Developing a Plan: The Basis of Successful Investing

Warren E. Buffett offers the following advice on the qualities of a successful investor. Buffett essentially suggests that a successful investor does not need an extraordinarily high IQ, exceptional business acumen, or inside information. To enjoy a lifetime of successful investing, you need a solid decision-making framework and the ability to maintain your emotions.

A successful investment strategy requires a thoughtful plan. Developing a plan is not difficult, but staying with it during times of uncertainty and events that seem to counter you plan’s strategy is often difficult. This tutorial discusses the necessity of establishing a trading plan, what investment options best suit your needs, and the challenges you could encounter if you don’t have a plan.

The benefits of developing a trading plan

You can establish optimal circumstances for experiencing solid investment growth if you stick to your plan despite opposing popular opinion, current trends, or analysts’ forecasts. Develop your investment plan and focus on your long-term goals and objectives.

Maintain focus on your plan

All financial markets can be erratic. It has experienced significant fluctuations in business cycles, inflation, and interest rates, along with economical recessions throughout the past century. The 1990s experienced a surge of growth due to the bull market pushing the Dow Jones industrial average (DIJA) up 300 percent. This economic growth was accompanied by low interest rates and inflation. During this time, an extraordinary number of Internet-based technology firms were created due to the increased popularity of online commerce and other computer-reliant businesses. This growth was rapid and a downturn occurred just as fast. Between 2000 and 2002, the DIJA dropped 38 percent, triggering a massive sell-off of technology stocks which kept indexes in a depressed state well into the middle of 2001. Large-scale corporate accounting scandals contributed to the downturn. Then in the fall of 2001, the United States suffered a catastrophic terrorist attack that sent the nation into a high level of uncertainty and further weakened the strength of the market.

These are the kinds of events that can tax your emotions in terms of your investment strategies. It’s times like these that it is imperative that you have a plan and stick to it. This is when you establish a long-term focus on your objectives. Toward the end of 2002 through 2005, the DJIA rose 44 percent. Investors who let their emotions govern their trading strategies and sold off all their positions missed out on this upturn.

The three deadly sins and how to avoid them

The three emotions that accompany trading are fear, hope, and greed. When prices plunge, fear compels you to sell low without reviewing your position. Under these circumstances, you should revisit the original reasons for your investments and determine if they have changed. For example, you might focus on the short term and immediately sell when the price drops below its intrinsic value. In this case, you could miss out if the price recovers.

An investment strategy that is based on hope might compel you to buy certain stocks based on the hope that a company’s future performance will reflect on their past performance. This is what occurred during the surge of the Internet-based, dot-com companies during the late 1990s. This is where you need to devote your research into a company’s fundamentals and less on their past performance when determining the worth of their stock. Investing primarily on hope could have you ending up with an overvalued stock with more risk of a loss than a gain.

The greed emotion can distort your rationale for certain investments. It can compel you to hold onto a position for too long. If your plan is to hold out a little longer to gain a few percentage points, your position could backfire and result in a loss. Again, in the late 1990s, investors were enjoying double-digit gains on their Internet-company stocks. Instead of scaling back on their investments, many individuals held onto their positions with the hope that the prices would keep going up. Even when the prices were beginning to drop, investors held out hoping that their stocks would rally. Unfortunately, the rally never happened and investors experienced substantial losses.

An effective investment plan requires that you properly manage the three deadly sins of investing.

The key components of an investment plan

Determine your investment objectives

The first component in your investment plan is to determine your investment objectives. The three main categories involved in your objectives are income, growth, and safety.

If your plan is to establish a steady income stream, your objective focuses on the income category. Investors in this category tend to be low-risk and don’t require capital appreciation. They use their investments as an income source.

If your focus is on increasing your portfolio’s value over the long term, your objective is growth-based. In contrast to the income category, investors strive for capital appreciation. Investors in this category tend to be younger and have a longer investment time frame. If this is your preferred category, consider your age, investment expectations, and tolerance to risk.

