YOUR COMPANY IS LOOKING FOR AN ABL ASSET-BASED LENDING CREDIT REVOLVER FACILITY HERE IN CANADA!
ASSET BASED LOANS IN CANADA
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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
DOES AN ASSET BASED LOAN FACILITY WORK FOR YOUR COMPANY
The infamous 'business case'. We're told it's a tool that ‘supports planning and decision making ...’.
Is there in fact such a case to be made for business owners considering ABL asset based lending in Canada via a business line of credit revolver facility versus bank lines of business credit and unsecured loans from commercial banks? We think so. Here is why.
THE ASSET BASED FINANCING SOLUTION
We agree that more isn’t always best in business when it comes to cash flow financing solutions, that's for sure, but isn’t the fact that your company can generate more borrowing capacity based on the sole criteria of a company's assets ( not ratios, covenants, personal guarantees, outside collateral, etc. that come with bank cash flow lending and Chartered bank business banking ) an impressive point.
On a pure cash flow basis, many companies cannot meet stringent bank requirements in commercial banking - that's why different types of asset-based lending might make sense for your business.
And remember, just because you have the ability to draw down additional working capital and cash flow on a daily basis doesn’t mean you have to use it. But boy, knowing it's there has always helped many small business owners in the Canadian SME sector of the economy.
THE BEST BUSINESS LOAN SOLUTION? HOW ASSET BASED LENDING WORKS
More borrowing power is based on the same 'borrowing base' certificates you might currently be utilizing at your bank when leveraging assets .
Your assets of inventory and accounts receivable of course substantiate that base, and typically your receivables and inventories are margined at 90% for a/r and 30-70% range on inventory.
Physical assets / fixed assets and commercial real estate equity can also be bundled into your facility! Those multiple forms of collateral increase borrowing power. Asset-based lending for real estate can also be structured as a separate term loan facility/bridge loan.
Many clients we meet have a traditional mix of A/R and inventory in some percentage mix. However Canadian business owners and financial managers shouldn't think the A/R and inventory relationship is 'cast in stone. It is not.
You can still qualify for an ABL asset based line of credit in Canada if you just have inventory, or if you just have A/R, or if in fact you have both but one significantly outweighs the other.
Example? A good example might be a major retailer who has a huge inventory component on the balance sheet but sells of course on a cash basis, i.e. no receivables.
WHY CHOOSE ASSET BASED LENDING
How does an ABL facility work?
Asset-based loans and business lines of credit are lending facilities secured by a company's asset - typically the asset categories include accounts receivable, inventory, fixed assets, and real estate if the latter is applicable. Loans are structured based on asset values and are particularly attractive to those firms unable to achieve all the traditional financing they need from other financial institutions.
ASSET BASED LENDING RATES
Naturally, pricing, terms, and margining will always come back to the analysis of the asset class. Asset-based lending banks in Canada via our chartered banks typically require facilities that are significantly larger in Canada but come with attractive pricing.
Growing or just surviving are two very good reasons to consider ABL finance in Canada. But here’s a solid business case to be made - These facilities can also be used to acquire a competitor or strategic partner. In fact, it works to your firm’s advantage to consider ABL financing for that type of transaction because it minimizes the cash required to complete the deal.
CONCLUSION - ASSET BASED LENDING | ABL FINANCE
So, the business case for ABL? It’s about benefits, return, and financial justification. Consider ABL asset-based lending as making a great business case for your firm's financial underpinning. Speak to 7 Park Avenue Financial, a trusted credible and experienced Canadian business financing advisor today for cash flow loans and other financing solutions for your business.
FAQ: FREQUENTLY ASKED QUESTIONS/PEOPLE ALSO ASK / MORE INFORMATION
What is asset-based lending?
Asset-based lending, also known as asset-backed financing is business financing backed by collateral. Facilities are structured as lines of credit secured by accounts receivables and inventories and other business assets held by the owner - This type of financing is for businesses, and is not a consumer financing option.
How does an ABL facility work?
Asset-based loans and business lines of credit are lending facilities secured by a company's assets - typically the asset categories include accounts receivable, inventory, fixed assets, and real estate if the latter is applicable. Loans are structured based on asset values and are particularly attractive to those firms unable to achieve all the traditional financing they need from other financial institutions.
For companies that are growing quickly and who have higher balance sheet leverage, ABL finance is a good solution for accessing the business credit they need.
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