Funding For Lenders In Canada: The Lender Finance Solution

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Funding for lenders in Canada is all about the right finance solution for your firm. You're a specialty finance firm with the normal challenges of running a business in a good economy, much less a pandemic economy! Your funding requirements for growth are unique and your best bet is working with a firm that has special insights into your business. That ever-evolving capital need is why you want to work with 7 Park Avenue Financial.

Why Grow Your Business With Increased Lender Financing Capability?

 

 

The majority of specialty lenders in Canada who require additional lender financing tend to operate locally or at most in all of Canada. Dun and Bradstreet advise that bank lending to business has decreased in many areas and that decrease plus capital market volatility provides opportunities for those augmenting their lending needs.

The combination of responsiveness and flexibility in structuring capital transactions that work is a solid formula for success. Growing and expanding your lending power is JOB #1 at 7 Park Avenue Financial. Lending solutions to specialty finance firms covers many niche industries - You might be an asset based lender, a receivable financing/factoring firm or in smaller niches such as SR&ED loan financing.

Lender financing needs have grown dramatically with the rise of the internet - no secret there. Clients of 7 Park Avenue Financial typically have provincial or national operations but are always looking for areas to expand in. Specialty finance firms typically are non-deposit taking and not heavily regulated, allowing more freedom for growth.

Business has dramatically moved to nontraditional specialty lenders who operate outside of the mainstream of traditional bank. The concept of a faster approval turnaround, although coming with higher rates, has enabled many businesses to operate and grow outside traditional bank financing. That drives the demand for your lender financing needs.



Small businesses are increasingly turning to non-traditional lenders as mainstream financing is more difficult to secure. Payments giant PayPal has begun offering online merchants financing options that don't require credit checks and carry no periodic interest or miscellaneous fees. Applications for lease types of loans are usually handled online and offer quick turnarounds and higher interest rate

Lender finance is all about borrowing from the right financial firm or intermediary. The business model is fundamentally quite simple - borrow at a rate lower than what you earn on client loans, i.e. your yield!

Factors Affecting Lender Finance Interest Rates

The rates you will pay depends on a small number of key factors that boil down to overall credit risk, and regulatory risk, as well as the general level of competition in the lender finance market. Non-Prime lending comes with greater credit risk but offers opportunities for profit with solid infrastructure and well documented credit processes.

The opportunity, with increased financing capability to dominate your specialty niche or to take on an under-serviced area of business financing, coupled with taking advantage of the lower cost of capital now available to specialty finance firms is very appealing to CEO's and CFO's. Financing is available via term loans, revolving credit facilities, of other arrangements that might be syndicated.

What Drives The Need For Increased Financing?

Access to reasonable interest rates and overall business and consumer confidence drives the need for increased lending capital. Your firm's ability to originate business, write deals, and then service your portfolio will distinguish yourself from the pack. A smaller company will always be able to compete when they are a leader in their specialty niche, allowing them to compete with banks and very large firms who have unlimited access to capital. Dun & Bradstreet advises that in the specialty finance industry 75% of the total market is dominated by a small handful of very large players!

Also, the internet and ' online lending ' have allowed many firms to disrupt market positions held previously by larger financial corporations. That's what ' Fintech Lending ' is all about, alternative business financing that can compete effectively with traditional finance lenders. Here your business processes and the technological ability of your firm will differentiate you from the competition.


Safe to say that many other specialty finance niches are becoming more successful every day - including law firm funding, small business working capital loans, royalty finance, software financing, and numerous others.

Key Trends In The Specialty Finance Vertical

Nontradtional lenders in Canada are experiencing strong growth, hence the need for access to lender finance solutions. Business models that bypass Canadian chartered bank financing, coupled with intensive use of online marketing make for better ability to mine the potential client base. Firms that can minimize loan loss while taking advantage of the lower interest rate environment is a key to long term success in alternative financial services.


The actual needs of your firm might even be outside normal lending needs, such as the areas of acquisitions or startup. In some cases you might be a captive finance company looking to expand your parent company's growth. Unfortunately, not all companies in Canada have access to public or syndication type markets, especially if your firm is smaller. Your firm, therefore, prefers a credit solution that is more customized. Ensuring you have a strong business model and good fundamentals is key in access to lender finance solutions in good and less than good economic cycles.

The key to specialty lender is innovative and custom solutions for your client base - that is a recipe for allowing your firm to reach its financial objectives. Your goal is to access certainty in your future financing needs. It's about creating a balance between your credit facilities and your company goals around long term goals, which might even include a merger or acquisition.

Well run specialty finance firms can achieve profitability when many industries struggle in a difficult economic environment. There should never be a 100% direct correlation to everything else that is happening in the economy, pandemics included credit crises included! In fact when we talk to specialty finance firms new opportunities and new geographic opportunities abound. Your challenge is of course to be able to fund and capitalize on those opportunities.

Typically specialty finance firms seeking lender finance have solid in house credit staff and technology, as well as the ability to demonstrate they can source transactions. Naturally, everyone is always on the hunt for opportunistic acquisitions of growth opportunities.

