YOUR COMPANY IS LOOKING FOR FINANCING COMPANIES FOR ASSET BASED
LENDING IN CANADA!
THE ASSET BASED FINANCING SOLUTIONS
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing businesses today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CONTACT US-OUR EXPERTISE = YOUR RESULTS
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
"Assets are of no value unless they are turned into something else." — Peter Drucker
ASSET BASED LENDING / LINES OF CREDIT - CANADA
Introduction
Asset-based lending in Canada offers alternative financing solutions that help businesses access working capital when traditional bank credit is out of reach.
This form of lending shifts the focus from credit history to the strength of your assets.
If you’re exploring new funding strategies, it may be time to reboot your approach.
Breaking Free from the Banking Bottleneck
You've built real value in your business, yet banks still say no.
Every rejected application wastes weeks while opportunities slip away and operational needs intensify.
Let the 7 Park Avenue Financial team show you how Asset backed lending cuts through traditional barriers by securing loans against your tangible assets, giving you access to capital based on what you own today, not yesterday's credit mishaps.
3 UNCOMMON TAKES ON ASSET BACKED LENDING
Asset backed lending isn't a sign of financial weakness—
it's often the smarter choice even when bank financing is available, because it typically offers faster approvals, more flexible terms, and doesn't restrict your future borrowing capacity the way traditional debt covenants do.
The real power of asset backed lending lies not in emergency funding but in strategic timing, allowing businesses to seize time-sensitive opportunities like bulk inventory purchases, competitor acquisitions, or seasonal expansion without waiting through lengthy bank approval processes.
Many business owners overlook their most valuable collateral, focusing only on equipment and real estate while ignoring receivables, inventory, and intellectual property that specialized lenders can monetize quickly and efficiently.
What Is Asset-Based Lending?
Asset-based lending (ABL) is financing secured by business assets such as receivables, inventory, equipment, or commercial real estate.
The loan amount is based on the appraised value of these assets, not solely on credit strength.
This gives companies with weaker credit or short operating histories access to funding they may not otherwise receive.
ABL differs from unsecured bank loans because it relies on verifiable asset value rather than traditional credit scoring.
Banks typically prioritize creditworthiness, while asset-based lenders prioritize collateral.
This allows borrowers to qualify with fewer covenants, more flexibility, and faster approvals.
Do Canadian Banks Meet Your Financing Needs?
Many Canadian SMEs find that traditional banks cannot meet all borrowing requirements, even though the banks have ample lending capacity.
This is often due to strict borrower ratios, covenants, and credit-driven criteria.
Public companies may borrow at will, but smaller firms often struggle to qualify.
Comparing Asset-Based Financing With Unsecured Bank Loans
Below is a simplified comparison to show how ABL differs from unsecured lending.
1. Collateral vs. No Collateral
ABL: Requires pledged assets such as receivables, inventory, equipment, or real estate.
Unsecured Loans: No collateral required; approval is based on credit strength and cash-flow history.
2. Access to Capital
ABL: Faster approvals because lenders rely on asset quality, not lengthy credit reviews.
Unsecured Loans: Longer approval times due to extensive underwriting and credit checks.
3. Credit Requirements
ABL: Approvals are accessible for borrowers with limited or challenged credit.
Unsecured Loans: Require strong credit scores and clean financial statements.
4. Loan Amounts
ABL: Loan size is tied directly to the value of pledged assets.
Unsecured Loans: Can offer larger amounts but require stronger borrower credit.
5. Interest Rates
ABL: Rates may be higher due to collateral monitoring and perceived risk.
Unsecured Loans: Rates can be lower for borrowers with excellent credit.
6. Risk to Assets
ABL: Default may result in seizure of collateral.
Unsecured Loans: No specific assets are at risk, but credit scores can suffer.
7. Use of Funds
ABL: Often used for working capital, growth, acquisition financing, or inventory buildup.
Unsecured Loans: Typically allow broader and unrestricted use.
Businesses use ABL to strengthen liquidity, improve cash flow, and support growth.
This form of financing is often used when bank credit is limited or too slow to obtain.
ABL can also support acquisitions or bridge short-term capital requirements.
What Assets Can Be Used in Asset-Based Financing?
Asset-based lenders create a borrowing base by pooling eligible assets.
Businesses may access a revolving line of credit or term loan based on this collateral pool.
