Monthly Archives: January 2018

Financing Credit Facilities When Seeking Business Finance Loans

Making a prediction is a sometimes risky scenario, potentially damaging to your credibility, but we’re quite confident in saying that Canadian business owners will recognize non bank asset financing as credit facilities for business finance loans to be the best thing they every heard of when it comes to financing their business.

Quite frankly we don’t think we exactly going out and making a stretch comment because, hundreds if not thousands of Canadian firms are investigating and utilizing this type of financing.

As the Canadian business economy turns itself around going into 2011 most of are clients are finally focused on growth again.But how is that growth to be financing, since lending standards and criteria at institutions such as the banks don’t appear to have been liberalized at the same pace that your company hopes to grow at!

That’s where our trend prediction comes in. Asset based lending focuses on your assets and growth opportunities – it doesn’t focus on rations, tangible equity in your company, rations, covenants, cash flow coverage, etc, etc, etc!

So you are picking up on the opportunity, let’s see how things work. Asset based lenders keep it simple, they lend a very high value against your ongoing assets. What are the typical assets lent against – you can almost guess what they are. They are receivables, inventory, unencumbered equipment and real estate.

The big mystery around asset based lending in Canada, based on conversations with our clients, is that business owners don’t really know or understand who these firms are. So we’ll tell you.

They are specialized firms, both Canadian and U.S. based, that focus solely on providing credit facilities and business finance loans with your assets as security. They take the same security as a Canadian chartered bank would, and you manage your facility on a day to day basis, drawing down cash as you need it. Funds are wired into your account as you need them, based on… guess what… assets! That really is the one key difference that our clients pick up on, that the total focus of this type of assets financing is the collateral itself.

We already know your next question… because we’ve heard it a hundred times before. Its’ how much can we get ‘… followed by what does it cost.
Speaking in general terms your receivables are financed at 90% of their value, and because of the nature and marketability of different types of inventory this type of collateral is margined anywhere from 25-75%. Recall we had noted that unencumbered equipment can be drawn against also. Typically an appraised current market or liquidation value is agreed upon with you and the asset financing provider.

Costs vary around this type of financing. On occasion it is competitive with bank financing – and giving you twice the liquidity – but more often than not it’s more expensive. You offset those costs by greater access to credit facilities that will grow your business and profits.

Speak to a trusted, credible and experienced Canadian business financing advisor who can walk you through the Canadian landscape of business finance loans in the asset based lending area. You’ll quickly find, we think, that our prediction is becoming more true every day, asset based financing is hot! And here to stay.

Working Capital and Small Business Finance Loan/Loans Options

Just picture your firm having access to all the working capital you need. Seem impossible? Not really… if you have a solid understanding of your options and your firms capability of qualifying or executing on those options.

Whether you’re the largest corporation in Canada or a small new start up (and everything in between) your business needs working capital. In Canada small business financing loans and financing arraignments for working capital are limited to a handful of possibilities – but being aware of what they are and qualifying for them could be the solution to your constant focus on cash flow via some sort of working capital loan.

It is probably easier than you think to ensure you are addressing the cash flow challenge correctly – where it gets somewhat ‘ thorny ‘ is matching a solution to the problem or locating an expert that can provide you with the business financing assistance you need.

Two key elements of your first step working capital assessment are your gross margins and your turnover. That’s the big problem we have with text book / academic solutions to working capital – they point you to the text book calculation – give you a formula which essentially has you subtracting current liabilities form current assets, and voila! the inference is you have working capital. However, our clients have never paid a supplier or completed a company payroll with a ratio!

To properly assess your working capital needs focus on understanding your turnover – how much inventory do you carry, what are the days outstanding in inventory, and as importantly, or more importantly, are your receivables turning over. Have you realized that for many firms 80% or so of the total of all the business assets you have are tied up in A/R, inventory, and, on the other size of the balance sheet let’s not forget payables.

So can you have financial success based on your new found knowledge and analysis of your cash flow and asset turnover. We think you can.

Canadian business financing solutions to small business finance loans really revolve around a couple viable solutions. Typically, in our experience Canadian chartered banks cant satisfy your business working capital needs – if only for the reason that they rarely finance inventory and require significant merit in your overall financials, profitability, external collateral, personal credit worthiness, etc.

So, where do you go from there? The other solutions are very viable and can take you to a potential 100% turn around in cash flow – they include working capital financing as a bundled line of credit on a/r and inventory via an independent finance company. For firms that are larger we believe the ultimate tool is an asset based line o f credit that provides high leverage margining on all you business assets. Other more esoteric solutions, but still very viable although somewhat misunderstood are securitization, and purchase order financing of new contracts and orders. (Your suppliers are paid directly for the orders you have in hand – what could be better than that?)

Finally, coming up the road at lightening speed is factoring and invoice discounting. We mention them lastly but they are probably the most popular method, gaining traction everyday. Our favorite is confidential invoice financing, allowing you to control your financing.

So there you have it. You have identified new ways to determine the need; we have outlined 4 or 5 solutions that will take the guess work out of working capital. These loan and financing options are available with a bit of research, and, if you choose, speak to a Canadian business financing advisor who can provide you with timely and valuable assistance in your cash flow needs.

Car Finance Loans

The motor car has become an integral component of modern life. If the time has come for you to invest in a new vehicle, it may be necessary for you to receive financial assistance to be able to take ownership of the model that you desire. Thankfully, there are countless lenders who offer car finance loans, before you put your name to any contract, it is important to know how to get the best terms and conditions.

