YOUR COMPANY IS LOOKING FOR BUSINESS CREDIT VIA AN ABL LOAN!
IS ASSET BASED LENDING YOUR KEY TO BUSINESS SUCCESS
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
"Access to capital is one of the biggest constraints facing businesses today." - Karen Mills
ABL LOANS - A FLEXIBLE FINANCING SOLUTION FOR YOUR BUSINESS
Business credit in Canada. Can ABL loan facility financing really provide you with that business ' wind in your sails ' your company needs to generate ongoing working capital and cash flow needs? We think so, and here's why! Let's dig in on the asset based loan solution!
WHAT IS ABL LOAN FINANCING?
ABL loan financing is a type of business credit solution under the asset-based lending umbrella - allowing borrowers to obtain loans and financing using business assets as the sole collateral. Typical collateral in ABL loans includes receivables, equipment, and real estate -
In some cases, brand and intellectual property can also be included as a component of the asset base of the business. Companies in Canada use ABL finance to generate the working capital they need to operate and fund business growth . ABL loans are typically structured in a more flexible format than traditional bank loans.
These days, as we’ve noted recently, there isn’t a day when we don’t hear about the challenges of companies ' tumbling' when it comes to their challenges in finding working capital and even long-term financing. (Today, we're talking about working capital/ cash flow)
However, the good news about the revolving door is that when ' the bank says no ' or the bank says 'yes, but not that much, there is always an ABL asset-based lender willing to step up to bat.
WHY DO ABL LOANS WORK?
The simple reason asset-based lenders provide the business credit you need is that they are solely focused on the amount, quality, and monitoring of your business sales and physical assets. Those assets? They are receivables, inventory, equipment, and in some cases, real estate if that pertains to land or buildings owned by the company.
ACCESS TRADITIONAL BANK FINANCING IS A CHALLENGE
Our Canadian chartered banks, in their wisdom, focus on cash flow lending, with emphasis on financial statements, ratios, covenants, and outside guarantees. Who is right? We won’t weigh in on that one today; we'll say that each institution, the bank and the ABL lender, is one of two options to finance your business - we'll let you decide which one works best.
While ABL solutions are often more expensive (not always), that’s clearly one reason why companies gravitate to bank financing first. By the way, asset-based lending firms tend to be non-bank commercial financing companies, although some Canadian chartered banks have entered the ABL market.
ABL LOAN VERSUS TRADITIONAL FINANCING
An ABL loan or operating revolver, as it is termed, offers your firm continuous working capital as long as you have those assets. The key beauty of this type of borrowing is that it grows with you; it’s not set in stone once a year as it might be via a bank approval.
Who uses ABL? Pretty well, every type of firm in Canada includes manufacturers, service firms, retailers, and high technology firms. Again, pretty well, everybody! The size of these facilities really determines who you deal with and your overall pricing and structure. Small deals start in the $250k range, while larger facilities can easily be tens of millions of dollars. To show you the spectrum, a start-up can have an ABL line of credit, and some of Canada's largest and public corporations have abandoned bank financing in favour of ABL business credit.
THE BENEFIT OF ABL LOANS FOR BUSINESS CASH FLOW
A key benefit of this type of business line of credit tends to be borrowing power - receivables are margined at 90%, inventory ranges from 20-70%, and appraisals and valuations are done on your fixed assets allow them to be thrown into the mix also. Just imagine being able to borrow daily against the value of your fixed assets. That’s ABL power!
IS YOUR BUSINESS ELIGIBLE FOR ASSET BASED LENDING? HOW TO APPLY FOR ASSET-BASED LENDING
Your firm's ability to get approved for this type of borrowing will depend on your ability to produce regular and proper financial statements, as well as the need to ensure you can report on current assets on an ongoing basis - i.e. aged receivables, inventory, etc.
CONCLUSION - FINANCING BUSINESS GROWTH VIA ASSET BASED LENDING
Intrigued? Is Asset based lending right for your business?
As a Canadian business borrower, you should be. Speak to 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor who can assist you with your ABL business credit needs and expertise in executing ABL transactions.
FAQ: FREQUENTLY ASKED QUESTIONS/PEOPLE ALSO ASK /MORE INFORMATION
What is ABL loan financing?
ABL loan financing is a form of business financing that allows businesses to borrow under a loan structure that uses the business's assets as collateral. Key assets normally financed under this structure include accounts receivable, inventories, and fixed assets of the business - in some cases commercial real estate owned by the business can be included in the facility via either a business line of credit or term loan structure.
Unlike bank financing, very little emphasis is placed on the creditworthiness of the owners of the business. Asset-based lenders are skilled in risk management and asset valuation, allowing their type f financial analysis to provide greater financing for cash flow and business growth - Loan flexibility in ABL finance solutions is the reason this method of alternative financing is becoming more popular in the Canadian business financing landscape.
How does ABL loan financing differ from traditional loans?
ABL loans differ from traditional loan financing via banks or other traditional financial institutions because they are usually more flexible as the focus is on collateral, versus the emphasis, banks place on balance sheet ratios, covenants, personal guarantees, and profit and cash flows.
Since collateral levels fluctuate the business has the ability to access more working capital as sales and assets such as the investment in carrying accounts receivables grows. The ability to use a pledged asset to access business funding is a key benefit of asset based lending ABL. Fixed asset facility limits greatly increase the size of a non-bank asset-based line of credit.
What types of businesses are eligible for ABL loan financing?
Businesses of all sizes and industries are eligible for asset-based lending solutions - that includes start-up or early-stage companies and businesses that are temporarily financially challenged or in a restructuring stage - Assets remain the main eligibility focus - many subsets of asset-based loans can be accessed - such forms of financing include receivable factoring, tax credit financing, sale-leasebacks, purchaser order financing, etc. Traditional operating facility advance are often much less than is offered under an ABL borrowing base.
ABL lines of credit and term loans are covenant light structure based, focusing on the liquidation asset values of the company. If a business is in a cyclical or seasonal industry the ability to access capital is important so many types of industries qualify versus conventional lending criteria imposed by banks.
What are the benefits of ABL loan financing?
The benefits of abl loan financing solutions include more access to funding that otherwise might not be able to be obtained by a bank or other traditional financial institutions such as a credit union or an insurance company. Loans are typically structured around the customization of the assets of the business. In many cases, abl loans can help to refinance existing debt. Growth financing funding is one reasons why many businesses consider asset backed loans.
Click here for the business finance track record of 7 Park Avenue Financial