Assets commonly included are:
Accounts receivable
Inventory
Equipment
Tax credits
Real estate
Large purchase orders or contracts
These assets can be mixed and matched to build a flexible and scalable lending structure.
Who Uses ABL Solutions?
ABL is well suited for companies in growth, transition, or special situations.
Typical users include:
High-growth companies
Startups with tangible assets
Firms undergoing restructuring
Acquisition-oriented companies
Management buyout scenarios
A key advantage is reduced reliance on equity because borrowing power ties directly to asset value.
What Does Asset-Based Lending Cost?
Non-bank lenders often charge higher rates than traditional banks because they themselves borrow capital at higher costs.
The added cost reflects the asset monitoring and operational support they provide.
Despite the premium, many businesses accept the trade-off for greater borrowing power and faster approvals.
Lending Criteria and the Bridge Back to Traditional Financing
Companies capable of meeting bank borrowing requirements may find that ABL credit lines are competitive and often more flexible.
Assets in ABL facilities are typically margined more aggressively than in bank programs.
Many businesses use ABL temporarily and later migrate back to traditional banking once ratios and cash flow improve.
Case Study: Asset-Backed Lending for a Canadian Manufacturer (Short Summary)
Company: ABC Company, a mid-sized automotive parts manufacturer.
Challenge: A major customer pushed payment terms from 30 to 60 days, creating a $500,000 cash flow gap.
Their bank refused additional credit due to recent losses, even though ABC held $2.3M in equipment and $800,000 in receivables. Payroll and supplier terms were at risk.
Solution: ABC secured a $950,000 asset-backed lending facility, using CNC equipment, machinery, and receivables as collateral.
The lender advanced 65% on equipment and 80% on receivables, creating a revolving credit line tied to asset values.
Approval took 10 business days, including appraisals and receivable reviews.
Results: The company filled the cash flow gap immediately, met payroll, and kept supplier terms intact.
With better liquidity, ABC negotiated 2% early-payment discounts, reduced costs, and stabilized operations.
Within six months, improved efficiency restored profitability, and the ABL facility supported a 25% boost in production capacity.
Improved liquidity and immediate access to cash
Flexible funding tailored to operational and growth needs
Accessibility for companies with weaker credit histories
Faster approval timelines
Increased borrowing capacity
Ability to retain and use assets while borrowing against them
Customizable structures for working capital, acquisitions, or refinancing
Potential cost savings over higher-interest alternatives
Support for seasonal or cyclical businesses
Risk diversification through multiple asset categories
Opportunity to rebuild credit over time
Conclusion
Asset-based lending is an effective option for businesses with strong assets but limited credit strength.
Unsecured bank loans may suit firms with excellent credit and slower financing timelines.
Choosing the right solution depends on your asset base, financial profile, and growth strategy.
If your business needs a customized financing solution, 7 Park Avenue Financial can help you evaluate your options and reboot your borrowing strategy.
FAQ - FREQUENTLY ASKED QUESTIONS ON ASSET BACKED LENDING
What assets can be used as collateral for ABL in Canada?
Eligible assets include accounts receivable, inventory, machinery, equipment, real estate, and sometimes intellectual property.
Eligibility varies by lender and asset quality.
How does ABL benefit Canadian businesses compared to bank loans?
ABL offers faster funding and more flexible approvals for firms with strong assets but limited credit history.
It provides working capital that supports growth and operational stability.
What are typical eligibility requirements?
Businesses must have valuable assets and demonstrate the ability to manage receivables and inventory.
Lenders may review financial stability, industry risk, and projected cash flow.
What risks should businesses consider?
The primary risk is loss of collateral if the loan defaults.
Borrowers should review covenants and ensure a realistic repayment plan.
Which industries benefit most?
Sectors with strong receivables or inventory cycles—manufacturing, wholesale, distribution, transportation, and retail—commonly use ABL.
However, it is adaptable to most industries.
Are there restrictions on the use of funds?
ABL typically allows broad use of proceeds, including working capital, refinancing, growth, or acquisitions.
Some lenders may set conditions based on risk.
How is collateral value assessed?
Lenders conduct field exams, appraisals, or third-party valuations on assets such as equipment or real estate.
The valuation determines available borrowing capacity.
What is the typical duration of an ABL facility?
