YOU ARE LOOKING FOR AN ABL ASSET FINANCE COMPANY FOR YOUR BUSINESS LINE OF CREDIT NEEDS!
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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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EMAIL - sprokop@7parkavenuefinancial.com
Can an ABL asset based finance company, via a new business line of credit, make your transition from financing pain to financing power? We think there is a strong case for that, and here's why.
Thousands of companies in Canada find themselves constantly challenged when it comes to ensuring their company has the right financing in place to both survive and grow.
For the small and medium-sized business owners and financial managers in Canada, there are some serious issues on the table: the jobs of employees, the value of the asset base in your company, and the ability to, at a certain point in time, transition that business to a family member or third party.
Management, therefore, needs to realize that any turnaround in the business often will revolve around their own commitment to exploring new types of financing that will in effect turn that 'pain’ into 'power'.
Financial challenges and problems require that they are identified early. There are a number of telltale signs of trouble in your firm that often might be clear, or not so obvious. They include pressure from your bank on your operating line, financial losses that will ultimately link back to cash flow problems, pressure from other competitors in your sales environment, and sometimes issues you could never control such as new market forces.
The business line of credit, whether it's via a bank or an ABL asset finance company is often a key driver in your transition from pain to power. If your firm currently has a Canadian chartered bank line of credit, you are subject to certain restrictions.
This facility is ultra dependent on a large number of key factors such as profit, operating performance (which is measured via ratios and covenants), and your availability to provide collateral inside and outside the business. And personal guarantees, as most Canadian businesses know, are key to a long term bank relationship in many instances.
Canadian businesses are often in the position of having their business lines of credit as somewhat of a scapegoat for short term losses and a trend to unprofitability.
So if your firm finds itself in a downward or negative spiral, what’s the solution? As we said a solid one might just well be a non-bank business line of credit from a commercial ABL asset finance company.
But why can such a facility save your company, turn it around, and ensure that pain to power transition? We would offer up that it’s simply a case of the ABL firm taking a sign that can't amount of more risk with your business. That risk though is somewhat measured from their point of view, as they focus predominantly on your overall asset base.
So you new ABL term sheet takes all your receivable, inventory, equipment, and in some cases real estate and rolls it up into one new large revolving credit facility It goes without saying that your firm must have good records and controls, and reporting capability, but at the end of the day the 'power', as opposed to the 'pain’, is now in sight.
When the business owner considers that ABL typically provides 85-90% lending against A/R, 30-70% on inventory, and then throws in an equipment component also... well... you get the drill - your firm has just reached a higher level of liquidity.
This new facility will, as time goes on, repair your company. Pressure from trade creditors will subside, you can take advantage of new growth opportunities, and sales can be back on track to grow.
You achieve this new higher level of borrowing by being able to supply regular ongoing info on your assets, and in most cases, you'll be subject to a quarterly, semi-annual or annual visit from your ABL lender.
If a turnaround in your financing fortunes is required you just may have discovered it. Consider speaking to a credible, experienced and trusted Canadian business financing advisor on you can successfully reverse your business challenges.
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Stan Prokop 7 Park Avenue Financial/Copyright/2020
