Avoid Scam, Learn About Asset Based Financing

on November 2, 2011 · 25 Comments

Shaw Capital Management and Financing tips on Why a Business Asset Based Loan Financing Is the Perfect Solution for Cash Flow in Canada

Shaw Capital Management and Financing provide same-day-funding. We can help you meet your cash flow needs immediately without entering into a long term factoring relationship. The money you get for the freight bills we purchase is payment in full. You are a Canadian business owner and financial manager looking for info and guidance on a business asset based loan. What is asset based loan financing, sometimes called cash flow factoring – how does it work, and why could it be the best solution for your firm’s working capital challenges.

Let’s cover off the basics and find out how you can benefit form this relatively speaking new form of asset financing in Canada.

A good start is to always understand and cover off some basics around what this type of financing is. Simply speaking the facility is a loan arrangement that is drawn down and repaid regularly based on your receivables, inventory, and, if required, equipment and real estate should your firm possess those assets also.

By collateralizing your assets you in effect create an ongoing borrowing base for all your assets – this feasibility then fluctuate on a daily basis based on invoices you generate, inventory you move, and cash you collect from customers. When you need more working capital you simply draw down on initial funds as covered under your asset base.

Your probably can already see the advantage, which is simply that if you have assets you have cash. Your receivables and inventory, as they grow, in effect provide you with unlimited financing.

Unlike a Canadian chartered bank financing your business asset based loan financing in effect has no cap. The alternative facility for this type of working capital financing is of course a Canadian chartered bank line of credit – that facility always comes with a cap and stringent requirements re your balance sheet and income statement quality and ratios, as well as performance covenants and personal guarantees and outside collateral. So there is a big difference in the non bank financing we have table for your consideration.

Your asset based lender works with you to manage the facility – and you are required to regularly report on your levels of A/R and inventory, which are the prime underpinnings of the financing.

Smaller firms use a particular subset of this financing, often called factoring or cash flow factoring. This specific type of financing is less transparent to your customers, as the cash flow factor might insist on verifying your invoices with customers, etc. A true asset based loan financing is usually transparent to your customers, which is the way you want it to be – You bill and collect our own invoices.

If our facility provides you with unlimited working capital then why have you potentially not heard of it and why aren’t your competitors using it. Our clients always can be forgiven for asking that question. The reality is that in the U.S. this type of financing is a multi billion dollar industry; it has gained traction in Canada, even more so after the financial meltdown of 2008. Some of Canada’s largest corporations use the financing. And if your firm has working capital assets anywhere from 250k and up you are a candidate. Larger facilities are of course in the many millions of dollars.

The Canadian asset based financing market is very fragmented and has a combo of U.S., international and Canadian asset finance lenders. They have varying appetites for deal size, how the facility works on a daily basis, and pricing, which can be competitive to banks or significantly higher.

Speak to a trusted, credible and experienced business financing advisor and determine if the advantages of business asset based loan financing work for your firm. They have the potential of accelerating cash flow, giving you cash all the time when you need it ( assuming you have assets ) and essentially liquefying and monetizing your current assets to provide constant cash flow, and that’s what its all about. Stan Prokop is founder of 7 Park Avenue Financial – http://www.7parkavenuefinancial.com

Written by shawcapitalman

Joe Knight, coauthor of the Financial Intelligence series, gives you a crash course in reading the numbers.

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Alternative Sources of Financing a Project to Bank Loans

on October 22, 2011 · Leave a Comment

in one way or another we may need some other alternative sources or means of financing a project instead of taking a loan from a financial institutions like banks. project financiers may most of the times be discouraged from borrowing loans from banks due to some challenges they face and hence may focus on securing finances from other possible sources that they see as less beurocratic. bank loans may not be an option of financing a project becouse of the following reasons

the terms and conditions of the loan may not be suitable for the borrower.

the interest rate of the loan could be high or may not be affordable to the borrower.

restriction in the amount of money one can borrow.

collateral or security is required by the bank and the borrower may not be able to provide the said security.

so from the above factors we have seen that bank loans may not be a financing option for a business or a certain project it is undertaking and for this reason we have to think outside the box to determine and locate any other type of finance that can act as an alternative to bank loans. here we are basically looking at the sources of finance that we can secure to finance our projects instead of trying to borrow loans from banks and to answer this question here below are some sources of finance that you can consider as a substitute to bank loans.

a) borrowings from friends/family, if you are confident you can secure finances from from a friend/family member then you can kiss goodbye to bank loans. friends and family may afterall lend you money without necessarally paying back an interest  with it. they can give you a certain period of time after which you will give them back their money. so the bottomline is that friends and family can be a source of project financing and one is required to look at and know whether they can lend him/her money to finance projects before going to the bank to borrow a loan.

b) share issue, share issue can be an important source of finance that can be substituted with bank loans. if your company is a public company you can call upon the members of the public to take up some shares in the company and use the money raised through the share issue to finance your projects. if the company is privately owned you can ask your close friends and allies to take up shares in the company and use the money raised to finance the projects. shares are good alternative sources of finance to bank loans and hence should be considered. in loans you have to pay an interest on top of principle amount which could be expensive while in shares you pay the shareholders dividents after considering the returns of the company.

c) from business to business financing, this method of financing perfectly works for you if you operate many lines of businesses under your operation. it can happen that you have a large group of businesses and when one is having a shortages in financing you can use another one to finance its operations. a company could be having a reserve money and as a result you can use those reserves to finance the activities of another that is experiancing shortages.

d) use of personal savings, this can also act as an alternative source of finance to bank loans. instead of your personal savings laying idle in bank accounts you can consider to finance your business projects with them and believe me you gain more by doing that way. banks may offer you some interest but the returns you get when you finance projects with it is more. 

should you borrow loans or not?why you should not borrow loans for investments

Written by possible24
i’m an ever optimistic writer who loves to approach things from a different perspective that is aided by truth. enjoy the reading!! You can visit my blog at http://www.naibayblog.com

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How Bridge Financing Works

on September 30, 2011 · Leave a Comment

Bridge financing is the generic term for credit made through short-term or interim financing in respect of certain transactions such as real estate, business purchases. Basically, there are two areas of bridge financing and these include the field of real estate and corporate finance.