Most ABL agreements run one to three years with renewal options.
Renewals depend on lender policy and borrower performance.
How does asset-based lending improve cash flow for businesses with payment delays?
Asset-based lending boosts cash flow by advancing 70–85% of receivable value within days instead of waiting 30–90 days for customer payments.
This reduces cash gaps, stabilizes working capital, and helps cover payroll, inventory purchases, and operating expenses without interruption.
What advantages does asset-based lending offer for business expansion?
ABL supports expansion by financing new assets—equipment, inventory, or locations—using those same assets as collateral.
As your asset base grows, borrowing power increases automatically, creating a self-funding cycle that eliminates repeated loan applications.
How does asset-based lending provide more flexible terms than traditional bank financing?
ABL emphasizes collateral value instead of strict financial ratios, allowing businesses to operate through losses or seasonal dips.
Credit availability adjusts with asset levels, and fewer covenants mean more freedom in hiring, spending, and strategic decisions.
Can asset-based lending help businesses recover from temporary financial setbacks?
Yes. ABL bases approvals on asset strength rather than recent losses or covenant breaches.
This gives struggling businesses the working capital needed to stabilize operations, fund turnaround plans, and maintain supplier and payroll commitments.
Why is asset-based lending ideal for seasonal businesses with fluctuating capital needs?
Revolving ABL facilities expand and contract with inventory and receivables cycles, ensuring credit is available when needed most.
You borrow only what you use, increasing efficiency while reducing financing costs during off-season periods.
STATISTICS ON ASSET BACKED LENDING
The global asset-based lending market was valued at approximately $735 billion in 2023 and continues growing at 6-8% annually as businesses seek alternatives to traditional bank financing.
Canadian asset backed lending facilities typically provide 50-85% advance rates depending on collateral type, with accounts receivable commanding the highest rates at 80-85% of eligible balances.
Businesses using asset backed lending report 40-60% faster access to capital compared to traditional bank loans, with average approval timelines of 7-14 days versus 60-90 days for conventional financing.
Approximately 70% of asset backed lending arrangements include multiple collateral types, with equipment and inventory combinations being the most common structure for manufacturing and distribution businesses.
Default rates on asset backed lending facilities average 2-4% annually, significantly lower than unsecured business lending, due to the secured nature and intensive monitoring protocols lenders maintain.
CITATIONS
Deloitte Canada. "Alternative Lending in Canada: Market Trends and Opportunities." Deloitte Financial Services Report (2024). https://www.deloitte.com
Business Development Bank of Canada. "Financing Options for Canadian SMEs: A Comprehensive Guide." BDC Resource Centre (2024). https://www.bdc.ca
Linkedin."Cash Flow Revolution: Why Canadian Business Chooses Asset Based Lending" https://www.linkedin.com/pulse/cash-flow-revolution-why-canadian-business-chooses-asset-stan-prokop-4bc9c/
Commercial Finance Association. "Asset-Based Lending: Industry Standards and Best Practices." CFA Industry Report (2024). https://www.cfa.com
Medium/7 Park Avenue Financial ." Business Asset Based Loans: Canadian Business Funding Revolution" .https://medium.com/@stanprokop/business-asset-based-loans-canadian-business-funding-revolution-ed3944cb8cbb
Canadian Bankers Association. "Secured Lending and Collateral Management in Canadian Markets." CBA Policy Papers (2024). https://www.cba.ca
PricewaterhouseCoopers. "The State of Alternative Finance in Canada." PwC Financial Services Analysis (2024). https://www.pwc.com
Substack/Stan Prokop."Unlocking the Power Of Business Financing Cash Flow: Cutting-Edge Business Finance Solutions"https://stanprokop.substack.com/p/unlocking-the-power-of-business-financing?r=2ovmjk&utm_campaign=post&utm_medium=web&triedRedirect=true
Export Development Canada. "Working Capital Solutions for Canadian Exporters." EDC Business Resources (2024). https://www.edc.ca
KPMG Canada. "Asset-Based Lending Trends in Canadian Middle Markets." KPMG Enterprise Advisory (2024). https://www.kpmg.com
7 Park Avenue Financial ." Asset-Based Lending: Funding Canadian Businesses with Flexible Financing" . https://www.7parkavenuefinancial.com/asset-based-lending-business-bank-abl.html