At 7 Park Avenue Financial we're committed to originating the right financing based on our knowledge of the right lender finance solution. We're positioned to address your needs quickly and focus on the shortest closing time possible. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with you.



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.


Stan Prokop
7 Park Avenue Financial/Copyright/2020

Software Leasing And Software Financing Solutions: Saas Finance 101!

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Benefits of Lease Financing In Your Software Acquisition & Subscription Requirements

Software leasing and software finance solutions for your investments into applications also come with often a significant expense. Not only the cost of those solutions but the maintenance and support and updates around those products bring additional cost. The good news? Software can be leased and financed through the right software finance company. Discover why thousands of firms are financing software.

The reality is that many of the same similarities business owners recognize around equipment lease and finance come with the same benefits when you finance applications. The key? Using the right firm, as many firms are unfamiliar and therefore risk-averse to financing this business asset - an 'intangible'. A Leased software finance solution funds that intangible.



The irony? Simply that contrary to popular opinion software as an asset often has more value than a depreciating asset. Naturally, your business doesn't 'own' the applications you are financing and the financing is simply a mechanism to pay for your investment.


Did you know that purchasing business software and financing that purchase comes with options? The rise of a software subscription model with regular monthly payments has become a staple and an alternative to a one-time costly purchase. Leading experts such as THE GARTNER GROUP has predicted a massive rise for years now in subscription-based software purchases.

As for the financing of the software purchase consider this :

Bundling of associated services with your purchase can be costly - ie training, migrations, report design, etc and interest rates have never been lower

The multi-year discount option saves money and locks your company in from future price increases

Software financing is predictable cash flow management that avoids unnecessary surprise in the capital budget process - financing technology needs preserves bank and other business lines of credit


Other key points? The right to use the software comes with no right to the intellectual property surrounding the developer's rights in the code. A good example - Microsoft's Excel package. We use these spreadsheets at home or in the office but Microsoft of course owns it.


Industry statistics for equipment leasing in North America tell us that over 80% of companies in all industries utilize lease financing to acquire assets. But most business owners and financial managers think of lease finance as acquiring hard assets so they have not considered the option of lease application software, cloud software, etc.

New clients at 7 Park Avenue Financial can be forgiven for not considering leasing their software needs until we have explained the benefits! If you are looking for a financing partner with expertise in financing technology and software we have the solutions you require based on our multi-year experience. Financing software is the perfect trade-off versus a significant cash outlay, and in almost all cases bundling of additional maintenance, upgrades and training can also be included. That is true technology financing.


Solutions your firm requires in the software area might come from one or a variety of vendors. Depending on your specific financing needs those multiple solutions can come from 1, or several vendors either in Canada of the U.S. Typical terms for this ' niche financing' can be anywhere from 2-5 years. Typical requirements from your firm might be a detailed overview or quote from your vendor, and normal business application information, financial information, etc.

That allows for a speedy approval process. While larger established firms might not necessarily consider financing technology needs SME COMMERCIAL FINANCE needs typically revolve around preserving cash and not using daily operating cash for longer-term investments. The pro's call that ' matching', namely financing long term investments with financing that matches the ' useful life ' of your investment in such areas as r&d, technology infrastructure, etc.


In past times lenders struggled with how to collateralize and register security around the financing of the software - but that is now easily handled as lenders register a simply PPSA' under the Personal Property Security Act.

The heart of our financing issue here is the true value of the software to your business. You run your business on it - i.e. sales management programs, office software, manufacturing software, etc. Lease payments are made since these assets are indispensable to the value and ongoing concern of the business. Unless companies are liquidated in total bankruptcy most lessors and finance firms recover fully on their software leasing - Source - Journal of Equipment Leasing



Also key to the software financing issue is that many software firms offer maintenance, support, and updates around their product. This enhances the lender's asset as it is used for longer lengths of time, and often constantly upgraded. Quite frankly it becomes less obsolete than computer hardware!

Many software lessors and lenders also finance the service and maintenance contracts associated with their customer’s software acquisition. Your software finance needs can typically be easily bundled into your computer hardware financing acquisition.

Given that software providers prefer upfront payment, allowing them to more quickly recoup their development costs, there are cash flow advantages to bundling all your IT needs into one master agreement. That multi-year financing option can easily translate into higher discounts on your total software purchases- always a factor in multi-year prepayment scenarios.

SOFTWARE AS A SERVICE ( SAAS ) FINANCING - SAAS FINANCE 101!

As software had become an essential product/service in today's environment even low priced office solutions as well as larger enterprise offerings can now be financed in a manner to achieve better costs and preserve the working capital required to purchase your software needs.

Industry experts tell us that the enterprise business software market is growing substantially. Monthly payment options are more important than ever to maximize your ' IT ' ( ' information technology') budget. Although many purchasers view their software costs as a monthly expense the reality is that these solutions are often sold on a bundled one to three-year contract, which may often include maintenance and upgrades. Financing in advance can often achieve significant savings. Note that we are mostly talking about application software solutions, not customized development.

