Is It Easy For Your Business To Get An Unsecured Cash Flow Loan? You Decide
OVERVIEW – Information on mezzanine financing in Canada. Does an unsecured cash flow loan make sense for your company, are you eligible, and how does it work ? Here’s your answers!
Cash flow loan
requirements in the Canadian business landscape might often mean that you need some form of mezzanine finance. What are the requirements and challenges in obtaining such financing and how does it work? Let’s dig in.
At some point in time many companies realize they need additional capital to grow / expand. In some cases it also might mean they are seizing the opportunity to buy a competitor. In some instances this type of financing is a way for owners to take some cash out of the business based on the current assets and cash flow in the business. It’s times like these that an unsecured cash flow loan makes the most sense.
In certain cases, not always though the way to think about mezzanine cash flow loans is that they are a mix of both debt and equity. The debt side of that equation is simple. It’s an equity substitute that puts more cash on the balance sheet, therefore improving your overall relationship of borrowed funds versus owner funds.
One of the most common reasons owners/mgr seek cash flow loans is that the alternative for more senior or bank debt have been exhausted. What makes mezzanine finance even more alluring is that although it’s a more expensive form of financing it’s never more expensive than equity financing which of course dilutes the owner / owner’s position in the company. Ouch!
We made the statement that mezzanine financing is more expensive, usually in the ‘ teens’ when it comes to interest rate. Why is that the case though? Simply because unsecured cash flow loans are a 2nd position behind any other secured creditors. Although there might be a 2nd lien position on your firm by virtue of the new financing it’s clear to all that 1st position security on assets is still always held by a senior lender, typically in Canada a Cdn chartered bank.
The most common explanation of why a mezzanine cash flow loan might be considered ‘ part equity ‘ is that in some cases the lender might request a warrant or option to buy into the company based on the financing provided.
While large or public companies use this financing and call it various names – convertible debt, warrants, junk bonds, etc the SME COMMERCIAL FINANCE sector in Canada can safely just call this an unsecured cash flow loan. Simple as that.
Mezzanine/cash flow loans are all about … you guessed it ‘ CASH FLOW’! So to be eligible for this financing be prepared to demonstrate past, present and future positive cash flow.
If you’re looking to access forms of funding you may not have previously considered seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
.Stan Prokop – founder of 7 Park Avenue Financial –
OOriginating business financing for Canadian
companies , specializing in working capital, cash flow, asset based financing . In business 10 years – Completed in excess oOf 100 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 & Contact Details :
77 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
DDirect Line = 905 302 4171
OOffice = 905 829 2653
Canadian Business Financing with the intelligent use of experience ‘
ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.
Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.
7 Park Avenue Financial
Canadian Business Financing