The final category is safety. Investors who prefer to prevent loss of their principle investment. They want to maintain the current value of their portfolio and avoid risks that are common with stocks and other less secure investments.

Risk tolerance

While the main reason for growing your portfolio is to increase your wealth, you need to consider how much risk you are willing to take. If you struggle with the market’s volatility, your strategy should focus more on the safety or income categories. If you are more resilient to a fluctuating market and can accept some losses, you might favor the growth category. This category has the potential for higher gains. Nevertheless, you need to be honest with yourself and the level of risk you are willing to take as you set up your investment plan.

 

Investing 101: Before You Start Investing Money

Doesn’t it make sense to learn to invest (some basics) before you start investing money for real? Maybe a course called investing 101 or personal investing would be helpful. Here this retired financial planner relates a story, and then points the new investor in the right direction so he or she does not start investing uninformed.

In the dean’s office of one of the largest universities in America, I recently asked if they offered investing 101, personal investing, or any finance course where the student could learn to invest. “After all, we all need to start investing money someday, and it is much to one’s advantage to be informed vs. uninformed, isn’t it?” That was my response when told, “no, or at least I can’t find one” by the dean. I was informed that they had well over 50,000 current students enrolled and offered THOUSANDS of courses in the various colleges throughout the university. But he could find no course under the heading of personal investing or investing 101, and he was in charge of the curriculum.

We spent about an hour together searching and were both laughing out loud at what WAS offered. How about a course in “the art of falling down”? It’s offered. Investing 101? Which college in the university would offer such a course? “The athletic department is real big here; maybe they could help”, I suggested. After all, professional football players make big money. They need to learn to invest money (in case their career is short) and should start investing early. I knew a few players when I was a financial planner, but like most folks they tend to procrastinate when the money is flowing in. They’re too busy earning it, and don’t have the time to learn to invest.

The truth of the matter is that I don’t find it funny that it’s difficult to find a down-to earth practical course that most people could truly benefit from, because as a new investor you need to learn to invest money before you start investing for retirement or any other financial goal. As a new investor you may not be able to find a financial planner you can work with or afford. Even if you found one, do you really want to start investing money with him or her without first getting your feet wet in the basics of personal investing? Let’s start at the beginning.

Before you get into financial concepts like asset allocation and strategy, you should first learn the very basics: investment characteristics. How can you compare various alternatives to determine which best suit your needs, financial goals and comfort level? In other words, you need to decide what you are really looking for. And you need a list of factors to consider before you start investing money. For example, do you have a long term goal like retirement, and are you willing to accept a moderate level of risk? If so, there are numerous investment alternatives to consider, and you can also get tax breaks.

 

Is Out-Of-State Real Estate Investing Right for You?

Have you made up your mind to start investing in real estate, but you’re torn in deciding where to invest?

Are you thinking about making a local investment, but wondering if an out-of-state investment might be better?

This is one of the first of many choices you’ll have to make when you decide to invest in real estate: the simple question of where you should invest your hard-earned dollars. While there are definite benefits to investing in your area, there are also some potentially profit-limiting downsides.

That’s not to say investing in outside areas doesn’t have its own pros and cons. Let’s take a look at both and see why out-of-state real estate investing might be a profitable option you have not yet explored.

Investing Locally

This is the most obvious choice for many real estate investors, but is it really right for you?

If you choose to buy a property local to you, you’ll rest easier about your investment since you know the market. First, you know your competition. You might know the names of professionals you can trust and you’ll have an intimate understanding of what the cost of living is for that area and how to make things more affordable.

Second, if you like to be hands-on, it will be much easier for you since you’re right there. If you want to see the property, it’s just a short drive away. If you want to talk to the property manager face-to-face, you just put it on your calendar for the end of the day.