How Does Leasing Software and Financing a Saas Contract Aid In Cash Flow Preservation? Software as a Service Revenue Financing Explained!

It is important to consider large volume purchases of software versus the needs of smaller firms. A typical cost in a larger firm might be 100$ per ' seat ' the term commonly used in the industry for one unit. Some firms might also require a third party to implement the solution. Those costs add up and the concept of software contract financing can allow your firm to maintain technology costs within budget. The idea of a manageable monthly payment withing your capital budget versus a large cash flow outlay is appealing to any business owner or financial manager! The right SAAS Funder / SAAS Lender makes that happen.



In summary, software lease financing is available and should be considered by every business owner in the same context as a capital equipment finance transaction. The computer hardware industry has grown with leasing, and the software industry is doing that also.

The same considerations an owner gives to lease vs. buy apply to a software finance acquisition. Subscription software financing allows you to turn an annual expenditure into a manageable monthly payment. Other types of software that are commonly financed are ERP software and Human Resource management applications, legal law firm software, as well as the traditional accounting and payroll types of solutions.


Speak to a trusted, credible and experienced Canadian business financing advisor with a track record of success who will help you ensure your software acquisitions can be adequately financed under the best rates, terms and structures that make sense for your company. We can make subscription-based software financing and all your technology funding requirements simple!



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.






Stan Prokop
7 Park Avenue Financial/Copyright/2020

Guide To Acquisition Financing Via Commercial Business Loans In Canada

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What Is Acquisition Financing?

You or your company has made the decision to either merge or acquire another business. What are some of the key issues in successfully completing acquisition financing and business loans for commercial entities in Canada?

In certain circumstances, your business purchase might involve the taking over of a business already in family hands, versus the other end of the spectrum which would be a purchase of a competitor. Business owners/entrepreneurs are always focused on growth. It's critical that you establish a method to target the company you may wish to acquire.

The ability to be proactive in your search as well as to have a formal strategy is key to successful acquisition finance. The ability to buy and finance a business successfully is a proven way to grow clients and leverage the capacity of your business model - that translates into building your brand.



Business owners, we speak to at 7 Park Avenue Financial tell us they have found firms to buy in different ways. That candidate to buy might come from your own network of personal and professional contact; in some cases business brokers who know the market well are a strong source of deal flow. Accountants and lawyers are also good referral sources. It's important to establish some exclusivity around a transaction you are considering from a competitive viewpoint. That can be established via non-disclosure agreements, a letter of intent, or an agreement of purchase and sale based on certain conditions, one of which might be ... financing!



In many cases, acquisitions do not work out if the purchaser strays from his or her chosen industry. Staying in the industry you know provides a greater chance of success based on your industry experience, given that you have the ability to run a business in your particular industry. Therefore picking a company you know in an industry you know well typically leads to a higher probability of success. Naturally investigating thoroughly the true financial and business position of the firm is critical in the decision to buy process.



While that increase in revenue and profits can come from organic growth it makes sense to achieve scale more quickly by utilizing a business purchase model. That economy of scale can often be a faster growth in sales and profits. It's not always the case but many experts believe that a larger business enjoys numerous advantages, including more beneficial relationships with suppliers/pricing, etc.

Certain types of your clientele might prefer dealing with a larger firm, as well of course the obvious ability for a larger business to attract higher-skilled employees. Naturally, a larger firm has more capability to expand into new markets and services.

A good place to start is simply to ensure you’ve got the right reasons or goals around a merger or acquisition. In some cases you wish to diversify your company, more often than not though it’s simply a case of growing, both sales and profits of course

Is the term ‘opportunistic a negative one? We certainly don’t think so when it comes to legitimate business dealings, so in many cases, you simply have come across a firm or competitor that in your opinion is undervalued. The bottom line, it’s a bargain and you're focused on exploiting either undervalued assets or companies that are not performing well in certain market conditions. Almost always ' price ' becomes a key discussion point so experts caution when to know you have reached limits or criteria that would negate the sale.




On the other hand, just because a company is up for sale doesn’t mean the process will be any easier. Negotiations can break down, for instance, if the two parties disagree on the price. It is essential to set certain criteria and limits and be willing to walk away from the deal if certain conditions that are important to you are not met. Bottom line? Poor pricing on a good company is often a ' bad acquisition'.

How Does Acquisition Financing Work

Don't forget also that acquisition financing is all about some even more common sense scenarios as identified above. Its often a classic opportunity to lower your operating costs as overheads in the new firm can be cut and other efficiencies can be extracted from the combined mix.

Sources of Financing In Canada  / Acquisition Financing Lenders

Typically, but not always a term loan is the main source of financing and comes from the appropriate term lender / senior lender on your transaction. This might be a Canadian chartered bank, or it may be a specialized commercial finance company in the traditional or alternative lending space.

In some transactions, your purchase may be completed by a cash flow loan based on historical and projected cash flows of the target company. There is always the ' equity component' of the transaction, and this amount varies based on the overall credit quality and size of the purchase.

