This year, however, the landscape has changed. While the pandemic is certainly not over, an end is in sight, and the global economy, including Canada’s, is poised to reopen. That will undoubtedly allow many Canadian firms to restart or expand operations to take advantage of a rebounding economy. To do that, they will need capital. The challenge, says Miller, is that while businesses will emerge from the COVID-19 environment with plenty of room for growth, their cash reserves might be depleted or even fully tapped.
“Looking to the future, companies will be set to grow,” he says, “but capital, not opportunity, will be the limiting factor. So it is fundamental for businesses to understand their capital options.”
Helping companies understand those options is a big part of what Miller and his team do. CWB Equipment Financing works closely with firms across the country, and in a range of sectors, to provide asset-secured financing and leasing solutions with highly competitive terms. To do that effectively, the CWB advisors operate as what Miller calls “solution engineers” – financing experts who get to know their clients’ businesses and come up with options that clients often have not recognized. Miller says business owners will often turn down an opportunity because they lack the equipment to do the job or the cash to get it – without realizing how they can put the value of their existing assets to work.
“Many business owners don’t understand the power of their assets,” Miller adds. “When we hear a company say, ‘My phone is ringing off the hook with new business, but we can’t do it because we don’t have the equipment, people or working capital’ we can help them look for opportunities that others might simply have dismissed.”
It is a detailed endeavour, and it goes beyond lending to help businesses buy equipment, although that is a big part of what Miller and his team do. For instance, in the post-COVID environment, many companies will face the challenge of restarting or relocating their equipment and team to take advantage of growth opportunities. The cost of doing so can be high, especially in capital-intensive industries, and businesses might not have the cash-on-hand to pay for it or to carry on operations until they recognize the revenue from the new work. “If I run a gravel company and need to move my crushing spread to a new location, that’s expensive, so where does that money come from if I’m light on capital?” says Miller. “We can look at leveraging off current assets to provide working capital so they can go out and move that equipment.”
Miller and his team have helped several clients with working capital to get back to work, but they have also helped with improving clients’ margins. New equipment can offer greater efficiency, enhancing margins, but the lack of supply and economic uncertainty because of COVID-19 has forced many companies to make do with their current equipment. This has resulted in reduced margins because of increased repair and maintenance costs while potential growth revenue decreases. “We have done a number of loans where we’ve provided capital against existing assets to put into their equipment,” Miller says. As well, CWB can help businesses consolidate their current loans or leases. This can provide a lower payment, reduce cash flow risk and supports room for growth.
Overall, CWB Equipment Financing can help unlock the value of existing assets to supply needed capital. It can also provide consolidation loans to reduce monthly debt payments and improve margin and cash flow.
Miller notes that businesses can put that value to work in other ways, too. If a company is pursuing an acquisition – a current trend he sees in the sector, and one that traditionally accompanies a period of economic uncertainty - equipment owned by the acquiring and target companies can be leveraged to help fund the sale. In another circumstance, a cash-flush company may want to build their capital reserves to take advantage of potential growth opportunities. In both scenarios, CWB Equipment Financing can help.
Those kinds of solutions are not new in the financial industry, Miller says, but businesses often do not recognize the potential of their assets to help them raise much-needed capital. The difference is how CWB maximizes value through the combination of market-leading terms and structures with a commitment to developing long-standing relationships with their clients. As Canadian companies look to take advantage of a more buoyant post-COVID economy, it is a mission that has never been more important. “We’re not just here for transactional business,” says Miller. “We can do it, and we’re good at it, but there’s so much more value we can offer that doesn’t cost our clients anything. Over time, the return on those relationships can be significant. And relationships do matter.”