Drawbacks to Local Investments

On the other hand, investing solely local can narrow your options. Not every market has the inventory of good investment opportunities that you can avail yourself of if you invest out-of-state. The local inventory of available properties may or may not be big enough or well-suited for investment opportunities.

You also run into the problem of whether your local market is the one you want. The recession made a huge impact on housing markets throughout the country and some areas have recovered at different paces than others. You might find yourself out-priced in your current market, but even if you aren’t, you might not be able to see a favorable future where you’re at.

Investing Out-of-State

If you decide to invest out-of-state, you can greatly increase your options. You can literally choose any location, any market and invest in properties there. Whether you want to invest in Florida vacation homes and coastal villas or homes in the suburbs of Detroit, the sky’s the limit. You can make your investment fit your price point and interests.

By investing out-of-state, you can put your money to work in markets with high ROI. You pick and choose which markets you’re interested in, and which ones are rising stars in the real estate investment scene, ignoring your own market’s changes.

Investing out-of-state also allows you to scale based on your needs. For many would-be investors, their local market is priced too extravagantly to make real estate investment prudent. The cost of living in a different state, just a few borders east or west, might be considerably lower. That means you can snatch up excellent properties at a much lower cost than you might in your own market.

Even better, you can snag those investment deals on excellent properties that would go for three to four times as much, if not more, in your own local market. Your purchasing power becomes much stronger in other markets, because everything’s relative.

Challenges of Out-of-State Investments

There are still some challenges to these remote investments. First of all, you have to learn who you can trust and maintain the peace of mind that comes from having easy local access to your investment. You also have to be able to trust that the property you’re investing in is what it’s advertised as.

The property is also more difficult to visit if you like to be hands on. You might have to fly out to visit the property, which some people enjoy but others are seriously bothered by. If you are the type of investor who prefers the more passive turn-key approach, this is an excellent opportunity.

 

What Is The Difference Between Investment Management and Stockbrokers?

he investment services industry can be daunting and ambiguous for individuals who seek a return on their capital. After working hard earning your wealth, it is important to understand the different services offered by professionals and what solutions fit you personally. One of the main questions we get asked here is:

“What is the difference between investment management and stockbrokers?”

Firstly, let’s discuss what stockbrokers are – we all have a much better, clearer, idea of what they do and who they represent. Stockbrokers are regulated firms that offer financial advice to their clients. A stockbroker buys and sells equities and other securities like bonds, CFDs, Futures and Options on behalf of their clients in return for a fee or commission. A brokerage / stockbroker will receive a fee on each transaction, whether the idea is profitable or not.

A brokerage can specialise in any investment niche they wish for example:

  • FTSE All-Share stocks,
  • AIM stocks,
  • European Stocks,
  • Asian Stocks,
  • US Stocks
  • Combinations of the above
  • Straight equities,
  • Straight derivative trading (CFDs, Futures & Options)

The main reason why investors choose stockbrokers over any other professional investment service is simply down to control. Due to the nature of a brokerage firm, they can only execute a trade after you instruct them to do so. This means it is impossible for a brokerage to keep buying and selling securities without you knowing – known as churning for commission. This doesn’t however prevent stockbrokers providing you with several new ideas a week and switching your positions to a new idea.

However, there are natural flaws with the brokerage industry is that because trading ideas can only be executed after being instructed to list a few flaws;-

  • you may miss out of good opportunities due to moves in the market,
  • you may get in a couple of days later because you were busy and not make any money after fees,
  • you may receive a call to close a position but unable to without your say so.

The above are examples that can happen when investing with brokerage firms, but this is due to the reliance of gaining authorisation from their clients. So if you are ultra busy or travel a lot then you could potentially miss out on opportunities to buy or sell.

 

What Is an Investment?