  Cash Flow Financing:  In many cases, a business might not have the asset base from a viewpoint of    ' tangible assets '. It is, therefore, necessary to demonstrate that cash flows have the ability to service your loan as well as covering off other fixed expenses. Good cash flow will allow you to obtain the most flexible terms possible for closing your transaction.


Seller financing can be a key aspect of your transaction and will sometimes ' make or break ' your deal. This financing, also known as vendor take-back / ' VTB ' can play a key role in business purchase success, especially if the seller is motivated and willing to participate.

A common form of acquisition finance for well-established target firms is mezzanine financing. It helps out the need to avoid additional owner equity, and while more expensive, it is based solely on the quality of cash flow of the firm you are purchasing. Rates are typically higher due to the lack of fixed assets backing the loan.



What are the types of acquisitions? We can summarize those into three areas, and in some cases, the type of acquisition you make will impact directly the type of financing and commercial business loans that you achieve.

Factors That Make Your Transaction Successful

  Purchase prices are always dependant on reasonable valuations. There are numerous ways to value a company based on multiples of sales, profits, cash flows, book value of assets, etc. The cash flow generation we have already mentioned is key, as it will ensure a proper understanding of the company's ability to hand debt and expand via new planned capital expenditures.

It's important to know that your senior lender will also look at the quality of management based on business and industry experience.



Back to our three merger scenarios - they are as follows: friendly, hostile, and leveraged or management buyout. Many smaller companies are of course happy and content to be taken over; they fully realize the potential synergies. However, in certain cases it gets somewhat ' ugly ' in that the management or owners of the firm you intend to buy or acquire simply are opposed to the idea.

Leveraged and management buyouts tend to be asset driven. The downside of a leveraged or management buyout is that if done improperly a large amount of debt can leverage your new firm negatively. There are numerous creative ways to finance acquisition financing in Canada.

What Are The Ways To Finance An Acquisition?

Financing methods include asset based lending, subordinate or mezzanine debt (i.e. unsecured loans based on historical and future cash flows) as well as a private equity component.
Valuation is an important aspect in the area of acquisition financing. Your valuation will have a direct impact on the business loans you enter into to complete the purchase.

In evaluating a final valuation or purchase price you will want to look at things like general financial operating activities - i.e. the financials. But don’t forget also that other factors such as new assets that might be required, working capital needs, etc also will drive that final valuation number.

Generally speaking businesses with hard assets are easier to finance - Those assets typically have value and are excellent collateral for business acquisition loans. This is particularly true of asset based lenders if your transaction requires alternative financing vs. traditional bank finance solutions such as a term loan.

Buying a smaller company, or even buying and financing a franchise can often be easily achieved by using the government of Canada's " Canada Small Business Financing Program '. This is a very flexible term loan with a maximum borrow amount of 1 Million dollars. The potential drawback to the loan is that the main collateral must be equipment, leaseholds, or real estate so borrowers should consult an experienced loan advisor familiar with the Gov't Guaranteed Loan. Under the program, the Canadian government shares the risk of the loan with the lender.

INDUSTRY STATISTIC - During the last 10 years, the government of Canada has underwritten almost 10 Billion dollars of small business loans, for over 63,000 companies!

Target acquisitions must be for companies with less than 5 Million dollars in revenue. The program does not cover farms of non-profit types of companies. The government sponsor of the program is Industry Canada.

Challenges In Business Acquisition

Buying a business is all about planning and ensuring you have a strategy. As well as the risk of overpayment and of obtaining a poor valuation  the purchaser will want to ensure he or she has a strategy of efficiently integrating the business to achieve maximum shareholder benefit.

Issues you want to address may include understanding the perceived or real weaknesses of the company in its chosen market. A business might have a wide variety of products and services so strategies must be implemented around pricing and service offerings. Your goal is of course to be a leader in your field and markets.

Business Valuation

Valuing your acquisition target is always a key challenge, and there are several different ways to come up with an acceptable value. Key factors such as what industry you are in, as well as the size of the company and typical profit ranges, will come into play. Companies also recognize sales revenues and profits in different ways. It is absolutely critical to come up with and understand what ' normalized ' financials will look like at the time of takeover/acquisition. Typically buyers will want to focus on the value of the company as ' going concern '. Buying distressed or turnaround situations is a whole different kettle of fish!

So in normalizing the financials you must look carefully at the core revenues and the assets that produce those revenues. You should be strongly focused on future income potential. One time events or expenses should always be discounted. For larger transactions, companies might choose professional business valuators.



At 7 Park Avenue Financial we want to be your key source for buying or selling your business - selling your company will often require either a valuation or business plan or probably both. Our goal is to ensure you have a financing structure that will allow for the proper sale, financing and growth of the business. Together with your accountant, lawyer, tax specialist etc, we focus on a smooth transition to a completed purchase.



In summary, when contemplating acquisition financing look at issues such as the proper mix of debt and equity, cash flow analysis, and various areas of operational risk and reward. If you want financial alternatives in financing your acquisition consider talking to a trusted, credible and experienced Canadian business financing advisor who will assist you in this exciting area of Canadian business finance.







