What You Need To Know Asset Based Line Of Credit Lending ABL

YOUR COMPANY IS LOOKING FOR A COMPREHENSIVE

ASSET BASED LINE OF CREDIT!

ABL Asset Based Lending Is On The Rise!

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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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ABL ASSET BASED LENDING IN CANADA - 7 PARK AVENUE FINANCIAL

Is there anything worse in business than the Finance Blues? We don't think so, and one potential cure is asset based line of credit lending in Canada.

The reason this method of business financing is still somewhat widely unheard of, (or worse yet) misunderstood comes down to the fact that a majority of business owners in Canada, we think, don't understand they have options. And ABL lines of credit are clearly a new option.

TRADITIONAL FINANCING VERUS ALTERNATIVE FINANCING

It kind of always comes down to two different cures for the business finance blues, one is when your business simply can't achieve traditional financing within our chartered banking system, and the other is when the amount of financing the business owner and financial manager needs far exceeds what other forms of finance can't deliver on.

And when ABL asset based lending turns out to be both flexible, and justifiable in cost, ( asset-based lending rates are typically higher than bank interest rates ) that’s where the cure has kicked in! While asset-based lending banks exist in Canada they are in fact boutique divisions of our Canadian chartered banks and typical transaction minimums are in the 5-10 Million dollar range - therefore the majority of asset-based loans are serviced by non-bank independent commercial financing companies.

WHEN DOES ABL WORK? UNDERSTANDING THE ASSET BASED LOAN AND LINES OF CREDIT

Are there any typical scenarios under which asset-based lines of credit work best, or are more common? One that we see often is that your company has come out of the 2008-2009 recession with a lot of focus having been around simply managing your business and assets to the best of your ability without the use of or access to bank type financing. Things are better, sales are growing again and fortunately or unfortunately that means that accounts receivable and inventories... you guessed it, are up! And let's not forget about pandemics. Asset Based Lending works in all economies.

We won't weigh in today on why traditional methods of financing might not be working anymore.... at the end of the day your firm has deemed to be unfinanceable or, as challenging, financeable without the amount of capital you need access to!

That latter point is a common one, your firm has financing now, but always seems to be out of cash. And in many cases, a simple glitch on either an operating covenant or some interim financial losses challenges your bank or other institution to reduce their involvement in your firm... just at a time when you are looking to increase that involvement.

ASSET BASED LENDING FOCUSES ON ' ASSETS '!

That is the ABL asset based credit line solution then - a simple focus on your operating and fixed assets that allow you to margin those to great cash flow and liquidity that you never thought you could access previously. To re-enforce our point ... it’s not about the balance sheet and income statement, it’s about the ' A' in Asset-based lending, your ' Assets'!

LOAN ADVANCE MARGINS VIA ABL

Typical advances on an ABL facility include a 90% accounts receivable advance and a predetermined amount of your inventory on an ongoing basis, anywhere from 25-75%. Asset based loans typically deliver much more business credit access than bank financing facilities as banks are focused more so on cash flow and profit versus ' assets'. Real estate can also be financed under a basis asset based loan, or included in your line of credit margins!

CONCLUSION - IS ABL YOUR FINANCING SOLUTION?

Asset based loans are collateral-based loans for commercial and corporate credit purposes. Key assets of your company can be secured, allowing your firm to 'monetize ' those assets for cash flow and working capital purposes. Typical assets included in the asset based financing ABL facility include inventory, accounts receivable, fixed assets that are owned by the company, as well as potential commercial premises owned by the company.

Is traditional bank type lending on the rise again? We're not sure, supposedly it is, but who really knows. What we do know is that asset-based credit lines are absolutely on the rise - they are your cure to the working capital blues! Asset based lending companies solve a number of working capital and cash flow challenges experienced by business owners and their financial managers.

So whether you consider ABL as a transitional finance vehicle, or simply a new great solution for business financing takes time to investigate this method of finance in Canada. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in curing those finance blues!