One of the reasons many people fail, even very woefully, in the game of investing is that they play it without understanding the rules that regulate it. It is an obvious truth that you cannot win a game if you violate its rules. However, you must know the rules before you will be able to avoid violating them. Another reason people fail in investing is that they play the game without understanding what it is all about. This is why it is important to unmask the meaning of the term, ‘investment’. What is an investment? An investment is an income-generating valuable. It is very important that you take note of every word in the definition because they are important in understanding the real meaning of investment.

From the definition above, there are two key features of an investment. Every possession, belonging or property (of yours) must satisfy both conditions before it can qualify to become (or be called) an investment. Otherwise, it will be something other than an investment. The first feature of an investment is that it is a valuable – something that is very useful or important. Hence, any possession, belonging or property (of yours) that has no value is not, and cannot be, an investment. By the standard of this definition, a worthless, useless or insignificant possession, belonging or property is not an investment. Every investment has value that can be quantified monetarily. In other words, every investment has a monetary worth.

The second feature of an investment is that, in addition to being a valuable, it must be income-generating. This means that it must be able to make money for the owner, or at least, help the owner in the money-making process. Every investment has wealth-creating capacity, obligation, responsibility and function. This is an inalienable feature of an investment. Any possession, belonging or property that cannot generate income for the owner, or at least help the owner in generating income, is not, and cannot be, an investment, irrespective of how valuable or precious it may be. In addition, any belonging that cannot play any of these financial roles is not an investment, irrespective of how expensive or costly it may be.

There is another feature of an investment that is very closely related to the second feature described above which you should be very mindful of. This will also help you realise if a valuable is an investment or not. An investment that does not generate money in the strict sense, or help in generating income, saves money. Such an investment saves the owner from some expenses he would have been making in its absence, though it may lack the capacity to attract some money to the pocket of the investor. By so doing, the investment generates money for the owner, though not in the strict sense. In other words, the investment still performs a wealth-creating function for the owner/investor.

As a rule, every valuable, in addition to being something that is very useful and important, must have the capacity to generate income for the owner, or save money for him, before it can qualify to be called an investment. It is very important to emphasize the second feature of an investment (i.e. an investment as being income-generating). The reason for this claim is that most people consider only the first feature in their judgments on what constitutes an investment. They understand an investment simply as a valuable, even if the valuable is income-devouring. Such a misconception usually has serious long-term financial consequences. Such people often make costly financial mistakes that cost them fortunes in life.

 

A Different Solution for Business Inventory Financing

If your firm has an investment in inventory then financing for that asset is often, if not always, vital. Financing via bank credit lines for the inventory component of your balance sheet is always difficult, if not in some cases impossible. Most business owners and financial managers know that of your two major current assets ( receivables and inventory ) that banks prefer receivable, aka a/r financing.

So how do you finance your inventory, and what are the requirements to get such a facility in place? The reality is that every business is different and your firm will have different categories of inventory – most commonly they are raw materials, work in progress, and finished goods.

Inventory financing in Canada is most often financed under an ABL facility. What is ABL is the next question our clients always ask. The acronym stands for asset based lending, and is a specialized type of financing that is mostly carried out by non bank institutions. Facility sizes tend to range from 250k and up, as it is not really economical for all parties (you and the lender) for finance amounts much under that.

Your ability to control, report, and purchase inventory most economically are key drivers in an inventory financing decision made by your inventory financier. Your ability to monitor, stock, and produce and bill and collect are the basic requirements for an inventory financing facility. We would point out that in many cases this facility also includes a receivable component, because, as we all known, inventory flows into a receivable which flows into… dare we say it… cash!

If you are unable to finance your inventory properly you can very easily get into what can best be describe as a ‘ cash trap ‘- and that’s not a good trap to be in. Typically each one thousand dollars of inventory on hand can cost you between 150 and 250 dollars per year when you take into account some obvious and not so obvious factors such as financing costs, storage, handling, insurance, and deterioration of the inventory which by its necessity forces you to do an asset write down.

The irony is of course that you can have too much inventory or too little, it’s a balance act.

