





Unfortunately a huge number of Canadian business owners devote a huge part of their time in business life to asset finance; in effect trying to find capital for their business. Many times the solution to that challenge is with leasing companies in Canada ready and willing to provide those business people with equipment loan and lease financing.

What then are some of the key issues that get you one step away from business financing success when it comes to acquiring assets for your firm? As a business owner or financial manager you want to get the amount of capital you need with the least amount of risk you are willing to take on via debt.

Leasing companies, via asset finance in Canada are one of essentially five ways to raise capital for assets. (Those other four are of course supplier loans, bank financing, term loans, or equity injections from owners).

Why then do 80% of business owners in North America constantly utilizing lease finance as a business strategy, instead of simply buying the assets? Flexibility is one reason, your assets can be financed on shorter terms , via a ' lease to use ' type strategy, or longer amortizations via a lease to own transaction .Depending on which of the two you choose you again ( and here's our flexibility again ) can either return the asset or take ownership of it .

Canadian accounting practice sets up specific rules that deal with different types of lease strategies , either recording the lease on your ' books ' or in some cases, via an operating lease setting your transaction up as an expense . As boring as it might seem to spend some time on lease accounting implications the right choices in this area can save you a lot of dollars, and grief ! .. when it comes to financial reporting, tax time, etc.

Clients seem to slowly get the point here, in that your lease management becomes part of your overall business strategy, and takes some planning. It’s a good vehicle for getting some communications between the users of assets in your company as well as the finance side of the business!

In that manner we ' preach' to clients that lease arrangements are driven from several areas of management thinking:

The ability to borrow

The convenience provided by leasing companies

Risk avoidance in asset ownership via an equipment loan

Tax and accounting implications/benefits


One of the most powerful examples of risk avoidance in asset ownership via assistance from Canadian lease companies is the area of technology and computer financing. Who in their right mind, asks the business owner, wants to take on the risk of technology obsolescence in the area of computing, which seems to change every 5 minutes, including the newest grey area of computing, ' THE CLOUD '.

Does an equipment loan or lease have a lower or higher cost? That’s a typical question from many clients who are at the crossroads of the lease vs. buy decision. This is where your finance folks or accountants take variables into effect such as your firms cost of borrowing, the rate in the lease , and hopefully always making every aspect of their comparison an ' apples to apples ' assessment .

Other factors in the lease vs. buy decision might include down payment scenarios, credit covenants with current lenders, depreciation policies, residual value of the asset at the end of the lease or loan, etc!

As we have shown, an equipment loan or lease might not always be as simple a consideration as you might think. But it continues to be the financing of choice, everyday, for thousands of Canadian businesses. Speak to a trusted, credible and experienced Canadian business financing advisor today about getting on track with Canadian leasing companies for asset finance.





Stan Prokop - founder of 7 Park Avenue Financial –


http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/leasing_companies_equipment_loan_asset_finance.html

Why Canadian Business Is Turning To Accounts Receivable Financing Via A Factoring Company For Survival And Growth

Balance the Cost and Benefits Of A/R Finance In Canada


Information on accounts receivable financing in Canada . How to determine the benefits and cost of using a factoring company for working capital.





Small and medium sized businesses in Canada are almost always facing a financial challenge with it comes to funding to both grow, and yes even survive. However unfortunate, the reality is that thousands of firms have somewhat limited options to meet the funding challenges of their business.

Is there a solution? The answer, simply, yes. One of those solutions is accounts receivable financing via a factoring company or invoice discounting firm.

So why do those thousands of firms consider a/r financing as an alternative to term loans , or even the costliest method of financing, giving up part of your owner equity . Simply because they are in a position, with the right knowledge, to utilize, rather... monetize one of the largest, if not the largest asset on the left hand side of their balance sheet , their receivables.

A/R financing simply speeds up cash flow and allows you to finance growth by monetizing your receivable portfolio, in whole or in part. The process itself is simple; it’s who you partner with and how you structure your A/R financing (and what you pay for it!) that becomes somewhat of a challenge for Canadian business owners and financial managers.

