Business Lines Of Credit Make The World And Your Company Go Round! Canadian Working Capital And Secured Facility Information .

Smart Businesses Have A Business Line Of Credit

Information on business lines of credit in Canada . How does a secured facility work and why is it necessary to have a working capital revolving credits.



Did you hear the one about the Canadian firm that went out of business because they were too profitable and growth was great? That's an ironic statement to many business people, but the reality is that profits don’t equal cash flow and business lines of credit via a secured facility is the capital you need to survive all that success .

It's actually pretty simply when you think of it but because your firm has made that investment in accounts receivable, inventories, and other working capital assets you need operating loans to make your business work - on a day to day basis.

It's pretty safe to say that if you running out of cash or working capital, whether you're a FP 100 company in Canada, or all the way back to a start up is a concern for any business person , And of course the business papers are full of those stories everyday .

So that’s put us squarely in front of the bank with the proverbial tin cup in hand !Yes there are numerous alternate sources of cash flow and working capital, but our focus here is on bank secured lines of credit . Oh, by the way, there aren't really business banking unsecured lines of credit for your business, so we're in a narrow field here!

Canadian chartered banks do it a bit differently when it comes to operating lines and lines of credit. They take an assignment of your assets (just in case!) and wrap this security agreement into a demand loan type arrangement. These are typically reviewed on an annual basis.

How much you ' get ' from your secured facility is, in general, pretty standard. Typically that’s 75% of what is called your ' eligible ' receivables, which are those clients of yours under 90 days and within North America. On occasion clients that have extensive foreign receivables are required to compliment business lines of credit with export credit insurance from government organizations such as EDC and some other private firms.

Inventory margining under business lines of credit is a bit trickier. It is rare you can achieve 50% borrowing value, and all sorts of analysis might be required on the type of inventory you wish to finance.

Giving due credit to the banks its safe to say that any type of inventory financing for capital purposes is risky, and any lender rarely gets back what they have loaned out on this asset class.

One of the areas that work well under a secured capital facility is that your borrowing is your own business. There are no client notifications, and your customers would really only be notified in the event of a default by your firm. In this case your customers would be asked to pay the bank directly, which only makes sense.

If there is one danger area in a business line of credit it is simply the fact that your business should use these funds for short term working capital. Taking these funds you have borrowed on a short term basis to buy equipment or make longer term corporate investments generally leads to problems.

If you're uncomfortable with banking terminology, which banks offer what business services, or want to learn about any potential downside in business banking consider speaking to a trusted, credible and experienced Canadian business financing advisor.




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/business_lines_of_credit_secured_facility_capital.html

Heard Of The New Paradigm Shift In Business Lines Of Credit ? ABL Asset Based Finance Is Changing Canadian Business Financing

Why Asset Based Lines Of Credit Give You A Commanding Lead in Business Financing



Information on ABL business lines of credit in Canada . Why Asset Finance lending & Financing give you an ‘ all in one’ credit facility.





We're sometimes reminded of the old bank joke concerning the sign on the bank window that says ' We can loan you money to get completely out of debt ‘...! Anyway... sometimes achieving the business financing you need isn’t always about debt. We're talking in this instance about a new paradigm shift ' in business lines of credit - namely ABL asset finance financing.



A paradigm shift is defined as ' acceptance by a majority of a changed belief or attitude or way of doing things ‘. That’s why we couldn't think of a better way to describe why ABL asset based lines of credit might be the solution for you business financing needs.



Can we all agree that it has been more challenging for Canadian business owners and financial managers to access the commercial line of credit financing they need to grow or simply survive in their business? Often times an ABL facility can be the solution that becomes what we could call a ' double whammy ' - it clears up a lot of current challenges and then focuses on the financing to grow you company .



What could those current challenges be then? It might be converting some senior secured debt into party of your new revolving credit facility, of paying off any arrears that you have with either suppliers or the big guy... aka Canada Revenue Agency!



ABL asset financing is a non - bank asset based line of credit that becomes your new ' revolver' line of credit. Typical facilities secure receivables, inventory, and in some cases can include fixed assets and real estate as party of your facility. That’s a powerful combination as you can imagine.



So where does our paradigm shift come into play? Simply that whatever you may have thought about a Canadian commercial bank line of credit somewhat goes away in the context of ABL asset finance. Receivables tend to be margined at 90% (for A/R under 90 days) and healthy advances on inventory based on its real world values now - something that has been often difficult to achieve in the past for many Canadian firms.



And what about the credit criteria used to approve such facilities. Suffice to say that they are different! Companies that are growing quickly but only just recently profitable or perhaps who had a loss last year are still 100% eligible for ABL financing. In many instances even the issue of ' concentration ' can be dealt with...namely your reliance on one or just a few customers for a large portion of your firm’s revenues.



The paradigm shift for these newer business lines of credit in Canada is significant. Your assets, the size of the facility (facilities range from 250k to the tens of millions of dollars) or the industry you operate in can effectively be dealt with in Asset based line of credit.



Probably the most important benefit of this type of financing for Canadian firms is their ability to satisfy day to day working capital and cash flow needs while at the same time being able to satisfy order demand for their clients.



In many cases Canadian small and medium sized firms are financed almost totally by the owners , in effect self financing but limiting growth ABL non bank financing provides an all inclusive facility to address daily and long term needs, its as simple as that .



If your firm has good management, growing sales, and the ability to produce good products and services while at the same time maintaining good financial statements on costs, asset quality, etc you are clearly a candidate for the new paradigm shift in Canadian financing.



Speak to a trusted, credible and experienced Canadian business financing advisor on why it might be time for you to seriously consider the new paradigm shift in business financing - asset based lines of credit.







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/business_lines_credit_abl_asset_finance_financing.html