When you arrange inventory financing you want to ensure you have reasonable levels of product – so you need to focus on both financing cost and order costs.

If you have inventory financing fast efficient turns are potentially more possible and you annual carrying costs can be dramatically reduced- don’t forget that the cash you invest in inventory could be put to work elsewhere and in many cases earn, for example, at least 12% more in profits. That’s a very typical number for a manufacturer.

Financing inventory is a challenge – you want to be able to take advantage of volume discounts, but at the same time limit your investment in inventory while satisfying customer order needs. Whew! That’s a real teeter totter don’t you think?!

Speak to a trusted, credible and experienced business financing advisor who can guide you through inventory financing in a manner that supports your business and industry. Beating the inventory financing challenge is a solid financial accomplishment.

 

In House Financing Programs Making A Comeback

In House Financing is making a comeback in the Canadian market. When I first entered the car business in 1995 there were very few options for people who had credit issues such as bankruptcy, written off accounts, judgements or collections to be able to obtain financing for a reliable vehicle. I was lucky enough to work for a dealership that had an in house leasing company and we were able to sell cars to these people before the sub prime lenders came on the scene.

Over the past several years there have been many companies come into the Canadian automotive financing market to fill the need for most of these customers. They are relatively large national and international financing companies. They have signed the majority of the dealerships across the country to refer business to them. In 2005 there were no fewer than 7 such companies doing business all across the country with many others doing business in certain markets in the country. At the time of writing this article in 2010 there are only 4 remaining and they have tightened up on their lending practices because there is less competition in the marketplace. Of note the 3 sub prime lenders that were doing business all across Canada that are no longer in the marketplace were international lenders with 2 or the 3 based in the United States. When the financial crisis occurred in America we lost them due to their parent companies consolidating their operations into the United States.

It has been this tightening up of lending practices that is beginning to make a need for In House Financing at the dealership level once again. Today there are more and more clients who have credit problems and are in need of special financing solutions as they no longer qualify for financing from the mainstream sub prime lenders.

Many car dealerships are growing tired and frustrated at spending a lot of time and money in advertising to get customers into their dealerships to sell them a car just to have the lenders turn their customer down. It has been this frustration that has led many of them to take another look at an old concept and begin financing these customers themselves. So slowly but surely there are In House Financing, In House Leasing and Buy Here Pay Here programs starting to pop up all across the country to service this new marketplace.

There is very little difference in the various financing programs from a consumer point of view. They all work basically the same way. You have to give them a down payment that the dealers require to offset the risk they are taking in financing these type of high risk clients. Most of the down payments range between $500 – $2000 and are either used as money down on the loan in the case of In House Finance and Buy Here Pay Here programs. The out of pocket money is used as a security deposit and first payment in most In House Leasing programs. The security deposit can be used to buy out the lease at the end of the term without having to come up with any money out of your pocket at that time. No matter what the money you give the dealership is called, by the end of the term it is used to pay down on your vehicle.

The other major difference in these programs is how the vehicle is registered by the Registry of Motor Vehicles in your province. With the In House Financing programs the vehicle is registered in your name on the registration and a chattel mortgage is placed on the vehicle at the Registry of Deeds in your province. The chatel mortgage make it possible to repossess your vehicle if you default on the loan the same way a bank or finance company can. With the In House Leasing programs the vehicle is registered in the name of the leasing company with you being registered as the plate owner of the vehicle. The Buy Here Pay Here programs are usually run by a smaller dealership and they sometimes register a chalet mortgage the same as the In House Financing Programs but often they get the customer to register the vehicle in their name and then return to the dealership with the ownership paper and sign it over to the dealership. This way if the customer defaults on the loan the dealer simply registers the vehicle back into their name and repossess it from the customer. At the end of the day it really doesn’t matter which program you choose to use if you don’t make the payments they will repossess your car but if you make your payments you will not have any problems. Remember all of these dealerships are interested in you keeping your vehicle. They are usually understanding if you are going to be a couple days late with your payment as long as you let them know beforehand and make arrangements to get caught up right away.

