Many Canadian firms require specialized financing that might best be described as ‘ outside the box ‘ requirements. Short term financing, such as bridge loans, solve immediate problems for Canadian business owners and financial managers.
So who are the firms that provide this type of financing? It clearly is not the government or Canadian chartered banks, so it’s often a challenge for thousands of small and mid market firms to locate specialized financing.
We supposed you might be able to call the government BIL/CSBF program specialized finance, but it is certainly not short term in nature… in effect its a term loan with significant government guarantees to the financial institution providing that financing. So while the guarantee is highly prized by the bank this clearly is not a specialized finance program that meets the needs of a short term financing.
It seems sometimes ironic, but firms that are significantly challenged from a financial perspective are actually the candidates for specialized finance such as debtor in possession financing (D I P) which allows a firm to operate while in the process of filing a bankruptcy proposal to creditors. Naturally the intent of this financing is to emerge as a new invigorated entity.
Essentially the financing takes a security in excess of the current secured creditors – it goes without saying a strong case must be made at this time for survival and re emergence.
So how can you release cash flow and working capital in a short term emergency type situation with existing unencumbered assets? The answer is of course a sale leaseback scenario. Under this strategy you essentially sell and release the assets to your lender. You are basically capitalizing on the investment you have made in fixed assets capital over the years, in effect monetizing that asset.
The good news here is that all types of assets can be refinancing under a short term financing / bridge loans strategy. That includes computing assets, construction equpment, manufacturing assets, printing equipment, and rolling stock.
Company real estate can of course be monetized in the same fashion as above , allowing you to extract anywhere from 30-75% of the value of a proper appraisal of your properly .
Short term financing needs are often required by firms who are in the process of exiting traditional bank financing, perhaps after they have been place in ‘ Special Loans’. In effect the bank relationship is over.
A multitude of solutions are available to your firm under bridge loans. This might include a comprehensive asset based line of credit encompassing inventory l equpment and receivables, or subsets of that finance such as receivable financing, purchase order financing, or the monetization of a government tax credit such as ‘ SRED ‘.
Short term financing in Canada is specialized… niche financing. It requires speed, efficiency, expertise in cost and structuring, etc. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in matters of bridge loans and specialized financing needs.