Working Capital & Cash Flow Financing – Whenever You Need It ? !

Information on working capital financing in Canada . The essence of cash flow finance success for your firm is the proper assessment of business loan and funding needs. Here’s why and how !

Working Capital Financing remains a strong priority for Canadian business owners and financial managers that feel they are emerging from the recent recession and still require working capital to grow.

We continually between with Canadian business owners who want to understand their working capital options. Working capital facilities consist of either cash term loans, or receivable and inventory financing facilities.

As a Canadian business owner you need to understand the problem before you address the solution – that is why we constantly recommend that you sit down with a trusted and experience business financing advisor who has credibility in delivering financial solutions for your cash flow needs.

If working capita financing was a challenge prior to the recession you can pretty well multiply that challenge by 100% in the current business environment. There is not a day when we don’t see an article or a television story surrounding the challenges of Canadian business financing, or, on the unfortunate side, the demise of a great Canadian business due to the current difficult financial environment.

Business owners in Canada see themselves as unique of course, and quite frankly we would agree that every business has its own business model, operating cycle, cash conversion cycle, and unique financing needs.

When a business owner asks us for working capital advice we point out that working capital is both permanent in nature, and temporary. By permanent we mean cash working capital term loans – this loan injects long term working capital into your business, is paid off over several years, and is paid at usually a fixed rate on a monthly basis . We currently are aware of only two options for term working capital loans; both of these options are unsecured in nature. That is to say they rank behind any current secured or senior lenders you might have in place currently.

On a term working capital loan rates vary with respect to your overall credit quality and size of transaction. In some cases no owner guarantees are required, depending on the overall structure. One of these type of loans is in effect underwritten by a government crown corporation, which brings with it significant rate advantages, as the government entities price their transaction to current low yielding bond rates .

We hasten to say that if your firm is contemplating a fixed term working capital loan (also called a ‘mezz ‘loan or ‘cash flow loan ‘that you clearly have to be able to demonstrate that you can service the debt. Service the debt is finance lingo for ‘being able to make the payment! Typical criteria in approving such a facility are cash flow coverage, ebitda analysis, and on occasion the guarantee of shareholders.

In summary, working capital loans vary in nature, they can be fixed cash term loans, or also revolving facilities focusing on current asset collateral such as receivables and inventory.

The bottom line is of course to understand your needs before you search for a solution. If you don’t have full expertise in this area work with a trusted business financing advisor to ensure you can maximize on the best solution for your working capital needs.

Stan Prokop
– founder of 7 Park Avenue Financial

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years – Completed in excess of 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 :

7 Park Avenue Financial

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Office = 905 829 2653

‘ Canadian Business Financing with the intelligent use of experience ‘