YOUR COMPANY IS LOOKING FOR A LINE OF CREDIT BUSINESS LOAN !
THE ASSET BASED LOAN REVOLVING FACILITY
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Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
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7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Struggling to keep your business afloat amidst fluctuating cash flows? Discover how Line of Credit Business Loans can be your financial backbone.
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer LINE OF CREDIT BUSINESS LOANS & solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
LINE OF CREDIT BUSINESS LOANS
An ABL Business Credit Line, also known as a business line or business line of credit, is this type of financing facility the ‘new normal’ when it comes to operating lines of credit in Canada. Well perhaps not for everyone, but it sure bears checking out when hundreds, probably thousands of other businesses are utilizing this type of borrowing already… and successfully.
Lines of credit offer a business the flexibility to access funds as needed, empowering companies to have cash flow with confidence around meeting day-to-day obligations. Companies can also capitalize on growth opportunities and meet the unexpected funding challenges of running a business.
ASSET BASED LENDING VERSUS BANK FINANCING
The ABL (A = Asset B=Based C= Lending) facility is almost always compared to Canadian chartered bank lines of credit. And quite frankly, that’s ok! In actuality, this type of comparison quickly brings out the major difference between these two types of working capital/operating credit solutions.
Unlike traditional business loans offered by banks, which provide a lump sum of money with fixed interest rates for specific projects, ABL facilities offer more flexible financing solutions. Online lenders also play a significant role in providing alternative financing solutions, often with faster approval times and more lenient qualifications than traditional banks.
Why is that? Simply because the nature of chartered bank borrowing is rarely all ‘asset based’, while that’s what the ABL is all about. Simple as that.
ABL DOES NOT HAVE THE SAME REQUIREMENTS AS A BANK CREDIT LINE
We suppose you can call it a philosophy of sorts, but the fact of the matter is our strong, great Canadian banks have industry regulations that force them to focus on an all-encompassing type of lending when it comes to business loans and credit facilities.
Those other areas we’re referring to include heavy emphasis on personal guarantees and credit history of business owners, cash flow coverage, external collateral, key operating ratio metrics, and covenants that some might view as restrictive. We’re tired even just going through that list!
ABL LENDERS IN CANADA
The majority of ABL lenders in Canada are non-banks. They are commercial finance companies focusing on 1 thing: Assets! They, therefore, can finance your business when a bank can.
Two key points need to be made here. One is that banks also offer ABL facilities - it’s just that they seem to be a bit poorly advertised in our humble opinion. Secondly, all of a sudden the thousands of companies that weren’t eligible for Canadian chartered bank financing all of a sudden are welcome applicants for an ABL financing facility! We suppose that we could add a third point that there is a cost differential in ABL facilities (typically higher, but not always, and sometimes lower!).
YOUR FIRM QUALIFIES IF IT HAS SALES AND ASSETS!
So if your company has the assets and sales growth, but not the equity or some of the other bank requirements we have touched on and identified then you are clearly a candidate for the ABL business credit line.
ABL CREDIT LINES ARE NOT TERM LOANS!
Although it’s often referred to, or thought of as a ‘term loan’ by the business owner or finance manager it’s actually simply a monetization of your current and fixed assets “accounts receivable, inventory, equipment, real estate” if applicable. Interest rates are higher in ABL financing solutions but provide much more access to business capital.
We quickly point out that the ABL also has some other superpowers! You can use it to:
Acquire a company
Stage a turnaround
Come out of a restructuring, formal or otherwise.
The higher borrowing base and ‘margining power’ of such financing allows you to bridge the gap between additional equity and simply waiting for your money from your client base.
KEY TAKEAWAYS
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How Line of Credit Works: Understanding the mechanics behind a line of credit is crucial as it dictates how funds are accessed and repaid.
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Advantages of Line of Credit Loans: Recognizing the benefits such as flexibility and revolving credit can guide decision-making.
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Qualifications for Line of Credit: Knowing the criteria lenders consider helps businesses prepare for the application process.
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Interest Rates and Fees: Understanding the costs associated with a line of credit enables borrowers to evaluate affordability.
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Managing Line of Credit: Learning best practices for utilizing and repaying funds responsibly ensures maximum benefit and minimizes risk.
CONCLUSION
So our bottom line today? Simply you may strongly wish to consider maximizing the borrowing power of your assets to facilitate your specific needs: growth, restructuring, inability to borrow at the bank, etc.
While the lower limit of such a facility is often 250k there are quite frankly no upper limits to ABL facilities in Canada. Oh yes, and some of our largest and most successful corporations utilize the method of financing - it’s just as we said, somewhat poorly advertised.
If your firm is in ‘MELTDOWN MODE’ on business borrowing and you want trusted business advice for business growth, call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with your operating facility needs, bank, or asset-based loans!
FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION
What are the benefits of Line of Credit Business Loans?
Line of Credit Business Loans, on credit application and credit approval, offer flexibility, allowing businesses to access funds as needed, manage cash flow, and seize growth opportunities. The credit limit is typically increased automatically as sales and assets grow . A good credit score of the owner is desirable but not necessary.
How do Line of Credit Business Loans differ from traditional loans?
Unlike small business loans / traditional loans with fixed amounts and repayment schedules, Line of Credit Business Loans provide a revolving credit line that can be accessed as needed, offering greater flexibility. The interest rate of these facilities is typically higher than bank financing. Companies pay interest on only funds drawn down at any time - no monthly payment! Variable interest rates are also available.
Can Line of Credit Business Loans help businesses manage cash flow fluctuations?
Yes, Business lines of Credit Business Loans are particularly useful for managing cash flow fluctuations as businesses can draw funds only when needed, minimizing interest costs.
What industries can benefit from Line of Credit Business Loans?
Line of Credit Business Loans can benefit a wide range of industries, including retail, hospitality, manufacturing, and professional services, among others.
What factors should businesses consider before applying for a Line of Credit Business Loan?
Businesses should consider factors in the loan agreement such as their cash flow needs, repayment ability, interest rates, fees, and any collateral requirements before applying for a Line of Credit Business Loan.