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.






Stan Prokop
7 Park Avenue Financial/Copyright/2020

Can Asset Based Lending Help Your Company? The ABL Solution Works - Here's How!

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Asset-Based Revolving Lines of Credit and Term Loans

Is asset based lending the right financing for your business? That's a question that comes up all the time with our clients, and they want solutions now, not down the road! One ' size fits all' solution is, asset based lending. These 'ABL' techniques and solutions could provide all the financing your firm needs in today's competitive environment. Asset based lending industry statistics show explosive growth over the last decade .

What is Asset Based Lending, also known as ' ABL '?

Simply speaking it's a lending facility with the collateral being specific company assets. Utilizing the ABL formula allows your company fo fund A/R, Inventories, unencumbered equipment, and real estate is that latter asset is a part of your asset mix. The combination of those assets will significantly improve overall business liquidity/working capital.

One way to view this newer method of financing is to look at it as a ' blending ' of your company assets. This lending formula, therefore, delivers on access to more capital than any one financing. There are numerous, let us call them ' subsets ' of asset finance -

A/R Financing
Inventory loans
Purchase Order Financing
Sale Leasebacks

All of these deliver solid financing when your business needs it. But combined into an Asset Based Borrowing solution your firm maximizes total working capital needs. View it as an option to run your business on a daily basis, or in the terms of considering a management buyout or acquisition. It's working capital when you need it most.




Companies that are constantly growing and in need of additional operating capital are the best candidates for the cash flow generating power of asset based lenders. Many of the best candidates for this business finance solution are financially leveraged and are not best suited for traditional Canadian bank financing .



Business owners and financial mgr's are looking for finance that grows with their business. As it became difficult to get all the financing they needed after 2008's recession many business owners investigated the ABL loan solution.

Typically, ( but not always ) asset based finance is non-bank in nature - it's offered by specialized commercial finance companies . It helps businesses access more working capital and cash flow - typically "Job 1 " for any business.

If your company has long term debt, and is looking to avoid taking on more debt, payables are rising, and you're waiting longer to collect receivables asset finance is a very logical solution. Ironically many business owners and financial managers in some cases haven't heard of this type of financing.

In the ' old days ' ( we remember them well ) abl was often touted as a financing of last resort. No longer!! Using it can grow your business, expand into new markets, buy a competitor, and oh yes, just survive day to day!

Summary Of The Benefits Of ABL

New clients at 7 Park Avenue Financial always ask us to clarify the benefits of the asset based lending solution.

A combination of business assets delivers a higher level of liquidity than any one type of finance

The ability to unlock assets traditionally not margined by Canadian banks as part of a working capital revolver

The ability to restore your firm to a level of financial stability - we meet with a lot of management who by necessity are always spending mangement time on cash flow needs

Every industry requires different levels of expertise and funding - ABL suits a wide variety of industries

ABL is a legitimate ' catch-all ' for expansion, restructuring or refinancing ( Yes you can finance the purchase of an existing business )

Asset finance solutions are low cost when compared to equity financing

Traditional Canadain bank requirements around covenants, ratios, etc make ABL more accessible and it's ability to ' co-exist ' with other types of debt is viewed as a key positive for firms that have different levels of senior and junior debt.It is a funding structure that works! That what we at 7 Park Avenue Financial call ' covenant light '!




In it's purest sense asset based lending is often just a revolving line of credit that allows you to borrow against all, repeat ' all ' of your assets. Those typical asset categories include receivables, inventory and fixed assets.. even real estate if your company occupies and owns its own premises. Therefore the prime security of the loan is a focus on the overall value of your asset base, with less, or no reliance on external collateral, the focus on personal guarantees, etc.

LEVERAGING BUSINESS ASSETS TO ACCESS WORKING CAPITAL

The entire subject of leverage and margining your assets in ABL is critical to understand for the business owner and financial manager . ABL funded revolving credit facilities are based on a formula based on the liquidation value of your current and fixed assets. Naturally, a/r and inventory rank very high in liquidation value and will provide the maximum borrowing power . Typical advances on receivables are 90%, and percentages will vary based upon the many types of inventory specific to any one industry in Canada.

How Is The Exact Value Of ABL Secured Loans In Canada Calculated?

The asset based lender will focus on your firm's balance sheet with a view towards ensuring a detailed analysis of your overall potential liquidity. Factors that come into play include specific industry issues as well as current economic conditions, pandemics included!

As an example, the ageing for a/r and inventory will determine eligible amounts of borrowing under the facility, i.e. all receivables under 90 days is usually a typical measure of borrowing power. There might be a ' dilution' part to the formula - that might be an allowance for bad debts/uncollectible accounts.

The final borrowing base certificate will demonstrate maximum borrowing power for your firm.It should go without saying your firm should have a good reporting and accounting systems capabilities .



Canadian asset based finance candidates can appreciate that numerous fluctuations in their business sometimes deliver a challenge to those borrowing base calculations. Retails or distributors might require excess borrowing capacity at certain times of the year so seasonality must be factored into any common sense formula.

