YOUR COMPANY IS LOOKING FOR BUSINESS FINANCING!

ALTERNATIVE FINANCING  COULD BE YOUR ULTIMATE SECRET FINANCING TOOL! 

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the biggest issues facing businesses today

                              ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CONTACT US

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Asset based loan  and working capital solutions  – Save time, and focus on profits and business opportunities

7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”

BUSINESS LOANS AND BUSINESS FINANCING IN CANADA FOR SMALL BUSINESS OWNERS  

Business financing and those searching for business loans via asset-based lenders in Canada could use a secret weapon for their loans and funding needs.

Release Your Business's Hidden Potential  

Your business assets represent untapped capital waiting to be utilized. Many Canadian companies struggle with liquidity despite having valuable assets on their balance sheets.

Let the 7 Park Avenue Financial team show you how Asset based loans bridge this gap by converting your existing assets into immediate working capital, giving you the flexibility to seize opportunities and overcome challenges.

WHICH BUSINESS FINANCING OPTIONS ARE RIGHT FOR YOUR BUSINESS?  

The importance of financing for any business cannot be overstated.

Accessing capital through various means is vital in ensuring that the company can meet its obligations and continue operating, even if it's only temporarily until funding becomes available again or being able to secure a line of credit with traditional financial institutions or one of many alternative financing solutions.

Adopting a positive attitude toward business financing can be very helpful for a business owner looking to borrow money. This attitude is achieved when the owner is confident of the alternatives and solutions.

Finding the appropriate financing for your business can sometimes be confusing and overwhelming - Talk to the 7 Park Avenue Financial team to help determine what is suitable for your business.

BYPASS TRADITIONAL FINANCIAL INSTITUTIONS  / TRADITIONAL LENDERS?

Certain business financing strategies and tools work better than others for many established businesses based on your firm's needs.

ABL, the acronym for 'Asset Based Lending'  in alternative financing, might be the main 'secret weapon' you've been searching for in cash flow independence.

THE  RISE OF ABL / ASSET-BASED LOANS IN CANADA

Asset finance is becoming popular in Canada as a solid alternative to cash flow lending from bank unsecured loans. It provides a whole new way of looking at business credit history, focusing on assets rather than a company's cash flow - allowing better financial performance.

Asset finance strategies are a solid method of growing a company. Growing companies or firms that are financially challenged but still generate sales typically use ABL-type strategies.

Although asset financing strategies apply to almost any company, they are particularly suited to manufacturers, distributors, retail firms, and construction companies. It's all about assets and sales!

Business owners and their financial managers need to know their borrowing options.

At 7 Park Avenue Financial, when we talk to new clients about business financing needs, we're told that access to capital and flexibility are their most desired features when business capital is sought.

Those unfamiliar with the asset-based lender landscape should talk to a Canadian business financing advisor who can best determine their overall needs suited to their company and industry.

Asset finance used to be often thought of as a lender of last resort - that is no longer the case as thousands of companies in Canada, large and small, utilize this financing. However, it should be noted that it is more expensive, not always, but most of the time.

The most typical users of this type of corporate financing are firms exploring new revenue growth and requiring bulge financing based on seasonality industry-specific issues.

Firms without Canadian banks as their senior lenders are the most likely candidates for some form of asset-based lending.

While most companies view Canadian banks as the 'go-to' for commercial loans, they are often stymied by conservative lending policies, the need for additional collateral, personal guarantees, and the dreaded loan covenants and ratios required by our highly regulated Canadian banking system.

The additional cash and borrowing ability generated by ABL allows firms to operate daily and consider growth opportunities.

Many smaller firms are increasingly taking the immediate leap into ABL finance solutions because they perceive that they don't qualify for traditional bank loans or an unsecured business line of credit.

They are looking for solutions in A/R financing, purchase order financing, inventory finance, and tax credit financing, all subsets of Asset-Based Lending. Commercial real estate loans and bridge loans are also available within asset finance as specialized loan transactions.

HOW DOES ASSET-BASED LENDING WORK?  

Regarding equipment, ABL loans can allow you to borrow on any fixed assets in your business, such as tech assets, plant equipment, rolling stock, etc.  - ABL offers a much higher loan to value ratio when you choose asset based lending as a financing solution for a pledged asset / pledged assets.

When approaching an asset-based lender, be prepared to provide details about your business and industry. Business plans, cash flows, and details about your current financing arrangements are very helpful.

