YOUR COMPANY IS LOOKING FOR ABL FINANCING VIA AND ASSET
BASED LINE OF CREDIT!
ASSET BASED LENDING ABL !
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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
ABL Financing is a ' game-changer '. Let's take a look at some of the reasons why and the background around the business asset-based credit facility and how it is used in lines of credit or loans.
WHAT IS ABL FINANCING
Asset based financing is simply the utilization of your firms assets as collateral for a business loan or line of credit.
If you're the financial manager or business owner of any sized business in Canada it would appear you're more often than not searching for working capital. The assets in your business can offer that flexibility when they are turned into a business line of credit facility that the financial folks term an ' ABL ', that's asset based lending 101!
ASSET FINANCE SOLUTIONS ARE THE ALTERNATIVE TO BANK CREDIT
The good news is that more and more firms in Canada, every day, discover that the flexibility provided by asset based lending as a financing arrangement. When Canadian firms can't find a suitable traditional bank lending arrangement for working capital needs ABL emerges as a solid solution of choice.
WHAT IS AN ABL FACILITY
Asset-based lending, also called ' ABL ' is a solid financing solution to companies that have sales and assets and are looking for the flexibility sometimes not found in Canadian banking solutions as well as the borrowing requirements imposed by banks. Typical facilities are business credit lines and business loans, both backed by assets and sales of the company. The goal in this type of financing is to provide your firm with working capital and cash flow secured by assets/sales on an ongoing basis.
WHAT IS FINANCED UNDER AN ABL BUSINESS LINE OF CREDIT
All your firm needs with respect to qualifying for such an asset based financing facility is any mix of accounts receivables, inventories, equipment or real estate. A typical ABL facility is a combo of 2 or more of these asset categories. The asset-based credit line in fact gives the business increased borrowing flexibility via a focus on asset based lending versus a cash flow based solution from, for example, a bank.
Why is that? It couldn’t be simpler, in that assets such as receivables and inventory are margined at higher values than they are with the Canadian chartered bank offering. Again, its collateral, not ratios and covenants that count when it comes to an asset-based credit line.
Is there a quick way for the Canadian business owner to rationalize a move to ABL? While no financing methods are always perfect, all the time the appeal of ABL is that it does not really focus on covenants - really the only thing that drives borrowing is the overall liquidity of your assets, whether you are growing or not.
ASSET BASED FINANCING GROWS AS YOUR COMPANY GROWS!
Another key positive is that an asset based line of credit can pretty well increase automatically as your business grows - As your accounts receivable base grows in conjunction with growing sales your financing ability for increased borrowing will grow at the same time. By the way, real estate can also be included in the asset mix, allowing your to leverage assets even more!
We've said no single method of business working capital financing is the panacea of perfection. So business owners should realize that Asset based credit typically involves more month-end reporting on those assets.
And while most asset based credit lines cost more than bank financing they can, on occasion be actually cheaper.
The ABL market in Canada consists of a fragmented bunch of firms, some niche-based and Canadian owned, while others are divisions or subsidiaries of U.S. banks and mega-corporations. The industry services companies of all sizes, from start-ups to major corporations.
EVERYONE USES ABL
It should come as no surprise that some of the largest and well-known corporations in Canada and the U.S. use ABL financing so don't feel you are doing missionary work in business financing! ABL is here and it just might be the radical ' game-changer ' when it comes to financing your firm.
CONCLUSION - THE ASSET BASED LOAN
Financing The Balance Sheet !
Speak to a trusted, credible and experienced Canadian business financing advisor on how asset based lending and non-bank business credit lines can fund your daily operations, acquisitions, and growth. Asset based lending rates will vary with your firms overall credit profile.
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Stan Prokop 7 Park Avenue Financial/Copyright/2020