 

Starting a Franchise? Looking For Business Money To Finance A Franchise?

The priority of securing business money when you have selected and are starting a franchise becomes even more important as you focus on getting the business started and up and running.

Let’s discuss some of the sources of capital in the Canadian franchise environment, and we’ll share some tips and strategies that have helped many other clients looking for Canadian business financing in the franchise environment.

There are actually 5 sources of capital that will successfully allow you to complete the financing of your new business. They include your own equity injection into the business, i.e. your down payment, bank and institutional financing (its not what you might think, so stay tuned on that one ), asset financing via an independent finance company, and finally a potential vendor take back from either the franchisor of the existing franchisee from whom you are buying the business.

Let’s therefore backtrack a bit and hopefully give you some solid tips and new information around how this financing is, in our words ‘ cobbled together ‘ to give you a total financing solution for your new business.

It’s always the same question when we talk to clients… ‘How much do we have to put in ‘… they are of course referring to their owner equity investment into the business. The truth is that the amount varies when it comes to the financing portion of your business. That amount is flexible and can vary anywhere from 10 – 50 per cent depending on the size of the financing and the amount of working capital you want to have on hand d on day once that will allow you to finance the business properly.

Another tip we’ll share in the above mentioned ‘ owner equity ‘ area is simply that in many cases some franchisors will actually mandate how much you ‘ have ‘ to put in. We therefore recommend to all clients that they get a clear understanding up front so there are no surprises. In defense of the franchisor they are probably relying on their own experience that allows them to have determined over time what it takes to successfully run and grow one of their units in their franchise system.

So how exactly do the banks in Canada participate in the starting of your franchise? Is it as simple as approaching your bank and determining what business money they will lend to finance a franchise? Not really we tall clients. We have rarely if ever seen a direct term loan to cover the financing of a franchise. But yet the banks do participate in most of the franchise financing in Canada. How? They piggy back on a special government program called the BIL/CSBF programme. This loan is underwritten by Ottawa, and has very generous terms and conditions around rate and structure. Unbelievably you are actually only guaranteeing personally 25% of the loan, which is another benefit.

So our cobbling together of a financing package is getting there – another great strategy is to finance separate individual assets with an independent lease firm. This type of asset financing is easier to get approved, and can cover a significant portion of any assets that need to be financed.

We spoke of a potential vendor take back from the franchisor or existing franchise as part of the purchase package. We will share with you several tips and comments on this one – namely that you should not fully rely on getting this type of financing in place. Occasionally you might be successful, may times you wont. Why? Simply because the franchisor or existing franchisee is motivated to sell you a franchise, not finance it!

Speak to a trusted, credible, and experienced Canadian business financing advisor in the area of starting a franchise and getting the right business money in place to allow you to complete your new role as a Canadian entrepreneur.

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Bad Credit Car Loan Vs Guaranteed Auto Financing – Will You Save Money?

You’re in the market to buy a new car and that’s great. Today most everyone buying a new vehicle will need some form of auto financing and if you find your personal finances or credit are less than perfect, you can still get a very affordable car financing if you know how.

An informed car buyer is a smart car buyer. When you know your auto financing options and you have your car financing set up and approved before you talk to any sales person, you can walk into a car dealership and negotiate a better deal on your terms without feeling intimidated, regardless of your financial situation.

If you know that you have certain credit challenges, you should understand the differences between bad credit car loans and guaranteed auto financing.

Bad Credit Car Loans…

Bad Credit Car Loans typically have been available through new car dealerships on the purchase of a new car or a pre-owned certified used vehicle. The actual auto loan financing paper-work is handled at the dealership but in general, the bad credit car loan finance contract is sold off to another lender. That lender will maintain and service your loan. Loans typically have a term of 24 months up to 60 months. The downsides to a bad credit car loan are that many franchise car dealerships are not set up to arrange these type loans in-house, interest rates and cost can vary widely and limit your auto purchase choices.

