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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?

CONTACT:

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

 

 

"Assets are not so much what you own but what you do with what you own." - J. Paul Getty

 

Stop letting bank rejections limit your growth - unlock the hidden value in your business assets today

 

7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer  Asset based 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 BASED LENDER FINANCING SOLUTIONS

 

Understanding Asset-Based Lending in Canadian Business Finance

What is Asset-Based Lending?

 

Asset-based financing leverages a company’s sales and assets as collateral to secure a loan.

 

This lending is particularly beneficial for businesses with significant physical assets, such as inventory, equipment, or commercial real estate, but may not have a robust cash flow.

 

Asset-based lending provides a flexible and accessible source of capital by focusing on the value of these assets rather than the company’s creditworthiness.

 

This approach allows companies to unlock the value of their assets, ensuring they have the necessary funds to support their operations and growth initiatives.

 

TRANSFORM YOUR  BUSINESS  ASSETS  INTO GROWTH CAPITAL -  A SMART SOLUTION

 

Canadian businesses frequently face rejection from traditional banks despite having valuable assets. This financing gap creates stress, missed opportunities, and growth constraints.

 

Let the 7 Park Avenue Financial team show you how asset-based lending bridges this gap by viewing your business differently - focusing on asset value rather than credit history. This solution unlocks the working capital hidden within your company's existing assets.

 

3 Uncommon Takes

 

1. Asset-based lenders often provide better insights into your business operations than traditional banks, acting as unofficial business advisors.
2. Companies can improve their vendor relationships through asset-based lending by leveraging faster payment terms.

 

 

 

The Fundamentals of Asset-Based Lending

 

Business finance in Canada always comes down to ‘choices’ for both owners & financial managers.

 

New, emerging, or middle-market companies often rely on' asset-based lenders’ and ‘ABL Credit’ for financing.

 

Asset-based lending is secured by the value of the borrower's assets, such as inventory, accounts receivables, and real estate. What are these solutions, and who exactly offers them? Let’s dig in.

 

The Role of Assets, Accounts Receivable, and Collateral

 

 

As we’ve previously mentioned, understanding the terms ‘assets’ and ‘collateral’ is key. While assets reside on the balance sheet in paper form and description, the true value of collateral drives asset-based lending solutions.

 

Businesses may need to use their physical assets as pledged assets for loans, and lenders often require a negative pledge clause to protect their interests.

 

These financings come with higher rates because they compensate for a bit (or a lot) more risks than commercial lenders who are not banks.

 

(SPOILER ALERT - Banks take on less risk)

 

Key ABL Credit Offerings

 

ABL Credit offers a wide range of financial offers. ABL is, of course, the acronym for Asset-based lending.

 

Some of the key offerings in this finance industry segment include:

 

A/R Financing (commonly called factoring): Accounts receivables are a key asset for securing loans, with advance rates typically reaching up to 90% of the invoice amount, contingent on factors such as payment terms and customer credit strength.

 

Inventory Finance

 

Business Credit Lines based on your assets of inventory, receivables and fixed assets

 

P O Financing

 

Sale Leasebacks / Equipment Financing

 

 

Qualifying for Asset-Based Lending

 

While these types of loans typically run from 250k on the small end to multi-millions in size, smaller deals under that lower threshold are available if you are working with the right firm.

 

Your financials, sometimes, but not always, complimented with a business plan, executive summary, and cash flow forecast, will always be a good start in securing your financing.

 

Common Reasons for Choosing Asset-Based Lending for Working Capital

 

Why do companies gravitate to asset-based lenders? Often, it’s to implement a short-term / intermediate-term cash flow fix.

 

It can be a short-term boost to your business or a solution to the problem of taking on large new contracts or business.

 

Asset loans are sometimes a great way to acquire a company or competitor. An asset-based loan is a secured lending practice where loans are provided based on a borrower's assets, serving as collateral and offering flexibility in managing capital requirements.

 

Key Decision-Making Factors

What are the key features in the decision-making process for asset lenders for either term or operating credit facilities?

 

They include:

 

Overall cash flow situation

Current financing arrangements

The amount and type of debt you have on your books

The general risk level that comes with your company or industry

 

 

How quickly can I access funding through asset-based lenders?

 

Asset-based lending typically provides funding within 2-3 weeks after:

• Initial application submission

• Asset verification process

• Documentation completion

 

 

What assets qualify for this type of financing? Qualifying assets include:

• Accounts receivable

• Inventory

• Equipment

• Real estate

• Purchase orders

• Intellectual property

 

What lending amounts are typically available?

