YOUR COMPANY IS LOOKING FOR BUSINESS FINANCE SOLUTIONS!
NEEDS A RESTRUCTURING PLAN? WE'VE GOT ONE!
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CONTACT:
Phone/Direct Line: 416 319 5769
Email: sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Distress financing solutions are required when businesses find themselves in financial jeopardy. Often called ' workout finance alternatives,' or ' loan restructuring, 'it's a case of your company sending out that S O S call for help, that term being, of course, the Morse Code for assistance. Your ability to take charge of the ' workout finance ' challenge and implement a proper cash flow and capital plan is key to long-term business survival. Let's dig in on business financial distress!
WHAT IS BUSINESS FINANCIAL DISTRESS?
What are the business financial stress indicators? When a company is in financial distress, debt covenants and commitments to lenders have typically been broken, or serious problems are being met. Ultimately the cause of financial distress is a total business failure. Causes of insolvency and distress include inability to manage assets and improper financial reporting and cash flow planning. There are different stages of companies in financial distress, and it is key to understand your current situation.
UNDERSTANDING WORKOUT FINANCING
The ability to understand your firm's financial alternatives when it comes to loan workouts is key, as well as also the obligation of knowing where these resources are. Being unprepared at a time when your business financing needs are critical will only lead to failure.
In more extreme cases, an asset sale of redundant assets might be considered - as well as the popular ' sale-leaseback,' which is an effective way of maintaining use and future ownership versus straight out asset sales of distressed assets are key to the business.
BANKS AND DEBT RECAPITALIZATION RESTRUCTURING
While Canadian chartered banks/bank lenders are the obvious ' go-to ' for capital and cash, the reality is that companies exhibiting financial stress or challenges are not on the bank's radar. Banks are, of course,' deal makers,' but the deals they make are based on the premise that money will always be safe as it can be so that rarely if ever, includes start-ups, early-stage firms, or companies in financial need. Assets, collateral and cash flow, and debt service around interest payments are their focus. Cross collateralization is often a key part of bank finance structures, bank covenants and various ratios such as debt to equity.
In some cases, M&A considerations might need to be undertaken.
DEBT VERSUS EQUITY FINANCING
For larger firms exhibiting financial challenges, ' equity capital' via a private equity fund is often the goal. That type of firm also needs to understand the tax implications of any business finance alternative. That, however, is rarely part of the small to medium (SME) enterprise solution. In some cases, financial challenges come out of internal problems.
In others, it's external - i.e. competition, seasonality, economy, etc. Bottom line, having a clear understanding of the problem and financial distress costs helps identify the solution for a new capital structure or bridging loans as an interim fix.
While many firms can be financially ' fixed ' with one type of financing, the fact is that quite often, a cobbling together of different finance alternatives are, in fact, ' the fix. '
WHY IS FINANCING THE BALANCE SHEET KEY IN A WORKOUT?
How does a restructuring company work? For most business recovery finance solutions, we usually turn to the balance sheet to finance working capital. That requires a clear understanding of where the business assets are and what they are worth.
Typical asset categories are :
Accounts receivables
Inventories
Fixed assets/equipment,
Real estate
Assets that aren’t financeable include goodwill and patents, R&D, etc. - those two are rarely part of our fix.
Best practices in financing and true working capital solutions will come from financing that involves current assets. Typical solutions are a reworking of A/R financing coupled potentially with inventory loans...
COMMON WORKING CAPITAL SOLUTIONS / DISTRESSED FINANCING STRUCTURES
CONCLUSION - NEED HELP WITH YOUR WORKOUT PROCESS / LIQUIDITY NEEDS? RESTRUCTURING AND DEBT FINANCING IS ON THE WAY!
If you're looking for help in identifying and negotiating workout finance alternatives and a loan agreement with debt capacity that works for your business, speak to 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can help answer that S O S call for assistance you might need to make.
In some cases, your firm might be under forbearance agreements vis a vis your original loan documentation arrangements. Time is of the essence - the goal is to get your business back to a sustainable growth rate.
Click here for the business finance track record of 7 Park Avenue Financial