The best way to address that is to ensure your lender has visibility to historical documents around cash on hand, current asset levels, accounts payable, etc. Heres where overall averages can really help the final formula. Yes, assumptions must be made but those cushions will be an excellent ' shock absorber' in available borrowing.



Traditional bank financing often revolves around strict reporting periods on financial statements, and aged reports on receivables and inventories and often comes with a term loan structure. If your firm requires what the pro's call ' bulge financing ' traditional bank type facilities cannot necessarily solve the cash flow crunch. The more liquid your receivables and inventories are re turnover will mean a higher loan to value in drawing down on your facility.

THE ABL DIFFERENCE?  Simple - You can borrow significantly, on an ongoing basis, against those assets. Smaller ABL facilities tend to be in the 250k range, but they can easily run into the millions. Many large corporations use ABL also by the way!

By now you may have picked up on the fact that as your business grows you can borrow more on an ongoing basis, as your assets have grown also - with virtually no upper limit.

While Canadian chartered banks focus on ratios, covenants, personal guarantees and high net worth the asset finance solution focus.. you guessed it.. mostly on your business assets.

ABL comes in different flavours and can be specifically based or full service against all assets. That allows you to not postpone business success! Can you afford not to access this solution?

So what can ABL do for your company - if you're growing let asset based financing finance that growth? Growth financing is a challenge for every business .If you are considering funding an acquisition ABL can play a part in that financing. Many entrepreneurs don't realize the critical part asset finance can play in acquisition financing. It is often the cheapest, quickest, and most efficient way to fund acquisitions versus going the equity financing route. An asset based lending mortgage can also be part of any new facility.

If your requirement is a turnaround or recapitalization this method of business finance is well suited to your needs and can be delivered in a timely manner when timing counts! Working with an experienced advisor with a track record of financing success will also allow you to address any cross border financing that might be required.


The seasonality of any industry can greatly impact cash flow - let this form of financing help you with the cash flow strain. And should your company require the ' turnaround' asset finance is a proven method of restructuring your firm.



Speak to a trusted, credible, and experienced Canadian business financing advisor with a track record of success on achieving benefits of ABL finance. Let our team tailor a specialty facility tied to your business within its industry. We will demonstrate how to unlock working capital to meet all your cash flow needs with the right total financing option. Next step? Growth/success!






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

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



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



Business financing for Canadian firms, specializing in working capital, cash flow, asset based financing, Equipment Leasing, franchise finance and Cdn. Tax Credit Finance. Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations.

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR

Stan has had a successful career with some of the world’s largest and most successful corporations. He is an experienced

business financing consultant

.

Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.


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









Stan Prokop
7 Park Avenue Financial/Copyright/2020

Can Asset Based Lending Help Your Company? The ABL Solution Works - Here's How!

Lender Financing Solutions Canadian Loan Funding For Lenders

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Lender To Lender Finance Solved!

HOW DOES LENDER FINANCE WORK?

Lender finance, if you are not a bank, is all about working with the best partner and/or advisor. The ability to achieve growth in your portfolio and maximizing lending power is all about industry expertise. At 7 Park Avenue Financial, we're laser focused on ensuring you get the type and amount of lender financing you need. That allows you to write more business and grow profit while maximizing return on equity. Lender finance banks and commercial competitors provide these solutions.

Why Alternative Specialty Lending?

Specialty lenders such as your firm are successful because you know how to source and underwrite and manage your portfolio as it compares to traditional bank lending.


The Canadian landscape in specialty lending is diverse and covers numerous industries, some of them quite new. No one type of specialty finance is going to cover every firm's needs. Your firm wants a custom solution tailored to your industry specific and company specific needs. You are looking for a finance company lender that has a knowledge of your industry that mirrors that of your own management/ownership team. That dual synergy translates into success via growth financing!

Credit Facilities With Lending Power To Grow!

Massive disruption is happening in specialty finance and financing for lending industry needs. New alternative business models for growth finance lending, as well as payments, are competing more than ever with traditional financing such as the major Canadian chartered banks who were in the past the main ' go to ' when it came to wholesale financing. Every firm is focusing on leveraging the technical aspects of their business and well as redesigning their customer platform/experience.

Technology is all over specialty lending solutions these days. Successful firms market, process and service portfolios; even ' traditional' lenders offer digital solutions more and more. Alternative data and Artificial Intelligence are the new buzz words. From a marketing opportunity, small businesses are increasingly turning to alternative lending sources for their capital and cash flow needs. That is why good lender finance loans are the secret sauces to competing with larger players . Even companies such as Paypal and Shopify offer business and consumer finance solutions. A quick turnaround coupled with higher rates seems to be the new mantra! Underwriting techniques, including portfolio analysis, play heavily into the use of technology in Specialty Finance.

In-person applications and client meetings are now handled via online solutions, including mobile devices! Short term loans/merchant advances are everywhere in the market place and these firms are enjoying explosive growth with the help of the right lender finance group.