Guaranteed Auto Financing…

Guaranteed Auto Financing differs from a bad credit car loan primarily in that this type financing is offered directly by smaller or independent auto facilities. Your finance contract is provided by the actual auto wholesale dealer and the loan is paid directly to the auto dealer that sold you the car. In other words, you would be financing your car purchase from the company that owns it and sold you the vehicle. Guaranteed auto financing is used for the purchase of used or pre-owned vehicles and not typically for purchasing a brand new car or truck. Loan terms are shorter than more conventional auto loans and they rarely offer terms over 36 months.

The big advantage to guaranteed auto financing is that often no credit check is required to obtain this financing. Payments are normally made weekly and sometimes in person. One disadvantage to this type of auto loan is that many car dealers providing guaranteed auto financing will never report your credit to the credit bureaus. So if you’re making payments regularly and establishing an excellent payment history, this will not be reflected in improving your personal credit profile or your credit score.

Your best approach would be to start now and see what financing options are available for you. There are excellent specialized auto financing services available online today that offer a whole range of affordable car loan programs even if you’ve been turned down for financing or you have poor credit, bad credit or other financial considerations, you’ll be surprised at how they can help you to buy a new car.

You see now that there are major differences between a bad credit car loan and guaranteed auto financing and there are other financing options besides these. Get approved for the best car loan for you first, then walk into the car dealers and negotiate on your terms.

 

The Key To Working Capital Financing – Asset Based Lenders

Wondering how your competition seems to have all the working capital financing they need and you don’t – the key to that answer might just be asset based lenders and the asset based lines of credit they offer to Canadian businesses such as yours.

Let’s examine how this relatively new and unique method of business financing can totally alter your business financing success.

The acronym for this type of financing is A B L; simply speaking its daily cash flow provide against your current, and sometimes now so current assets. What do we mean by that? Simply that this facility allows you to margin your receivables, inventory, and in most cases, should you choose, fixed assets and real estate. You are probably saying to yourself that you could arrange financing on your own re those fixed assets and real estate – but we are talking about using those assets as collateral for your daily revolving line of credit. So you aren’t borrowing, you are not bringing debt on to your balance sheet, you are just leveraging your ‘ assets ‘ (that’s the ‘A’ in ABL!) for daily cash flow and working capital.

And why are we claiming that this type of working capital financing just might be your key to business success. Simply because you have probably found it has been challenging to get the full amount of business credit you need. In some cases you might have discovered its been a challenge to get business lines of credit of any manner.

So if your competitors are using this type of financing today, who exactly is eligible for it, and is your firm a candidate. The answer is simply that if your firm has a combination of 250k in working capital assets you are immediately eligible for asset based lines of credit. We would add that firms with smaller asset sizes can still monetize those receivables via invoice financing or discounting, but that’s not our key focus for today’s information exchange.

So now you now the offering are out there. But why should you consider it. Simply because your firm might be in one of a number of special situations – that includes issues such as your need for increased daily operating cash, you wish to merge with or finance an acquisition, you have been unable to obtain inventory financing elsewhere, you are growing to quickly for traditional Canadian chartered banking financing, etc! We are pretty sure you get the picture now!

The benefits to this type of business financing must by now be pretty obvious. It’s all about access to working capital financing and cash flow that you couldn’t access before. Assets that couldn’t be financed are now financeable, and inventory financing, previously limited or unavailable now looms on your growth horizon.

Who are these asset based lenders, and what is the cost of this financing? We’ll leave that one for another day, but if you want to investigate asset based lines of credit for your firm ( remember, your competitor probably already has ) then speak to a trusted, credible, and experienced Canadian business financing advisor who will assist you with identifying benefits and the best solution for your current strained needs in business finance.