Unlocking the Power of ABL Asset-Based Credit Line Business Financing | 7 Park Avenue Financial

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ABL Asset-Based Credit Lines: The Smart  Business Financing Solution
ABL Asset-Based Credit Lines: The Secret Weapon for Business Financial Success



Discover the Power of ABL Asset-Based Credit Lines!

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Financing & Cash flow are the biggest issues facing business today


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Are traditional bank loans still the best choice for businesses, or is ABL the game-changing financing option they've been overlooking? 



Why ABL Asset-Based Credit Lines are the Future!





Asset-based lending (ABL) has emerged as a powerful financial solution for Canadian businesses seeking increased liquidity and flexibility via their company's assets and sales.


Could an ABL asset-based line of credit be all the business financing your Canadian company needs? One form of business finance in Canada rarely meets everything you are looking for in a finance solution - quite often there needs to be a combination of solutions that make the final package work for yourself.



The Revolving Business Line of Credit



We can make the case the ABL facility, in fact, just might be the perfect solution for you - everything you are looking for in a revolving credit facility.


The revolving business line of credit... revolves... it’s as simple as that. The facility is an all-encompassing umbrella around your key business assets - 99% of the time that includes the current and fixed asset triad - receivables, inventory, and equipment. Truth is told real estate can often be factored into the same facility.


The security that your firm provides for those substantial assets becomes what the lender calls the 'borrowing base' for your facility. A true asset-based facility will have no form of notification to your clients, suppliers, etc. That's an important differentiator when it comes to benchmarking other types of financing.



ABL vs. Canadian Chartered Bank Line of Credit 



Up to now, we can forgive the majority of first-time clients exploring an ABL for asking, 'So what in fact is the difference between this type of finance and a Canadian chartered bank line of credit?'

One key difference exists and emerges very quickly for the Canadian business owner or financial manager. It's simply that 'more' in our case is better, and 'more' in this case means more liquidity and cash flow.

Another not-so-subtle difference is that the majority of firms utilizing an ABL asset-based line of credit qualify for financing when in fact they would never be a candidate for traditional bank financing.



A Broad Spectrum of Canadian Business Utilizes ABL Finance 



That’s why a broad spectrum of Canadian business utilizes business financing of this manner. Does your company find itself in one of these industries: Wholesale distribution, retail, and manufacturing? The bottom line is that pretty well every industry in Canada is serviced by ABL finance.



Why Consider a Change in Working Capital Requirements? 



So why would your firm in fact consider a major all-encompassing change in its working capital requirements?


The unfortunate reason is that we would venture to say that the majority (but not all) of Canadian ABL users either don’t qualify for bank financing or they, in fact, qualify but simply can't get the amount of liquidity they need. They are in fact 'capped'.

With reference to our 'not all' comment above, it may come as a surprise to many but some of the largest and most successful corporations in Canada, firms with revenues in the billions have forsaken traditional bank lines and focused on an ABL facility. In the ABL environment, your firm can be public, private, small, large... it's one size fits all.



Flexible Facility Sizes 



Facility sizes for an entry-level ABL tend to be in the 250k range, but it's important to note that there is no upper limit from there - facilities in the tens of millions of dollars can be arranged.



Maximizing Liquidity 



Your new business line of credit works because the ongoing monitoring and margining of collateral (via your reporting) maximizes liquidity. Typical advances are 90% of A/R, 30-70% on inventory, and market values of equipment and real estate.

It doesn't take long for the business owner to realize that with those margins that in some cases their overall cash flow access can be improved anywhere from 50-100%, and we've seen that time and time again.


Unlocking Business Potential: ABL Financing Unleashed


ABL Asset-Based Credit Line Business Financing Solutions have emerged as the key to unlocking a business's untapped potential.


These solutions provide a flexible and versatile means for businesses to harness the value of their assets, enabling them to secure the liquidity required for expansion, investment, and operational efficiency.