Successful firms in specialty finance are known for getting client transactions completed and your ability to move on to and fund new transactions is key. Never has specialty finance moved so quickly with the emergence of internet/fintech strategies for marketing and customer engagement.

You are primarily looking for a lender financing solution to expand lending - no firm wants to turn away business based on internal funding strategies. You, therefore, need a partner to expand growth potential.

How Does 7 Park Avenue Financial Help? The Specialty Lending Finance Company Solution!

The Lender Growth Challenge : Industry Expertise Required!

As a specialty finance firm your need to access the appropriate credit market and lender loan facilities . If you're unable to issue commercial paper or bonds, etc your best alternative solution if via financial intermediaries .

We're focused on ensuring maximum liquidity in your client portfolio. That type of funding capability allows you to keep existing clients and fund new clients via your particular custom funding solutions. Your company might require a financing revolver or in some cases a term loan might be the final or complementary solution.

The specialty finance market typically includes the receivable factor industry, as well as asset based lending. However many companies are successful in very unique niches that might include auto financing, consumer receivables, refundable tax credit ( SR&ED) loans, etc. Lender financing is all about achieving working capital for future success. A fintech lender finance program is one of the most sought after funding solutions today. Lending for the factor and asset based lending also dominates specialty finance borrowing.

Credit Facilities With Lending Power To Grow!

No industry, lender finance included is immune to risk. The ability to constantly grow portfolio while maintaining acceptable credit quality is key. As a lender finance borrower, your firm must be able to discuss/demonstrate it's ability to put the right controls in place as your content grows. Underwriting guidelines must be clear and demonstrable, as well as your firms ability to provide client loan documentation and information around your MIS systems. These issues are paramount to be successful in attracting a secured lending funder.

Documentation in your files should include applications, copies of original promissory notes or loan docs, third party credit reports, and risk analysis based on your firms ' credit box '.

Your lender will want to ensure your systems are in place and there is the ability to test your processes. That will of course lead to an appropriate level of reporting on a monthly basis to ensure proper due diligence is taking place. In certain cases customer specific issues must be well documented, for example, payment extensions or allowances. Naturally, every firm has there own policy when it comes to credit guidelines within their industry business model.As a responsible lender, you must demonstrate ability to verify that a borrower has the potnetial to repay your debt.

Lender financing has never been more in demand than today! You need specialized assistance and someone who is familiar with specialty lender finance companies.At 7 Park Avenue Financial we are familiar with lender funding solutions and we want to help you manage any of the exceptions and risk related to your business.

What Documentation Will A Lender Finance Company Require For Initial Review

Typically you should be prepared to offer the following information as part of your submission to Lender Finance Companies :

Executive summary/business plan
Articles of Incorporation
Portfolio ageing summaries
Management Bio
Historical and Current Financials
Sales Projection
Current Secured Lender information
Overview of Credit Policy and a sample loan document

In some cases a PNW statement of management may be asked for


The ultimate success in additional finance will allow you to grow your portfolio, but working with the right specialty finance funder is equally as important. Attractively priced funding to a diverse client base is the essence of successful lender loan facilities in both consumer and business markets.

The Bottom Line?

Specialty finance funding will always fluctuate with the economy and interest rate factors. Successful firms such as yours will always be reviewing growth potential versus potential loan losses in bad times and better economic times. A good secured lending funder is the best partner in all economic cycles, pandemics included!

Talk to 7 Park Avenue Financial for information on innovative financial solutions to your specialty finance product/products. We know the lender finance industry and the dual-edged sword of opportunity and challenge in middle market specialty lending and lender finance options. Speak to an experienced business finance firm that will help you keep your company growing. Specialty finance is unique and we want to accommodate your specific 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.









Stan Prokop
7 Park Avenue Financial/Copyright/2020

Lender Finance ? Get Successful With You Canadian Lender Financing Needs

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Lender financing is about the ability to grow and support your financing capabilities to maximize the profitability and growth potential of your finance company. The opportunity to obtain a customized lender finance solution to your industry enhances your reputation via credit facilities and business capital that deliver true lending potential to your client best, whether that be consumer or business, aka ' b2b' and b2c'. That's when ' experience ' counts!

No lender/finance company wants to decline borrowers that meet their credit criteria for lack of internal funding program capability or competitive interest rates.


At 7 Park Avenue Financial our clients that are lenders know that they require specialized insights into their business. The industry is vast and diverse with firms offered both secured and unsecured loans and other ' niche ' financing products. The 2008 financial crisis brought about significant changes in the way in which specialty financing solutions are funded. Whether it's a collapse in financial markets or the traditional banking system . a pandemic crisis, or technological breakthroughs in delivering consumer or corporate finance solutions the only constant is: Change! As challenging as specialty finance industry issues are seasoned lenders know that opportunities emerge at every turn in times of upheaval.

The Lender Finance Search - Understanding  The Lender Financing Provider

Most industry specialists in finance feel that they have been somewhat abandoned by the major insurance companies and Chartered banks that traditionally filled the void in specialty lending. Whether that can be termed a failure on their part of only a hard reality of the capitalization and constraints of those two lending bodies is subject to vigorous discussion.

