YOUR COMPANY IS LOOKING FOR ASSET-BASED LENDING SOLUTIONS!
The Canadian Business's Guide to Asset Based Lending
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?
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7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Email : sprokop@7parkavenuefinancial.com
"Asset Based Lending in Canada offers a robust financial lifeline for businesses, unlocking the potential of assets to fuel growth and stability."
"Transform your business assets into your strongest ally in overcoming financing challenges."
Asset Based Lending: A New Era for Canadian Finance
INTRODUCTION
Asset Based Lending - aka "ABL" ) is a vital strategy for businesses seeking to navigate the challenege of growth, sustainability, and operational efficiency. The approach ? Leveraging a company's assets as collateral, offering a lifeline to businesses across various industries, providing them with the necessary capital to thrive in today's competitive market.
The good news? It comes without the stringent requirements and limitations often associated with traditional bank loans!
By using tangible assets such as inventory, accounts receivable, and equipment as collateral for a credit line , businesses can unlock capital tied up in these resources, offering a flexible and often more accessible financing solution. It can be structured as a complete facility or separate revolving credit and term loans.
Let the 7 Park Avenue Financial team demonstrate how it compares to other financing options. Whether you're a small business owner looking to expand, or a CFO strategizing for financial stability, understanding the potential of ABL could be the key to unlocking your business's next growth phase.
Reputation and Experience
The importance of choosing an experienced asset-based lender in ABL origination cannot be overstated as they possess the expertise to evaluate rapid business growth and provide a loan customized for your specific needs. On the other hand, partnering with a less seasoned asset-based lender can pose significant risks, including exorbitant interest rates and onerous reporting requirements that could burden your business.
Customized Solutions
Customized asset-based lending solutions offer several advantages, including improved management of cash flow and the ability to effectively navigate through seasonal peaks for businesses. These customized options are tailored specifically according to the client’s needs, ensuring prompt and efficient service from start to finish. The flexibility provided by asset-based lending allows for better utilization of assets as well as greater control over cash flow.
Ongoing Support and Servicing
Consistent support and maintenance in asset-based financing can greatly influence your overall experience. It can offer a means of funding, improve cash flow organization, and restructure previous financial liabilities for ongoing fiscal responsibilities. This type of lending is centered on utilizing assets as collateral which can bring valuable resources such as working capital while also offering an opportunity to repay existing debt through refinancing measures.
ABL Transactions and Facility Types
Asset-based lending encompasses a variety of options to suit the diverse needs of businesses. Revolving lines of credit, term loans, and stand-alone facility invoices are among these possibilities for securing financing based on assets.
Revolving Lines of Credit
In asset-based lending, businesses can borrow funds on a revolving line of credit that is determined by a percentage of their assets’ value. This convenient feature allows for repaid funds to be immediately available for borrowing again without interruption in the process. It creates an efficient and seamless borrowing experience for companies utilizing this type of financing option.
Term Loans
In the realm of asset-based lending, term loans are extended to borrowers based on the collateral they offer. These types of loans come with advantageous conditions including reduced interest rates, less rigid limitations, and customizable repayment plans.
Stand-Alone Invoice Financing Facilities
In the context of asset-based lending, a stand-alone invoice financing solution also meets the requirements for financing all receivables. This enables businesses to regularly submit invoices in exchange for funding based on an agreed-upon advance rate as soon as invoices are generated and your goods and or services are provided. Click here for more info on A/R Financing and Confidential Receivable Finance.
Conclusion
Asset-based lending is a valuable tool for businesses seeking to unlock their potential in Canada. By utilizing assets, companies can obtain funding for rapid expansion or lucrative contracts.
This type of financing offers numerous benefits including lower interest rates, increased flexibility, and fewer restrictions compared to traditional loans.
Businesses have the opportunity to leverage outstanding invoices as well as high-value machinery and equipment as collateral or invest in real estate projects through asset-based lending strategies.
Choosing the appropriate asset-based lending partner can make all the difference. It is important to take into account factors such as their established reputation, level of experience in this field, and ability to provide personalized solutions tailored to your specific needs. Considering their availability for ongoing support and efficient servicing should also be a top priority when selecting an asset based lender.
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian Business Financing advisor who can assist you with your business funding needs around growth financing funding.
Frequently Asked Questions / People Also Ask / More Information
Can I get a loan based on my assets?