 

Lending amounts range from:

• Minimum: $250,000

• Maximum: $50+ million

• Based on asset quality

• Collateral value

 

KEY TAKEAWAYS

 

• Asset-based lending uses a company’s assets as collateral.

• Ideal for businesses with significant assets but weaker cash flow.

• Provides access to capital based on asset value, not creditworthiness.

 

Asset-Based Lending Applications

 

Primary Uses:

• Financing business growth and expansion

• Managing operational cash flow

• Supporting operational restructuring

• Improving the working capital position

• Reducing existing debt burden

 

 

Ideal Industry Applications:

• Manufacturing companies

• Retail businesses

• Construction firms

• Companies with substantial inventory

• Businesses with significant equipment assets

 

 

Key Advantages:

• Available despite weak cash flow

• Leverages existing business assets

• Supports strategic business goals

• Provides operational flexibility

• Offers an alternative to traditional financing

 

 

Asset Types That Can Be Leveraged:

 

• Inventory

• Equipment

• Accounts receivable

• Real estate

• Other physical assets

 

 

Benefits For Business Operations:

• Access to working capital

• Support for strategic initiatives

• Operational sustainability

• Financial restructuring options

• Growth opportunity funding

 

 

This type of financing particularly suits companies that:

 

• Have strong assets but weaker cash flow

• Need flexible financing solutions

• Require rapid access to capital

• Want to leverage existing resources

• Seek alternatives to traditional bank financing

 

 

Accounts Receivable Financing

 

Accounts receivable financing is a specialized form of asset-based lending that uses a company’s accounts receivable as collateral to secure a loan.

 

This financing option is ideal for businesses with a large number of outstanding invoices but insufficient cash flow to wait for customer payments.

 

By leveraging their accounts receivable, companies can gain immediate access to capital, which can be used to meet operational needs, invest in growth, or manage cash flow more effectively.

 

This type of financing ensures that businesses can maintain liquidity and continue their operations without interruption.

 

 

Cash Flow Management with Asset-Based Lending

 

Asset-based lending is a powerful tool for managing cash flow. It provides companies with access to capital based on the value of their assets.

 

This type of financing can help businesses meet various financial obligations, such as payroll expenses, supplier payments, and investments in new equipment or inventory.

 

By converting assets into cash, companies can ensure they have the necessary funds to support their operations and growth. Additionally, asset-based lending can improve working capital, allowing businesses to maintain liquidity and operational efficiency.

 

 

KEY TAKEAWAYS

 

 

• Collateral Valuation drives lending decisions more than credit history

• Advance rates determine available funding based on asset type- fixed assets facility limits  vary

• Monthly reporting requirements ensure transparent asset monitoring

• Working capital optimization focuses on converting assets to cash

• Flexibility allows for seasonal business fluctuations for a  company seeking  bulge financing

• Businesses with significant inventory can leverage these resources to secure funding, especially during periods of economic fluctuation or cash flow challenges

 

 

Conclusion -  Asset based Lending   Works!

 

Is the ABL CREDIT solution your 'fix' for business finance needs?

 

It just might be - Call  7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor with ABL industry  expertise  who can assist you in solving liquidity needs.

 

FAQ

 

How does asset based lending improve cash flow flexibility?

• Immediate access to working capital

• Funding grows with your business

• Seasonal adjustment capabilities

• No fixed monthly payments

• Usage-based financing structure

 

 

What advantages do asset based lenders offer over traditional banks?

• Faster approval process

• Higher advance rates

• More flexible terms

• Focus on asset value

• Less emphasis on credit history

 

 

Will asset based lending help my business grow?

• Access to larger credit facilities

• Support for rapid expansion

• Ability to take on larger contracts

• Purchase inventory in bulk

• Fund equipment purchases

 

 

What due diligence do asset based lenders require?

• Asset verification process

• Financial statement review

• Customer concentration analysis

• Inventory assessment

• Site visits required

 

 

How are interest rates determined?

• Based on asset quality

• Risk assessment factors

• Industry considerations

• Facility size impact

• Current market conditions

 

 

What makes asset based lending unique?

• Asset-focused evaluation

• Flexible credit limits

• Growth-oriented structure

• Regular monitoring

• Relationship-based lending

 

 

 

 

MORE INFORMATION -

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