The Basic A to Z Of Cash Flow Financing Via Mezzanine And Other Solutions
OVERVIEW – Information on mezzanine cash flow loans as a business financing alternative in Canada . ‘ Mezz’ finance and other alternatives are a solid solution to traditional finance needs
Business financing in Canada offers some alternate solutions not often considered by owners/mgrs. One of these is ‘ mezzanine’ cash flow loans. We’re covering the basics, an a to z approach, so let’s dig in.
The one main requisite of unsecured cash flow finance, i.e. ‘ mezz ‘is positive cash flow. That cash flow, when structured properly, allows business owners/mgrs to consider growth options normally not achievable, as well as potential acquisitions of competitors. Often it’s the key financing building block in a management buyout also.
The reason this method of business financing in Canada works so well? Essentially it’s because it reduces the amount of owner equity or outside debt that is required to make your chosen strategy work. Given that ownership equity (or giving it up) is expensive the owners/mgrs strive to create a finance structure that gives them the most financing at the lowest cost. That ‘ blended ‘ cost of all their financing reduces overall interest rates.
Mezzanine cash flow finance is often considered as an alternative to a traditional banking structure. One way of looking at it is that it’s a way to fund future growth that otherwise might not be funded until some future point in time when all those required bank ratios can be achieved. What business owner does not want to accelerate growth!
The key concept around ‘ mezz ‘ is that it’s essentially unsecured lending; providing only a promise to pay by the owner with the normal secured required.
Why does the traditional banking solution not work when owners think they have the right mix of assets for a traditional bank type solution? The answer is that those assets are often ‘ discounted ‘ by the lender – receivables are not financed on a 100% basis, appraisals might not back up the book values, and in many cases firms these days have some significant intangible assets on their books, which are typically not financeable.
As we’ve stated business financing through mezzanine cash flow loans gives your firm a solid chance to grow – more quickly. These loans, when structured properly are matched to your actual cash flow repayment ability. An interesting point in the whole issue of ‘ mezz’ financing is that the senior secured lender, typically ‘ the bank’ will often view your mezzanine loan as in effect…equity.
These unsecured cash flow loans typically cost more , with higher rates often approaching the teens, but again as we’ve stated its cheaper than giving up or raising more ownership capital.
If mezzanine cash flow financing might meet your needs for growth, acquisition, or recapitalizing seek out a speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can help you achieve the benefits of such financing.
7 Park Avenue Financial : http://www.7parkavenuefinancial.com
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 – Completed in excess of 100 Million $ of financing for Canadian corporations . Info /Contact :
7 PARK AVENUE FINANCIAL = CANADIAN CASH FLOW FINANCING EXPERTISE
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Office = 905 829 2653
‘ Canadian Business Financing With The Intelligent Use Of Experience ‘
ABOUT THE AUTHORStan 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