In Canada two types of working capital finance via invoice finance are available. Under the most common scenario you ' sell ' your invoices to your factoring company - they advance you the cash, pretty well the same day, and they begin a process to collect that receivable as it becomes due from your client.

The other alternative, less common but our absolute recommended solution is that same sale of your receivables, but with you doing all the billing and collecting. In both circumstances there is essentially no limit on the amount of financing you can attain - naturally you have to have the sales to support that financing, but more often than not with most clients we talk to sales isn’t the problem, financing is !

If we had to say what confuses, or concerns the majority of first time clients in accounts receivable pricing we would have to put it down to two issues, the cost, and the daily mechanics of this financing vehicle.

So what's the best way to both understand and justify the cost of A/R finance? This is where the ' rubber hits the road' so to speak. The best way we can explain it to a client is that you have to look at the cost of this working capital from a couple different angles. One is that you are already carrying accounts receivable, so you have a cost. If the clients are low margin profits to you and taking a long time to pay that cost is significant, often as much or more than the cost of A/R finance.

The other way to look at it is that there is a large value to cash in the ongoing operations of your firm. You can maintain solid relations with suppliers and vendors by paying them promptly, taking advantage of discounts, as well as capitalizing on the buying power of your new found cash. A typical discount on, say, a 100k invoice in Canada is $ 2,000. Simply speaking, it has cost you $2000, on a 30 day basis to receive $98,000 for your invoice. But, consider this, take that 98k now and negotiate better pricing of say 3% less on your vendor purchases, and pay your vendor on delivery or via a 2% prompt payment discount. That combination strategy has saved you 5%, plus, you're ' liquid'. Talk about a winning strategy.

The time it takes your clients to pay, as well as your monthly volumes ultimately dictate your pricing in accounts receivable financing in Canada.

As we said the benefits of utilizing a factoring company are quite clear. Unfortunately in Canada the method in which fees and benefits are presented often lack clarity to the first time A/R finance user. Want clarity on pricing and benefits of accounts receivable financing in Canada? Consider talking to a trusted, credible end experienced Canadian business financing advisor for info on this innovative working capital vehicle.







Stan Prokop - founder of 7 Park Avenue Financial –




http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/factoring_company_accounts_receivable_financing.html

How Canadian Government Small Business Loans Work . Is the SBL Loan For You?

Intrigued By The Government Small Business Loan?



Information on the SBL loan for Canadian business. How government small business loans work in Canada.






‘So, exactly how does it work?' If we had the proverbial nickel for every time a client asked us that question about how Canadian government small business loans work we would be .. well, you guessed it.. rich!

Because the players, the mechanics of the SBL loan are widely misunderstood it's worth taking the time to understand how this valuable Canadian business financing vehicle works.

Quite often the criticism and perceived dissatisfaction with the program relate back simply to misinformation about the mechanics of the financing.

If we had to focus in on two issues that come into play time and time again with clients its either their dissatisfaction with the timing it takes to get approved , or , even worse, the fact that they are not approved!

The Canadian government small business loan is formally known as the BIL/CSBF program, and is operated under the auspices of INDUSTRY CANADA, a federal department. Our humble opinion is that the SBL loan is in fact very well managed, but where things fall apart always comes back to clients not knowing, or understanding the very basic qualifications for the program. Winning, via an approval under the program provides you with a great method of securing long term capital for business needs such as equipment, leaseholds, computers, software, and yes... even real estate if you choose.

Not every Canadian business owner knows the cap of the program... i.e. the infamous ' how much can we get ' question! For any non real estate item the loan cap is $ 350,000.00 ( is it just us , but that’s not exactly a small amount relative to ' Small' business loan ) and if you choose to finance real estate only you can actually finance 500k , the program cap under real estate.