By unleashing the power of ABL financing, companies can break free from the constraints of traditional financing, opening doors to growth and prosperity.



Key Takeaways 



  1. Asset-Based Lending (ABL) is a financing approach that revolves around your business assets, including receivables, inventory, and equipment.

  2. Borrowing Base: This is the security your firm provides based on these assets, serving as the foundation for your ABL facility.

  3. Liquidity Advantage: A significant difference between ABL and traditional bank financing is the increased liquidity and cash flow that ABL offers, making it a superior option for many businesses.

  4. Diverse Industry Use: ABL financing serves a broad spectrum of Canadian industries, including wholesale distribution, retail, and manufacturing.

  5. Versatility: ABL is suitable for businesses of all sizes, from small to large corporations, offering a one-size-fits-all solution.

  6. Facility Sizes: ABL facilities can start as small as $250k but have no upper limit, accommodating even multi-million dollar financing needs.

  7. Maximizing Liquidity: Ongoing monitoring and collateral margining in ABL maximize liquidity, with typical advances covering 90% of accounts receivable and varying percentages on inventory and real estate.

  8. Paradigm Shift: ABL challenges the traditional belief that bank loans are the ultimate financing option, offering an alternative that businesses may have overlooked to their detriment.





In today's financial landscape, ABL might be a more accessible and beneficial funding choice for businesses compared to traditional bank financing, challenging long-held beliefs about the superiority of established banking institutions.

So is ABL a one size fits all? You can certainly make that case when you consider the facts above.


Call 7 Park Avenue Financial, a trusted credible and experienced Canadian business financing advisor who can assist you with your asset-based line of credit needs.





What exactly is ABL Asset-Based Financing?

ABL Asset-Based Financing is a funding solution that leverages your business assets, such as receivables, inventory, and equipment, to provide you with increased liquidity and cash flow.

How does ABL differ from traditional bank financing?

ABL offers more liquidity compared to traditional banks and is accessible to businesses that might not qualify for standard bank loans.

Is ABL suitable for my business industry?

ABL serves a wide range of industries, including wholesale distribution, retail, and manufacturing, making it adaptable to various business types.

What are the typical facility sizes for ABL financing?

ABL facilities from asset based lenders can start as low as $250k, with no upper limit, catering to both small businesses and large corporations.

How can ABL maximize my liquidity?

ABL asset based loans employ ongoing monitoring and collateral margining to optimize liquidity,

How do I apply for ABL financing?

To get started with ABL financing and an asset based loan solution, you can contact an ABL lender or financial advisor such as 7 PARK AVENUE FINANCIAL  who will guide you through the process.

Are there any specific eligibility criteria for ABL financing?

Eligibility criteria for ABL financing can vary among lenders, but generally, businesses with assets  and sales can qualify for an asset-based revolving line for a pledged asset solution.

What is the interest rate structure for ABL loans?

ABL loans often have both variable interest rates, as well as fixed - they tend to be higher than bank interest rates and the specific terms can be negotiated with the lender based on your business's financial situation. A business will choose asset based lending as an alternative to bank financing via unsecured loans which may not be available to the company

Can I use ABL financing to expand my business or purchase new equipment?

Yes, ABL  business loan financing is flexible and can be used for various purposes, including business expansion, equipment purchases, and working capital.

Are there any risks associated with ABL financing?

Like any financial arrangement, there are risks, but with proper management and understanding of the terms, ABL can be a valuable tool for business growth via the company's cash flow

What assets can be considered as collateral in ABL financing?

In ABL financing, common collateral assets include accounts receivable, inventory, equipment, and sometimes real estate.

Is ABL financing available to startups or only established businesses?

ABL financing is typically more accessible to established businesses with tangible physical assets, but some lenders may consider startups with strong potential and who have good receivables.

How often is collateral monitored in ABL financing?

Collateral is usually monitored regularly to assess its value and ensure compliance with the borrowing base, which determines the available credit.


' Canadian Business Financing With The Intelligent Use Of Experience '

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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