The required backup information usually involves financial statements, bank statements, and details on owned or leased assets.

What if you could have a non-bank type financing mechanism that covered every size of business and all industries in Canada and did not emphasize your balance sheet, income statement, profits, or lack thereof?  And was, relatively speaking, easy to arrange. That is the offering of asset-based lenders in Canada.

We can hear you lining up as we speak!

Let's discuss this financing and how it works and then cover some key questions that clients have about costs, day-to-day paper flow and reporting, and the key advantages.

No business finance strategy is without some form of 'downside,' so we'll also explore that in case there are concerns regarding asset financing that need to be addressed.

What Is Asset Financing?  

ABL, or asset-based lending, allows you to borrow, on a regular, ongoing basis, against, you guessed it, ' specific assets' and higher asset values.

Your assets in any business will always be the same, and they can be categorized into a few key categories, which include more liquid assets such as receivables and inventory, as well as physical assets such as equipment and, in some cases, real estate.

ASSET-BASED LOANS VERSUS 7 PARK AVENUE FINANCIAL  

When you are in a traditional Canadian chartered banking relationship, your lender lends against those same assets, but probably not to the extent an actual asset-based line of credit would provide you with.

And the prerequisites for that banking facility are all too clear for Canadian business owners and financial managers.

To achieve traditional Canadian chartered bank financing, you must be profitable, have a solid balance sheet, and have a decent measure of personal guarantees and outside collateral.

Note also that ABL lending can be used to buy a business in Canada. Bank loans for businesses cannot always satisfy the buyer's full financing need for a business acquisition.

THE COST OF ASSET BASED LENDING SOLUTIONS  

That's not what ABL is about, it's about only your business assets, and monetizing them in a fashion that makes them as liquid as you need them to be. They also provide Inventory financing solutions.

Business loan rates vary when it comes to interest rates. Still, rates have become even more competitive in recent years but are typically higher than borrowing rates from Canadian chartered banks that serve the business sector.

A typical asset-based lending revolving line of credit would margin all receivables and a significant extent of inventory and include drawdown ability on unencumbered equipment and real estate if they were available and required.

Therefore, you only have to remember one thing in ABL lending: 'assets'. Business assets mean access to funding!

Clients always want to know if and how they qualify for such a facility. You must be able to provide decent reporting on the ageing of your receivables, the turnover of your inventory, and the market value of your equipment.

We respectfully suggest that if you can't do that, you might not even be a candidate for staying in business, so those certainly aren't onerous requirements!

ELIGIBILITY

So, who is eligible for asset-based financing? Businesses with high growth patterns or firms coming out of a challenging period in their history are the best candidates for this type of financing. A frequent misunderstanding around this type of financing is that it is 'debt'. That is not the case. ABL strategies simply monetize assets—they accelerate borrowing capability based on turnover and value of assets.

There's no Holy Grail 'perfect' financing for small business strategy, but asset-based finance should always be considered when looking at day-to-day funding for growth and operations.

Oh, those 'disadvantages' and risks we spoke about? The two disadvantages or potential concerns are the higher cost of this financing and the additional reporting we spoke about.

OTHER ASSET FINANCING STRATEGIES  

Factoring/ AR Financing / Invoice Factoring— Short-term funding for day-to-day operations  - funding outstanding invoices via trade credit extension to business customers—invoice financing is a great way for businesses to get the funds they need to fulfill their short-term obligations. This cash flow facility is backed by the business's accounts receivable and sales.

Talk to the 7 Park Avenue Financial team about Confidential Invoice Financing solutions and flexible borrowing with ongoing access to funds

Sale Leasebacks - Securing loans against business equipment

Equipment Financing / Leasing - for companies requiring significant investments in new or used assets

SR&ED Tax Credit Bridge Loans - Financing small business innovation research for private corporations -   Some companies explore business grants available from the government to help achieve certain business goals - Requirements vary and can be time-consuming and confusing at times -  In Canada, IRAP  grants can be financed similarly to SR&ED loans.

MEZZANINE FINANCING / CASH FLOW LOANS  

Companies unable to secure asset-based financing that requires collateral often consider cash-flow loans. Interest rates and costs vary, and this option is unavailable for a start-up business. Loans are secured based on the business's operating cash flows and are typically structured as term loans.

Merchant Cash Advance / Short Term Working Capital Loan/ Online Lenders / Business Credit Cards -

Short-term working capital loans, sometimes merchant cash advances, are readily accessible to many businesses.

