YOUR COMPANY IS LOOKING FOR AN ASSET BASED CREDIT LINE!
ASSET BASED LENDING / BUSINESS CREDIT VIA ASSET BASED LENDERS
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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?
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
ABL Facility Lending? We checked and it's true, you've got ' probable cause ' to check out a unique type of asset based lending in Canada that competes with Canadian banks when it comes to a lending facility that you need to facilitate a business credit line. Let's explain!
When we're watching our favourite crime shows on TV these days (CSI Brampton, etc.) we’ve always been enamoured by that term probable cause.
WHAT IS AN ABL FACILITY?
ABL facilities is asset-based borrowing from a businesses ' base' of assets which typically include a/r, equipment, inventory as well as real estate if the latter is applicable. These assets form what is known as a ' borrowing base ' from which a line of credit is arrived at for day to day funding of a business based on sales and growth.
THE ASSET BASED LINE OF CREDIT - THE ' BANK ALTERNATIVE '
Simply speaking it’s a 'reasonable grounds for belief '. And that’s our point today when it comes to our suggestion that you check out thoroughly the ABL facility, more commonly known as the asset-based line of credit.
ASSET BASED LOANS FOCUS ON ... ' ASSETS'!
How does an ABL loan work ? We get that questions a lot at 7 Park Avenue Financial.It's simply an alternative to bank financing. Whereas banks place a tremendous amount of focus on your cash flow and all the balance sheet and income statement ratios that come with that the asset-based loan focuses 99.99% on your assets - typically accounts receivable, inventory, equipment, and even your company-owned real estate if that’s applicable. An ongoing borrowing base is established on your sales and assets. Real estate bridge loans are sometimes addressed separately.
AR Factoring is a subset of asset based lending and can be a separate facility based on sales receivable financing needs.
BANKS REQUIRE CASH FLOW COVERAGE / GUARANTEES / COLLATERAL
Our Canadian banks are so strong and well known for growth, profits and conservatism simply because they are regulated, and enforce very strict rules around how much capital they can lend out, guarantees, and our previously mentioned ' cash flow coverage ' for any debt you have with them or anyone else. Asset-based financing is not ' cash flow ' lending.
The benefit to all that - it’s pretty obvious - unlimited capital with great rates, for those that qualify.
What if though? What if you don't qualify for a Canadian chartered bank line of credit? Typically you find yourself in one of the following situations - you have high or volatile growth, you’re just out of the start-up stage, and on any given day you seem to be using cash, not generating a lot of it!
ABL FINANCING IS ONE SEPARATE CREDIT FACILITY BASED ON ALL YOUR ASSETS
All the reasons and facts that we're provided for you above simply enforce why asset-based lending via the ' ABL asset finance ' is getting more popular, It focuses on the underlying assets you have and monetizes them into one single borrowing facility. It's working capital regarding financing your balance sheet.
ASSET BASED LENDERS ARE NOT REGULATED LIKE BANKS
The asset-based lender is typically what we finance folks refer to as a 'non-bank, non-regulated lender '. The connotation is of course that they can do whatever they want within their firm's own borrowing guidelines based on their management experience. They are also focused daily on managing the risk of the asset-based loan and line of credit facilities they have provided to your term. Typically that means you're reporting on your financials and assets in a more regular fashion, monthly for sure. Some of our clients view that as a negative - we explain they should consider that in our experience many firms that report and understand their financial progress more regularly... guess what... DO BETTER!
SOME BANKS DO IN FACT OFFER ASSET BASED CREDIT LINES!
The somewhat not so secret in ABL facilities is that many Canadian banks recognized that this is indeed a viable way to lend - so they have set up small divisions in their banks to also consider asset-based lines of credit. Boy, talk about being two-faced! Just kidding of course, because no one has more respect for our Canadian banks than us.
CONCLUSION
Asset-based lines of credit work because they provide a lot more liquidity also. Accounts receivable is typically financed at 90%, inventory is financed at more generous levels once your ABL lending firm understands your business, and they even throw your fixed assets into your daily borrowing mix. That’s liquidity 101!
Have we proven your probable cause around asset-based lending abl solutions? We think so, hope so, so seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your business line of credit needs.
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Stan Prokop
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