Once you start getting in and understanding the program you start to appreciate its true value. Why? Because it becomes readily apparent that normal traditional financing in Canada could never satisfy some of the financing needs of start up businesses, small businesses, new franchises, etc. Those 3 key business segments are by far the most popular users of the SBL loan.

From a Canadian chartered bank or commercial independent finance company it’s all about risk. So the ability to finance your business with as little risk as possible is paramount to a bank or finance firm.

That's why using government small business loans allows you to leverage your business, even if it is a start up or a franchise to 90% leverage.

Understanding of the program essentially comes back to the following point; it's simply that the government is providing a guarantee or an ' enhancement ' we could call it to your loan. So all of a sudden the bank that told you your business might be too risky is in fact able to complete your financing satisfactorily.

When it comes to our two client issues, timing and approval we can only say that if you spend some time in understanding the small handful of criteria you eliminate both of those issues nicely.

Criteria for the program couldn’t be more basic - a permanent equity injection of 10% of the financed amount (that’s the ' down payment) and clean credit history of the busines owner or owners. Other miscellaneous items are the same as any other form of traditional financing, a business plan and cash flow, some supporting background info on the owners, etc. And by the way, don't consider applying for a government guarantee if you haven’t paid or filed your taxes. That's common sense, right.

Oh, and that timing issue. If you do things right it should take a couple days, if you choose to stumble around in misinformation it will take you much longer. Fast track your loan even faster by speaking to a trusted, credible and experienced Canadian business financing advisor on the SBL loan.





Stan Prokop - founder of 7 Park Avenue Financial –


http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/sbl_government_small_business_loan_loans.html

Floating A Loan? Don’t Float Alone! Funding Your Canadian Franchise Via Franchising Lenders For Funding Success!

Franchisee Funding For Canadian Entrepreneurs


Information on buying a franchise in Canada . How to overcome loan funding in Canada for your new business . Who are the lenders for your Canadian franchising funding strategy.





We recently caught an article on U.S. banking from one of our favorite U.S. websites ' Banking Connects ‘. The essence of the piece was that U.S. banks were awash in funds, but entrepreneurs were somewhat ' floating alone' in help on floating that loan!

So, let's try and ' Canadianize' that comment a bit with respect to a franchise loan in Canada, with emphasis on how to successfully loosen the purse strings of those franchise lenders for your funding needs.

Two critical components of success in franchising funding are your overall ' package ' of information, including a business plan and cash flow document. as well as owner capital .For non financial types those two fairly basic elements are still daunting though. The good news is that for very modest prices a number of solid sources to you can recommend assistance or even complete the package on your behalf. The cost by the way? Reasonable!

And now on to owner capital. If there’s one constant question we get from clients its ' How much money do we have to put into the business '.
Naturally we have the perfect answer that never seems acceptable at the outset: ' It depends ‘.

That's because the amount of money you put into the business is dictated by several areas of planning that must all come together.

They are as follows: In certain instances some Canadian or U.S. franchisors doing business in Canada might even strongly dictate how much money you have to put down. We suggest that they might be doing this by experience, knowing that past history has told them what an effective owner equity component is to their franchising system.

Funding of your franchise loan might come from a couple different sources, either an independent commercial finance firm that specializes in this type of lending, or, more commonly, the Government Small Business Loan. This requires a permanent capital amount from you in the 10% range.

Clients are always happy to hear from us that, on balance, acquiring a proven franchise is actually a favorable lending practice in Canada, if only for the fact that it removes some of the 'start up ' risk associated with opening any new business.

With the current 2012 economy on the horizon it's safe to say that entrepreneur and self employment options are clearly on the rise, given downsizing in many other aspects of the Canadian economy.

So, floating that loan! Some of the most accessible and competitive rates from Canadian lenders come via the BIL/CSBF program that more often than not perfectly suits a franchise funding need. The program is classically tailored to meet small business needs (isn’t that what a franchise is?) via great rates, limited personal guarantees, and longer amortizations, typically in the 5-7 year range.