They are typically structured as monthly installments based on a sales formula and an emphasis on the owner's credit history. Many businesses also utilize business credit cards as an essential financial tool, particularly for new business financing / SMB financing.

BEST START-UP FINANCING FOR A NEW BUSINESS? SOURCES OF FINANCE FOR ENTREPRENEURS AND LOANS FOR SMALL BUSINESS  

Changes in  2022 made the Government Canada Small Business Financing Program one of Canada's best sources of new business/startup financing/ franchise financing. The program has also been enhanced with new classes of loans, different terms, and flexibility. This funding solution is comparable to the Small Business Administration SBA loan in the U.S.

The program's term loan structures allow a business to buy land and buildings used for commercial purposes. New or used equipment needed by the business can also be financed, as can leasehold improvements to leased properties.

The most dramatic change to the program is the addition of business lines of credit for working capital purposes.

The new maximum loan cap in the program is 1.5 Million dollars. 

At  7 Park Avenue Financial, we encourage all borrowers ot ensure they have a solid business plan when exploring financing options for a new business. Business plans should analyze the source and use of funds for funding requirements and have conservative financial projections.

The maximum loan amount for any borrower is $1.15 million for borrowing money under the program. Term loans under the program are structured via a monthly payment with a typical 3-5-year term. Repayment terms are flexible and tailored to the needs of the business.

The government does not lend money under the program; it guarantees most of the loan to a participating bank or credit union. These small business loans help build business credit.

Credit scores for borrowers are essential, as banks and others emphasize the personal credit of the owner/owners. The minimum credit score is typically in the 650 range, given that an early-stage business often represents more risk to the lender.

Startup companies and franchise purchases are the main borrowers under the program, and government funding/guarantee is a key aspect. Businesses should also explore a BDC small business loan for entrepreneurs from Canada's non-bricks-and-mortar business bank.

Case Study: Manufacturing Company Turnaround

Traditional lenders rejected a mid-sized Canadian manufacturing company facing cash flow challenges despite strong orders due to recent losses.

By implementing an asset-based loan against their $2.3M in receivables, $1.8M in inventory, and $3.5M in equipment, they secured a $5.1M revolving facility.

This immediately resolved vendor payment issues, allowed them to negotiate supplier discounts, and provided capital for a critical equipment upgrade.

Within six months, their production efficiency improved by 22%, the cash conversion cycle shortened by 18 days, and profitability returned. The flexibility of the asset-based structure allowed them to weather seasonal fluctuations while maintaining compliance, something their previous term loan couldn't accommodate.

KEY TAKEAWAYS  

• Borrowing Base Fundamentals drive asset based loan structures, determining how much you can borrow against each asset class based on liquidation values.

• Collateral Categories matter significantly, with accounts receivable typically receiving the highest advance rates (70-90%), followed by inventory (30-60%), equipment (50-80%), and real estate (50-75%).

• To ensure sufficient collateral value, lenders perform Regular Asset Monitoring through field examinations, inventory appraisals, and receivables aging reports.

• Covenant Flexibility is a key advantage of asset-based loans over traditional financing. It focuses primarily on collateral coverage rather than strict financial ratios.

• Understanding Margining Calculations enables strategic management of your borrowing base to maximize available capital while maintaining compliance.

• Seasonal Business Fluctuations can be better accommodated through asset-based lending as borrowing capacity grows alongside inventory increases and receivables.

• Most facilities operate as Revolving Credit Lines rather than term loans, allowing you to borrow, repay, and reborrow as needed.

CONCLUSION - BUSINESS FUNDING OPTIONS IN CANADA / SOURCES OF FINANCE  

Accessing the capital needed for a small business can be challenging, but it’s not impossible for many viable small businesses.

While business loans from banks and credit unions have the best interest rates, traditional bank loan financing requires well-qualified borrowers. 

Newer businesses without established business credit, cash flow, and collateral encounter many obstacles in obtaining the financing they need to run and grow the business.

Call 7 Park Avenue Financial about the best business financing options and how to get a business loan. We're a trusted, credible, and experienced Canadian business financing advisor for small business owners, assisting you with your business funding needs.

FAQ FREQUENTLY ASKED QUESTIONS MORE INFORMATION PEOPLE ALSO ASK  

What type of financing is best for small business financing options?

What are the 2 common sources of financing?