Very few people can afford to buy a vehicle outright, especially if it is a showroom model. It has become common place to take out automobile loans whenever we want a new car. An auto loan is basically the same as other lines of credit, you sign up for a contract through which the lender provides “x” amount of money, and you then agree to pay back a certain amount each month with interest added.

An automobile loan is available to the majority of US citizens, a long as the applicant fulfills certain eligibility requirements. This includes more than just being an American citizen, there would also be an expectation that applicants are eighteen or older, and in full time employment.

If you have already been turned down for a loan by a few lenders, it is important to not get disheartened. Thanks to the internet, there are new lenders operating who are less strict about who they provide credit to.

As with any type of loan, the type of deals that are available do vary. One of the most important considerations is the rate of interest that is offered, as this can have a big impact on how much money is paid back each month. It is certainly worth making the effort to find the best rates, a car loan that comes with more than ten per cent interest is best to be avoided, that is unless there is no other option.

Various factors will impact upon what type of loan deal you are offered. Your credit rating is one of the most important issues, if you have a long history of making loan repayments late, this will not allow you to be seen in a positive light when applying for a new facility. Also, your age, the down payment you give for the vehicle, and your monthly income will all be factored in.

If you plan on buying a vehicle from a showroom, the dealer may offer you their own finance package. This is usually an option worth exploring, but generally better terms and conditions can be had independently. If you are on good terms with your local bank, you can ask whether they will provide the facility that you need, if not, a credit union may be the next best option.

Car finance loans are easy to avail of, if you meet certain eligibility requirements. As long as you do some research and comparison, you should not have too much difficulty in finding the facility that allows you to drive off in the vehicle that you want.

Mortgage Financing Loans

What types of mortgage financing loans are available?

Fixed Rate Mortgage Loans: Payments remain the same for the life of the loan. Housing cost remains unaffected by interest rate changes and inflation. Adjustable Rate Mortgage Loans: Payments increase or decrease on a regular schedule with changes in interest rates; increases subject to limits.

Is there special mortgage financing for first-time homebuyers?

Yes. Lenders now offer several affordable mortgage financing loans that can help first-time homebuyers overcome obstacles such as bad credit. Lenders may now be able to help borrowers who don’t have a lot of money for the down payment and closing costs or have quite a bit of long-term debt.

What factors affect mortgage loan payments?

The amount of the mortgage financing, the size of the down payment, the interest rate, the length of the repayment term and payment schedule will all affect the size of your loan payment. So will a low credit score in that it will put your mortgage financing at a higher rate.

How does the interest rate factor in securing mortgage financing?

A lower interest rate allows you to borrow more money than a high rate with the same monthly payment. Interest rates can fluctuate as you shop for bad credit mortgage financing, so ask lenders if they offer a rate “lock-in” which guarantees a specific interest rate for a certain period.

How large of a down payment do I need?

There are mortgage financing loans now available that only require a down payment of 5% or less of the purchase price. But the larger the down payment, the less you have to borrow, and the more equity you’ll have. Mortgages with less than a 20% down payment generally require a mortgage insurance policy.

Getting Yourself a Finance Loan

A lender can give finance loans in the UK as either secured or unsecured for smaller items that you wish to purchase, rather than a home purchase for instance. The current credit crunch experienced by Britons has slowed the demand for finance loans, but if you are capable of securing one due to your high credit standing and your pay history, you’ll find that most lenders are more than willing to work with you.

People receive finance loans for various purposes such as possibly a new car, home improvements, a new caravan, solicitor’s fees, a well-deserved holiday, to pay university or other school fees, or in order to pay off their credit cards or even an overdraft. Once the loan is granted the money will of course be yours to spend as you wish.

You will have to fill out an application which will ask for your full name, address, date of birth, marital status, employment status, gross monthly income, whether you are a homeowner or tenant, how much your house is worth and what is owing on your mortgage.

The next step in obtaining a finance loan is for the loan company or bank to verify the various information you have given them. You should be aware that the loan rates can go up to 29.9% APR. APR stands for Annual Percentage Rate, and it is defined as the equivalent rate of interest when considering any of the added costs for a given loan. Therefore it is a function of the initial loan amount, the applicable interest rate, the total additional costs, and the terms. Also, if you are applying for a finance loan, you’ll find that the debt may be secured on your home, and that home is then subject to being repossessed should you not keep up your payments on your mortgage or any debts that are secured by your home.

Now in an automobile loan, the automobile itself secures the loan whether it’s a new automobile or a refinancing of an existing auto loan. As with the caveat mentioned above, you must keep making payments if you do not wish to be subjected to a repossession of your automobile.

Back when lending was competitive it was much easier to locate a lender willing to take a chance on such an unsecured loan. However, now that we are in a credit crunch, all lenders have made it more difficult to arrange such finance loans. Already made effective October 2008, due to unscrupulous lenders who were in essence credit sharks, the Consumer Credit Act now has been changed to offer more protection to borrowers. The Banking Code Standards Board retains an easily navigable website should you encounter any problems when seeking either a secured or unsecured loan in Great Britain.

Regardless of what type of loan you are trying to secure, know that even though more consumer protections have been added, you still need to do your research to avoid being trapped in a loan that is both unfair and unscrupulous.