We understand that rates for U.S. franchisees that are non bank in nature are often in the low teens these days in the U.S. . The Canadian program we've referenced has rates at least 50% lower if that U.S. comment is true.

Don't feel as a Canadian would be franchisee that you have to ' float alone' to float that (franchise) loan. Funds are available if you have a plan, some good business background in your chosen industry, and a decent measure of your own funds to commit to the venture. Speak to a trusted, credible and experienced Canadian business financing advisor today.






Stan Prokop - founder of 7 Park Avenue Financial –


http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/franchise_loan_lenders_franchising_funding.html

Downside Of Canadian ABL Asset Based Finance ? P.S. There Is No Downside! Business Financing And Lending That Works

Asset Based Lending Works



Information on ABL asset based finance. Explaining the perceived downside of lending via asset base lines of credit financing for Canadian firms.





So, which is it? We're big proponents of ABL asset based finance in Canada. So once in awhile a client pops the question. What's the question? It's ' Is there any downside to asset based financing for a Canadian firm?" Fair enough. ABL lending seems to have only good things attached to it in terms of the benefits. So about that downside...

We often hear the term perception versus reality. In the mind of the perceiver the perception is of course reality.

The world of ABL financing in Canada is in some ways fairly new. It's used by wholesalers, distributors, retailers, and manufacturers as an alternative to the commonly known ' bank operating line of credit '. One guesses that to be able to ' pan ' something and express concerns about the downside that you have to know what you're talking about.

In simple terms ABL lending in the context we're talking about it is a revolving line of credit secured by the assets of your company. Those assets are most commonly A/R, inventories, and in some cases we can throw unencumbered fixed assets and real estate into the mix. Again, simply speaking you borrow on a daily basis against the total value of all those assets once the asset value is agreed upon between yourself and the ABL lender.

So, on to that perceived downside! Many business owners and financial managers make the assumption that their firm must have the same credit quality that Canadian chartered banks require - that being profits, clean balance sheets, owner guarantees, the necessity for outside collateral on occasion, etc.

So the perception is that the downside here is that approval for ABL asset based finance is challenging. That clearly is not the case, if your firm has assets that can be financed you are in fact the best candidate for asset based lending.

Pricing. That clearly is perceived by many clients as the downside to this newer method of financing Canadian business. So, again, perception, or reality?! The reality is as follows: larger asset based lines of credit; particularly those in excess of 3 Million dollars are priced ultra competitively with Canadian banks. In some cases they might be lower!

How's that for a perception breaker?! For facilities between 250k and the, say 3 Million range pricing is done based on credit quality. In general these facilities are in fact priced higher, but in fact become the only alternative for firms that can't access any form of traditional financing at all.

‘Our company is public ' says a CFO. So we assume we can't access ABL revolver facilities?' Nothing can be further from the truth, as our ABL financing solution serves both private and publicly controlled companies, either on the TSX or Venture exchange in Canada. Even subsidiaries of U.S. companies by the way could qualify for asset based lines of credit. And in fact we think shareholders of public companies would like the idea that asset based facilities tend to grow and provide ongoing capital as the firm grows.

Fees. That’s the other common complaint we occasionally here about asset based finance. Here's where we will give in a little bit to those naysayers, as yes, there are some miscellaneous fees associated with ABL lending. But those fees only are a bit larger when we're talking about those very large revolving facilities, and in that case the pricing and access to more credit and working capital tend to offset any cost such as an appraisal fee, commitment fee, etc.

Finally, time to get approved and closed. Clients perceive ABL financing, perhaps because it’s different, as taking long to close. If you have solid reporting, can talk intelligently about your business and are prepared to commit to a new lending relationship we don't think there is any more time involved versus a bank line of credit.

So, perceptions. Realities. You decide, but be open to accessing this new method of financing. Speak to a trusted credible and experienced Canadian business financing advisor for assistance in your reality check!







Stan Prokop - founder of 7 Park Avenue Financial –


http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.


Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/abl_asset_based_finance_lending_financing.html