Finance firms have certainly seemed stifled when it comes to the potential to grow, and your firm might be anxious to capitalize on access to the internet by business borrowers. That type of access to clients can only help you to spur growth without having to recognize boundaries (like the old days !). As an example, well-respected statistics firms such as Dun and Bradstreet estimate that the specialty finance industry in North America has volumes in excess of 585 Billion dollars.

Growth capital is what it is all about as your core business requires capital alternatives to deliver financing services. Owners, managers and shareholders of your business know that new capital sources should come with expertise that will lead to further financial success and the ability to operate effectively on an ongoing basis. At the end of the day, it is all about the portfolio and your management's ability to deliver value to owners and the client base.

Credit risk, more specifically the management of that risk is at the heart of your firms borrowing capabilities. Your ability to borrow well is dependent on your ability to demonstrate assessment of credit risk as well as documentation, collection, and fee issues dependent on your success


You want a partner or advisor who had an understanding and insights into your business. At 7 Park Avenue Financial, we have 16+ years of business dealing directly with specialty lenders in every aspect of consumer and corporate borrowing. You're looking for someone who understands your ' credit box ' when others don't or don't want to!

It's no secret that every aspect of every specialty lenders business is somewhat unique. Whether that be consumer lending, asset based lending, equipment leasing, law firm lending, factoring /receivable finance, auto loans, MCA ( merchant cash advance ) working capital loans, sr & ed loans, as well as other / niche lending markets every finance business is different. Online lending models have exploded into the Canadian and North American marketplace.


Your team knows that specialty lenders succeed best when they fill the void left by the exit of other or traditional market players. You, therefore, want to capitalize on expansion and growth. Therefore financing with a partner or advisor with industry expertise and the ability to finance creatively is foremost in your mind. That's where the relationship begins at 7 Park Avenue Financial - with a focus on understanding your current portfolio and the credit criteria that drive that growth.

Specialty Lender Financing Makes Your Firm More Competitive

Demand for your financing comes from client confidence in your finance services and of course interest rates, your ' cost of capital '. Someone lending to finance companies will look at your ability to write new business, but, as importantly service and collect on those loans. If your firm is a smaller finance company those rates/cost of capital areas are more important than ever if you are competing with the ' gorillas' in your industry who have the scale and potentially multiple sources of business capital. In some cases your firm may also be challenged to align new funding with redesigned business processes.

Niche players such as your firm always can succeed of course by highly specializing in your chosen field of finance. The specialty finance industry is not unique in that similar to many industries experts tell us that the higher quartile of lenders have the majority of the business


Your firm's ability to demonstrate adherence to any level of regulation in your industry, as well as the ability to divulge credit practices is key to the start of a good relationship with a specialty lender or funding advisor.

These days it's all about ' fintech ' which can mean a lot of different things, but the essence of that is the technology that delivers your firm's funding and growth and reporting. It should be no secret that a well-performing portfolio and your firm's ability to demonstrate that performance is key to attracting new funding.

At 7 Park Avenue Financial our focus is on delivering on a financing solution that will maximize your portfolio growth potential, so our focus of discussion is around areas of the size of your portfolio and the ' credit box ' that goes into those client approval decisions.

In some cases your firm might have some level of industry self-regulated or government compliance which should be demonstrable. These days it's all about ' FINTECH ' and any technology issues your firm has invested in or intends to invest in.

Similarly to any corporate borrower your finance companies must demonstrate the ability to report appropriately on portfolio statistics such as ageing, bad debt reserves, etc.


Lender to lender funding is also about your firm's ability to capitalize on new markets when new niches or geographical opportunities emerge. New economic cycles have a way of identifying unique new opportunities. The growth of alternative financing products has uncovered millions of dollars of lending possibilities for successful firms with existing portfolios.

Benefits Of Flexible Specialty Lending To Your Industry :

Ability to maximize the borrowing power/leverage of your existing portfolio

Secure specialized facilities based on the nature of your business

If your firm can't issue debt or stock or access commercial paper markets you need the best interest combined with flexibility and good repayment terms as low as possible compared to your interest earned

Almost all firms, probably including yours have external pressures around regulation, credit risk, and competition.


Lenders control credit risk by assessing the borrower's creditworthiness before extending credit. If a borrower fails to meet the conditions of a loan, fees can be charged, or the loan will become a loss. Lenders can minimize loan losses by employing or outsourcing a collections team that contacts and attempts to collect from borrowers who fall behind on payments.


At 7 Park Avenue Financial we have delivered on the financing of credit services for unique finance programs delivered by industry leaders in a niche industry. Whether your firm is experiencing hyper-growth or if you have very special requirements the 7 Park Avenue Financial team wants to become a long term financing advisor/partner and contribute to your company's success in your industry.

Seek out and speak to a trusted, credible and experienced Candian business lending advisor who can ensure your lending needs are met.





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.









Stan Prokop
7 Park Avenue Financial/Copyright/2020

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