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Without an ABL Lending and Loan Facility Financing Where Will You Be Tomorrow? A Canadian Non - Bank Alternative!
A Formula for Canadian Commercial Business Financing
You Are Looking for ABL Lending Via a Non-bank Financing Solution And Loan Facility!
The ABL FACILITY - A Business Line Of Credit That Works
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing businesses today
Unaware / Dissatisfied with your financing options?
Call Now! - Direct Line - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
Email - sprokop@7parkavenuefinancial.com
ASSET BASED LENDING CREDIT FACILITIES IN CANADA
Concerned about your ability to achieve business operating financing over the long term - if that’s the case asset based loans via the ABL lending solution might be the alternative to a traditional bank financing facility.
WHY CHOOSE ASSET BASED LENDING - WHY DO MANY COMPANIES CHOOSE TO UNLOCK MORE FINANCING
We think the whole issue revolves around the term alternative - and we mean that in two ways. First of all from a purely technical reason ABL ( Asset Based Lending ) is in fact 'alternative financing', a term that has become very much in vogue since 2008-2009 when the Canadian business financing landscape changed dramatically due to the global financial recession - and lets not even talk about COVID challenges and the credit/recession concerns of 2022.
And secondly, it’s just basically another word for choice and we guarantee you that you need choices in your business financing decisions.
So, can you ignore asset financing and let other firms, including your competitors, use ABL as their new choice of operating financing? Of course, you can, but if this type of loan or facility (it’s not a loan per se) has the ability to virtually guarantee you access to financing for all future growth we think it’s remiss of you not to consider it. That’s just our humble opinion.
The bottom line is that this type of asset based line of credit financing facility is almost always tailored to your specific needs, with fewer restrictions. It provides you with the flexibility to have a customized arrangement around the borrowing power you can generate via... guess what, Assets!
And what are those assets? Commonly they are a broad range of balance sheet assets :
Accounts receivable
Inventories, and in some cases as an add-on, fixed assets or commercial real estate owned by the company
In some cases, patents and intellectual property can be included in the facility.
CAN YOUR COMPANY BENEFIT FROM ABL? WE KNOW IT CAN!
It’s simply the monetization of those assets based on realistic values (often achieved by an appraisal) that give you an alternative, and by the way, almost always a larger(!) operating facility.
If as a Canadian business owner or financial manager you're concerned about the future of financing for your firm and you have special needs or situations then ABL is probably the answer to your alternative, which is losing out on growth opportunities or having to look elsewhere for debt or outside equity.
What Are The Benefits Of Asset Based Lending?
There are numerous key advantages of using Asset Based Lending solutions - They include
Greater acess to cash flow/working capital than traditional cash flow financing solutions
Greater access to capital for firms unable to access all the bank credit they require
Facilities grow in line with growth in sales and assets - providing future flexibility visibility for growth
Abl solutions place less reliance on covenenats, ratios, personal guarantees and outside collateral
Asset backed facilities often are short term in nature, ie 1-2 years and provide a bridge back to tranditional financing solutions that focus on ' cash flow lending' and unsecured loans.
Financing is competitive and in some cases is competitive to bank financing - the asset backed loan interest rate is based on transaciton size and asset quality
ALTERNATIVES TO ABL LENDING - ASSET BASED OR CASH FLOW SOLUTIONS?
Cash flow term loans
Sub debt/mezzanine financing
Sale-Leaseback of assets
Equity Financing
However, the ability to monetize assets to the maximum and not borrow relative to the balance sheet is appealing!
We've referenced the ability of your firm to secure the future of your financing and growth via an ABL lending and financing facility. Clients who want to make this drastic change to non-bank financing always ask a question that could generally be summarized as 'what's in it for us'. The answer is pretty simple, increase cash flow for firms that have assets, both current and fixed, that aren’t being monetized now.
Although you might end up reporting more on the monthly values of those assets most clients are happy to know that these reports are no longer tied to covenants and ratios, etc. as required by traditional Canadian chartered bank financing. Issues of seasonality in your working capital, or being flexible to take advantage of new opportunities (including acquisitions by the way) make ABL lending a solid 'loan' financing facility alternative choice.
So what's the bottom line for the future of your operating financing? And where will you be tomorrow in your business financing? It's simply that you should investigate asset-based lending facilities, non-bank in nature, as a method of creating long-term access to working capital and growth ability.
CONCLUSION - ASSET BASED FINANCING
Speak to 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor for the lowdown on ABL financing / asset based lending.
FAQ: FREQUENTLY ASKED QUESTIONS / MORE INFORMATION / PEOPLE ALSO ASK
What is an ABL credit facility?
ABL credit facilities are asset backed loans based on multiple forms of collateral based on a company's assets. Specific assets typically include receivables, inventories, equipment, rolling stock, etc . These facilities are typically structures as lines of credit that compete with commercial banking solutions offered by banks.
Typically more financing is accessible since the borrowing margins are higher on the face value of the assets. ABL lenders focus on the market and liquidation values of a company's assets which provide a borrowing base against which the company can draw on for day to day cash needs
How does an ABL loan work?
ABL loans use a borrower's balance sheet assets as collateral - more liquid assets such as accounts receivables and inventories are tyically the largest part of the borrowing facility - Other less liquid assets such as equipment and real estate can be bundled into the borrowing capacity of the facility . Small and medium sized borrowers comprise the majority of borrowers as firms strive to meet cash flow demands. The simplified borrowing process appeals to Canadian businesses.
Are banks the best asset based lenders?
Canadian chartered banks do offer asset-based lending arrangements. Advantages to this type of loan solution are the competitive pricing offered by banks. Most bank ABL deals require a minimum of 5-10 Million dollars in borrowing, which recludes many SME companies in Canada. Banks also require extensive due diligence on loan approval for ABL deals and often require inventory audits, financial audits, etc.
Click here for the business finance track record of 7 Park Avenue Financial
' Canadian Business Financing With The Intelligent Use Of Experience '
STAN PROKOP
7 Park Avenue Financial/Copyright/2024
Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil
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