YOUR COMPANY IS LOOKING FOR AN ASSET
BASED BUSINESS LINE OF CREDIT!
ASSET BASED LOAN / ASSET BASED FINANCING SOLUTIONS IN CANADA
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Can the ABL asset-based business line of credit really reverse the cash flow ' plunges' that companies inevitably face? We think it can, and by the way, it’s been proven by the thousands of firms in Canada and the U.S. that utilize this method of revolving credit facility for their business needs. Here's why... and how. Let's dig in.
WHAT IS AN ASSET BASED CREDIT LINE?
It always helps when the business owner/manager understands the basics. So the asset-based credit line for business simply a revolving credit finance solution that allows your company to draw down on working capital needs to be based on a high margin against inventory, fixed assets/equipment, accounts receivable and real estate if that plays into the equation.
Due diligence by the asset based lender on the size, quality, and turnover of assets will deliver more borrowing power! The bottom line? It's all about leveraging your business assets on the balance sheet to allow you to consider growth options as well as funding daily operations. The asset-based lender established a borrowing base certificate on a regular basis, allowing you to draw down on the abl facility when you require funds.
WHAT SIZE OF BUSINESS CAN UTILIZE ASSET BASED LENDING
While for any type of business finance it always helps if a company has a track record a true ABL solution works for almost any type of size and firm that has assets. While transactions on the lower end of the scale might be in the 250K range there is virtually no upper limit and true asset-based facilities many times run into the many millions of dollars. The only prerequisite - assets !! .. as well as your ability to produce proper financial statements on an ongoing basis.
ASSET BASED LOANS VERSUS BANK FINANCING
This method of finance a business line of credit is directly comparable to Canadian chartered bank facilities. Whether it’s the bank or your asset-based lender you grant a secured position on all business assets, and then borrow against them.
ABL PROVIDES MORE WORKING CAPITAL FUNDING!
The immediate question that comes to mind is of course the difference in choosing between the bank and the ABL solution. Typical ABL structures provide borrowing against 90% of receivables, 50-70% of equipment true value, and typically 50% on inventory. If your company owns real estate it is easily thrown into the borrowing mix.
5 KEY BENEFITS OF ASSET BASED LOANS
It is therefore obvious to see some of the key tangible benefits of the ABL line of credit. If we had to succinctly summarize them it would be as follows:
- All business assets become borrowing power
- funding is immediate
- As your business grows the facility grows in lockstep
- Easier to qualify than bank financing
- Similar to bank credit facilities you only pay for what you are borrowing at any given time
-There is no contact with your clients in a true ABL asset-based solution
NO MORE RATIOS AND COVENANTS
So the simple difference - you're borrowing on business assets and revenue growth - not cash flow ratios and covenants and debt to equity borrowing constraints. It's that covenant freedom you have been looking for - as some put it - it allows you to weather those business ' bumps in the road'.
It's easy to see why this innovative financing solution is gaining more traction every day. In effect, it has become 'respectable'! Improper perceptions occur in the marketplace when people think ABL is a last resort type of financing. In fact, it’s the first resort for some of the largest companies in Canada and the U.S.
CONCLUSION
While asset base lending usually, but not always, is more expensive, the fact that you're turning assets, generating profits, and not taking on term debt often makes a lot of sense. Interest rates on an abl facility will always be higher 99% of the time, but as we say at 7 Park Avenue Financial it's all about access to capital versus cost of capital.
If you wish to reverse the cash flow plunge, letting working capital soar, seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your ABL needs.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
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