You have the option of securing a loan based on your assets, known as an asset-based loan or mortgage. This type of lending is commonly utilized by businesses to address short-term cash flow needs, using their invested assets as collateral for the necessary funds. In this way, you can still access needed cash without selling off your valuable assets.
Who provides asset-based lending?
7 Park Avenue Financial originates asset-based lending solutions to fast-growing or highly leveraged companies in Canada - Talk to the 7 Park Avenue Financial team about executing ABL transactions suited to your needs.
What is asset-based lending?
Asset-based lending is a type of loan that relies on the worth of assets put up by the borrower as a guarantee. This option enables businesses to obtain financing for quick growth or significant projects using their current assets as collateral, giving them leverage in securing funds.
What are the advantages of asset-based financing?
Asset-based lending has its perks, including lower interest rates and more adaptable conditions. These advantages are a direct result of the assets being used as collateral for the loan, which enables larger borrowing amounts and personalized repayment plans that cater to individual needs
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Who can apply for asset-based lending?
Asset-based lending is a type of financing that businesses can seek if they possess valuable assets such as accounts receivable, inventory, machinery and equipment, real estate properties, and liquid assets like cash or certificates of deposit. Eligible applicants for this form of funding must have these types of tangible and intangible assets to secure the loan. Companies wishing to refinance existing debt also find ABL useful.
How does asset based lending work in Canada?
Asset-based lending in Canada involves using company assets, like inventory or receivables, as collateral to secure financing. This method provides businesses with the capital they need to operate, grow, or manage cash flow more effectively by borrowing against the value of their assets. Traditional operating facility advances from banks do not offer the liquidity ABL offers.
What are the benefits of asset-based lending for Canadian businesses?
Canadian businesses can benefit from asset-based lending through improved liquidity, flexibility in financing, and the ability to access funds quickly compared to traditional bank loans. It's especially useful for companies with strong assets but less-than-perfect credit histories.
Who qualifies for asset based lending in Canada?
Typically, businesses with tangible assets such as inventory, equipment, or accounts receivable, and a need for financing to support growth, operational expenses, or restructuring, qualify for asset based lending in Canada. Commercial real estate can also be bundled into the facility as part of the asset lending values to maximize liquidity.
How does asset based lending differ from traditional bank loans?
Unlike traditional bank loans that rely on an unsecured loan solution heavily reliant on credit scores and financial history, asset-based lending focuses on the value of the borrower's assets. This makes it more accessible for businesses that may not qualify for traditional loans and a solid solution for firms that have their loans called by a bank. ie " Special Loan "
What should businesses consider before opting for asset based lending in Canada?
Businesses should evaluate their financial stability, the value of their assets, and their ability to repay the loan. It's crucial to understand the terms, interest rates, and any potential impacts on business operations before proceeding.
What types of assets can be used for lending in Canada?
In Canada, assets such as accounts receivable, inventory, equipment, and sometimes real estate can be used as collateral for asset based lending.
How quickly can a business access funds through asset-based lending?
Businesses can often access funds more quickly through asset based lending commercial financing companies than traditional bank loans, sometimes within a few weeks, depending on the lender's process and the assets' evaluation.
Are there any industries that particularly benefit from asset-based lending?
Industries with high inventory levels or significant accounts receivable, such as manufacturing, wholesale, and distribution, often benefit the most from asset-based lending. Commercial Finance Association (CFA): The CFA (now part of the Secured Finance Network) publishes annual reports on the asset-based lending and factoring industries. These reports indicate a strong use of asset-based financing solutions as an asset-based line of credit in North America versus traditional lending criteria via banks. A company in a cyclical or seasonal industry benefits from this type of lending.
How do interest rates for asset-based lending compare to other types of loans?
Interest rates for asset based lending may be higher than traditional bank loans but are typically lower than unsecured loans or lines of credit, reflecting the reduced risk due to collateral backing.
Can startups or small businesses use asset based lending in Canada?
Yes, startups and small businesses with sufficient collateral can qualify for asset based loans, offering them a valuable financing option when traditional bank loans may not be accessible.
What is the typical loan-to-value ratio in asset based lending?
In asset based lending, the loan-to-value (LTV) ratio typically ranges between 80% to 90% for receivables and 50% to 70% for inventory. This ratio determines how much asset based lenders are willing to loan against the borrower's assets in asset based lines of credit.
How do lenders determine the value of assets for lending purposes?
Lenders assess the value of assets through appraisals, audits, and financial analysis to determine a fair market value, ensuring the loan amount is appropriately secured by the collateral in favour of he financing company as lender.
