YOUR COMPANY IS LOOKING FOR ASSET-BACKED LENDING!
ASSET BASED LOANS AND LINES OF CREDIT
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 - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Asset Backed Lending and working capital solutions – Save time, and focus on profits and business opportunities
7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”
ASSET-BACKED LENDING CANADA - HOW DOES ASSET BASED LENDING WORK?
Asset-backed lending in Canada just might be the way you ensure your business has the financing it needs. Simple as that. Let’s dig in.
Often called ‘ ABL ‘ for short, it’s a ‘niche’ financing that has come into its own in the last 4-5 years in Canada.
Asset-based loans have certainly been around longer than that and were introduced to us by our good friends in the U.S. . . .
Asset-based lending provides a financing solution for every industry in Canada, with flexible financing tailored to your company's unique situations.
When traditional bank financing can’t come to your rescue, asset-based financing will. Whether it’s a short-term working capital solution/bridge loan or an intermediate or permanent funding solution, ABL solutions fix the problem.
TRANSFORM BUSINESS ASSETS& YOUR SALES INTO IMMEDIATE WORKING CAPITAL
Even though your business has valuable assets and sales, cash flow can be a struggle. When traditional financing doesn't work, you lose growth potential. Let the 7 Park Avenue Financial team show you how to cash flow business assets, providing you with immediate access to cash flow.
Uncommon Takes:
- Asset-Backed Lending can improve inventory management practices
- Using ABL facilities can enhance supplier relationships through better payment terms
DID YOU KNOW
- 65% of businesses using ABL report improved cash flow
- Average funding amount: $2.5M - $10M
- Typical advance rates: 70-85% on receivables
- Market growth: 12% annually
- Default rates under 2%
WHAT IS THE BEST ASSET BASED LENDER FOR YOUR FIRM
What exactly is this financing, how does it work, who is the right ABL lender for you, and what does it cost? Asset-based lending allows businesses to leverage their assets, such as inventory and equipment, to secure funding.
CANADIAN BUSINESS FINANCING ALTERNATIVES IN CANADA
Most business owners and managers know that financing alternatives are much more limited than in the United States.
Our financial institutions are different. We have fewer (but stronger?!) banks, and we’re conservative when it comes to lending, which has its pros and cons depending on whether you’re the borrower or lender!
WHAT ASSETS, INCLUDING ACCOUNTS RECEIVABLE, CAN BE USED AS COLLATERAL TO SECURE AN ASSET BASED LENDING ABL LOAN?
Part of the mystery surrounding asset-back lending/ABL in Canada is that the term is used in various ways.
In our case, we’re talking about comprehensive working capital solutions, such as a business line of credit that allows you to borrow against accounts receivable inventory and fixed assets under one facility.
The loan-to-value ratio is a key factor in determining how much can be borrowed against these assets, with higher ratios allowing for more borrowing power.
For example, receivables are typically margined at 90% of face value compared to 75% in traditional bank loans focused on receivables. The bottom line = borrowing power!
Real estate can also become a key part of the borrowing base or be treated under a separate facility. Some use the term to denote equipment financing in a bridge loan or even to describe equipment financing in Canada.
WHAT ARE ASSET-BASED FINANCING COMPANIES, AND HOW DO THEY WORK?
We’ve then described the facility, its costs, and how it works.
Asset-based lending works by leveraging a company's assets, such as inventory and equipment, to secure funding, navigate regulatory requirements, and adjust financing approaches based on the unique needs of different industries.
Because ABL business credit is more generous regarding borrowing margins and the qualifications are less stringent than bank criteria, the Canadian business owner / financial manager must consider some costs and mechanics around the facility.
IT'S ALL ABOUT ' ASSETS'
Almost all cases, a due diligence fee might be attached to the borrowing setup. We’ve already explained that ABL finances physical assets, so the asset-backed lender wants to see them. Simple as that often includes a due diligence visit or appraisal.
MISCELLANEOUS FEES MIGHT BE PART OF YOUR TRANSACTION
Almost any borrowing facility will come with legal fees to set up and collateralize it in the name of your lender—that pretty much goes for our banks, too. Other miscellaneous fees might be monthly or yearly monitoring and, in some cases, a penalty for not using the facility that has been set up.
WHAT IS THE COST OF ABL FINANCING
While the actual borrowing cost of this type of financing can be, in some cases, competitive or even lower than bank financing, more realistically, the costs are higher.
ABL provides companies with access to significant capital without the stringent constraints of cash flow-dependent loans, which is particularly beneficial for asset-rich businesses facing fluctuations in their company's cash flow.
They are often compared to mezzanine financing rates, typically in their teens. This type of financing will allow for sales growth around potential acquisition financing, restructuring, or simple day-to-day operations funding, with the stress surrounding a possible cash flow crunch.
THE KEY BENEFIT OF ABL FINANCE - BORROWING POWER!
If the cost is higher, what are the benefits? Quite frankly, they are pretty dynamic. Companies might choose asset-based lending because it offers significant capital and flexibility compared to traditional cash-flow lending methods.
Your firm can access more credit than you could ever achieve with the bank. This is basically because advances on a/r and inventory are more generous, and being able to borrow daily then, as you need it, against the value of fixed assets makes things all that much better.
CANADIAN BANKS VERSUS ASSET BASED FINANCING COMPANIES
The reality is that many asset-backed borrowers in Canada couldn’t obtain any or all of the financing they need from our chartered banks.
Unlike unsecured loans, which do not require collateral and rely heavily on the borrower's creditworthiness, asset-based loans are secured by tangible assets, allowing businesses to access larger amounts of capital.
Our banks rely on cash flow, owner’s credit, personal collateral, profits, and covenants. The ABL lenders only focus on assets!
KEY TAKEAWAYS
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Valuable assets serve as immediate collateral, unlocking trapped capital
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Borrowing capacity grows with your business assets
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Regular asset valuation determines available credit
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Operational flexibility remains under your control
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Quick access to funds supports growth opportunities
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Cash flows: Asset-based lending focuses on physical collateral rather than projected cash flows, providing a different approach to securing funding
CONCLUSION
Is this type of business credit for everyone?
Probably not, but if you have specific business needs, a mix of assets, growth potential, and the ability to present a strong case for a non-bank line of credit, it just might be your total solution to all your Canadian business financing needs when it comes to growth opportunities you wish to capitalize on.
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor with a track record of success in asset-based lending and financial services provider environment.
FAQ
What assets qualify for Asset-Backed Lending?
A business's qualified assets typically include:
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Accounts receivable
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Inventory
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Equipment
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Real estate
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Purchase orders
How quickly can funding be accessed?
What percentage of asset value can be borrowed?
How does Asset Backed Lending improve cash flow management?
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Provides immediate access to working capital
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Reduces payment gaps
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Enables bulk purchase discounts
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Supports seasonal inventory needs
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Maintains consistent supplier payments
What makes Asset Backed Lending more flexible than traditional loans?
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Credit line grows with your assets
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No fixed monthly payments
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Draw funds as needed
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Pay only for what you use
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Quick access to additional funds
How can Asset Backed Lending support business growth?
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Funds inventory expansion
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Enables equipment acquisition
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Supports new market entry
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Facilitates larger contracts
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Backs strategic investments
What documentation is required for Asset Backed Lending approval?
How does the valuation process work?
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Professional appraisers assess assets.
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Regular monitoring required
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Market conditions considered
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Depreciation factored
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Industry standards applied
What distinguishes Asset Backed Lending from traditional bank loans?