In some European countries there are concepts of pre-and interim financing which exist mainly in the real estate sector. They are typically used in connection with short-term credit lines for which they bridge the period between the payment of the borrower and the final real estate financing. The final financing serves to replace the interim (credit relief).

Another form of bridge financing is employed by commercial enterprises prior to their initial public offering, in order to secure operational capital. Such funds are often provided courtesy of an investment bank underwriting the new issue. For its part the company will grant some of its stock at a discount of the issue price as a means for the underwriters to sufficiently offset the debt.

In some instances, bridge financing can also be offered by a banking concern underwriting an offering of bonds. In the event that the bank fails to dispose a firm’s bonds to institutional buyers, they purchase the bonds themselves on less favorable terms.

In international banking, bridge financing plays a part in establishing strategic instruments of corporate financing. Acquisition by investors often requires a high capital investment and is usually performed under severe time pressure. If the purchase price is due immediately or cannot be entirely satisfied from existing funding sources and final forms of financing are not yet known, a bridge financing in the form of a pre-financing is required.

Acquisitions often result in such short notice, which means a solid financial plan cannot be aligned, thus leaving room for more spontaneous financing solutions such as bridge financing. During the term of the bridge financing, the investor has sufficient time to decide on the final funding sources and to provide for the replacement of the bridge financing. Bridge financing in this form actually constitutes a pre-financing.

Typical construction loans depend on the progress of construction (for instance, 25% of the loan payable on completion of the basement, an additional 25% for white, another for finished interior installation, and balance upon delivery).

Disbursements therefrom are consequently effected in the construction phase, and not always available as needed to cover the costs incurred in short intervals. To comply with these conditions, an interim financing is sought, which is readily adaptable to the payment requirements, without payment of quotas.

A property loan is always present if only the general requirements for consumer loan are met. This is the dependence of the loans granted by a mortgage lien (or compliance with the requirements) and also the granting of the loan or an appropriate interim to conditions to be considered for these loans as market rates.

 

Written by Lexus

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Financing a Startup Business

on September 15, 2011 · Leave a Comment

No matter how great and unique your idea for a new business is, you won’t get past the starting gate without funding. There are many ways to find money, but most are generally more appropriate for most established companies. Still, there are some smart tacks for start ups; there’s money out there if you get creative. Here’s a look at some options:

Bootstrapping. – the translation for “Bootstrapping” is using whatever resources you have on hand to help you get your business to the next level.

Entrepreneurs spend an average of close to ,000 – ,000 to start a business, and most of that money is provided by the small-business owners themselves.
Where do entrepreneurs find the money? While most part comes from personal savings and home-equity loans, they also tend to use (plastic), Credit Cards heavily. Possibly, half of all start ups are funded by the owners’ credit cards.

Raise money from relatives – Friends and family come handy. At the very early stages of any start up, entrepreneurs also tend to raise money from relatives, colleagues and other people they know well.

Usually, friends & family financing is informal; you probably don’t have to write a business plan for the transaction. But, no matter how well you know your early investors, it would be wise to draw up a contract to prevent any misunderstandings down the road.

Borrow from Banks. For most start ups, getting a traditional bank loan is a long shot, especially in today’s economy. That’s because banks typically will only consider companies that have been in business for two years, at least. Above all, they need to see a tangible asset that can be used as collateral.

Also try SBA – Small Business Association:

One possibility is to apply for a loan guaranteed by the Small Business Administration (SBA).
A bank is less reluctant to take on a company with an SBA guaranty. Even with that seal of approval, you may still have to pledge your home/personal property as collateral.

Look for Grants you might qualify for. If your venture is a technology business, you might be able to apply for a Small Business Innovation Research grant (SBIR).
That is a federally funded program mandating that certain agencies set aside part of their budgets to fund fledgling high-tech companies with interesting inventions they want to commercialize.

There also are a limited number of government grants for women and minority-owned businesses as well. One really good thing is: Competition for this money is steep. So, if you apply for the grant and win it, it’s helpful for attracting funding from other investors.

Use Venture capital. Simply put, Venture Capitals rarely invest in start ups or even early-stage companies.
Still, if your company already has a track record and promises high returns, it’s worth a shot.
Your best bet is to use your network to find a referral. Then, make sure you have an great business plan put together. You also have to be willing to give up control over major decisions and/or to sell your business at one point in time.

Find Angels. If you’re further along in your development – you have a management team and, preferably, a product or service on the market that’s of a high interest – you can try angels.
http://www.angelinvestors.net
They’re private, high net-worth individuals who generally invest anywhere from ,000 to million in companies.
Who are they? most likely former entrepreneurs themselves, angels can offer not only money, they also can provide expertise and useful contacts.

How to find them? One avenue is to approach the growing number of angel clubs. These groups of private investors meet regularly to hear brief presentations from entrepreneurs seeking money and then, often, give money jointly to companies. to find them see link on this article!)

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Written by carolinad

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