Asset-Based Loan : Unlocking the Hidden Value in Your Assets | 7 Park Avenue Financial

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YOUR COMPANY IS LOOKING FOR  BUSINESS FINANCE SOLUTIONS!

You've arrived at the right address! Welcome to 7 Park Avenue Financial  UPDATED 05/05/25

Financing & Cash flow are the  biggest issues facing businesses today

ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS  FINANCING OPTIONS?

CONTACT US

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

Canadian Business Loans - Alternative Financing Using Business Assets

Business finance loans in Canada require that the business owner/financial manager has a clear understanding of the various types of asset financing that can bring survival and success to the company.

BUSINESS ASSET LENDING SOLUTIONS

There are at least 5 types of asset-based loans that can be tailored to company needs, allowing you to secure the funding needed. Let's dig in on business loans Canada!

WHAT IS ASSET FINANCING

Asset finance is all about using the balance sheet to finance your business.

Along with the sales that your company generates, business assets such as receivables, inventories and fixed assets can allow you to offer up collateral to a business lender to finance operations and growth.

In many instances, it is short-term financing and is viewed as a bridge back to traditional bank financing solutions.

At the heart of the matter is the requirement that you understand whether the solution will be asset-based finance or cash flow-based.

Asset based lending in Canada is a non-cash flow-based type of financing focusing on business assets and sales. In any type of finance your firm takes on it is always of course, necessary to consider financing cost, as typically asset finance solutions from non-bank alternative lenders have a higher cost of borrowing.

From Asset-Rich to Cash-Ready: The ABL Advantage

The Problem: Many Canadian businesses face rejection from traditional lenders despite owning significant assets.

This financing gap creates impossible choices—delay growth, miss opportunities, or worse, struggle to meet payroll.

Solution:   Let the 7 Park Avenue Financial team show you how Asset-based loans unlock the hidden value in your existing business assets, providing flexible capital without the strict requirements of conventional bank financing.

REVOLVING  BUSINESS CREDIT LINES- FINANCING TAILORED TO YOUR BUSINESS REALITY

The revolving business credit line is a common solution for most firms. These loans follow the ongoing growth of assets in your business - primarily those ' current assets ' - i.e. receivables, and inventories. 

When it comes to these lines of credit, Canadian banks look to stability in the assets and the overall health of the company.

When your firm cannot fully demonstrate that capability, the alternative option is an 'ABL ' - it's the same asset-based credit line, but focuses instead very much on the asset quality and turnover.

Inventory is often the ' elephant in the room ' in revolving credit lines, given its true turnover and quality. Asset-based financing can be called the 'new kid on the block when it comes to business borrowing. This method of financing is a true ' business loan with collateral'.

Often known as ' ABL ', asset-backed finance is a solution for both small and medium-sized businesses in pretty well every industry.

It is appealing to business owners and their financial managers because it is viewed as easier to obtain and has a maximum amount of flexibility in the structures that can be provided.

In some cases, businesses use financing due to their hyper-growth; in other cases, it's often the solution for a business turnaround.

Many business owners don't realize that asset-based loans can be an integral part of a merger, acquisition, or management buyout.

and asset-based lender to determine the true value of your assets and sales grwoth will consistently deliver on the cash you need to run and grow the business.

Small facilities start in the 500 k range, while large facilities can be in the many millions of dollars. Some of Canada's largest corporations utilize asset-backed financing versus traditional bank borrowing from Canada's chartered banks.

It is very common for receivables to be margined in the 90% range, which is typically higher than a bank margin formula.

ABL lenders know the true value of various types of inventory, and if required third-party appraisal can be ordered to determine the true market and liquidation values of larger fixed assets or real estate.

A/R FINANCING / FACTORING

An offshoot of asset-based financing is ' A/R Financing ‘, generally called ' factoring'. Its total focus is on accounts receivable and is utilized by thousands of firms in Canada - large and small.

Receivables are typically generated from contracts and purchase orders your firm receives. Not all owners/mgrs know that the actual Purchase Order itself can be financed.

In PO Financing, the focus shifts to the quality of your customer and your company’s ability to fully satisfy and complete the order. While typically a more expensive form of financing, it allows many businesses to take on much larger businesses than their current financial profile will allow.

THE COMMERCIAL MORTGAGE AND SALE-LEASEBACK OPTION  

Commercial real estate mortgages and sale-leasebacks on existing properties are viable ways to bring cash flow into your business via these asset values re: the borrower's assets in property.

In acquiring a property, your company turns rent checks into real equity, and sale-leasebacks on property already owned can generate valuable working capital while retaining ownership in the building or property.

WHAT IS THE CANADA SMALL BUSINESS FINANCING PROGRAM

In some cases, you may wish to consider for your business needs the CSBF government-guaranteed loan program which finances both assets, as well as leasehold improvements and real estate.

At 7 Park Avenue Financial, we feel this is one of the best small business loans in Canada for new small businesses.

The ' SBL' small business loan can be structured as a term loan with a monthly payment or can also be used as a business line of credit with your business bank account.

This guaranteed loan - loan is guaranteed by the government and is formally known as the Canada Small Business Financing Program sponsored by INDUSTRY CANADA / Government of Canada.

Interest rates and the loan amount cap are set as program guidelines for participating financial institutions. Financing is different from BDC loan requirements as specified by the Crown Corporation.

The interest rate is very competitive and is a solid way for businesses to access small business funding. Monthly payments are structured around flexible payment terms and are tailored to business needs, and the personal guarantee is a limited one for the Small Business Financing loan. Credit approval to secure funds requires a  business plan and a good personal credit score of the borrower

The loan can be used for funding lump sum new or used equipment, as well as funding leasehold improvements for rented premises or a technology purchase.The amortization periods of the term loan portion is usually 3 -5 years and any new business or the purchase of a franchise can benefit from competitive fixed or variable rate financing choices. Small projects a business requires are a great use of the progra.m

Talk to the team at 7 Park Avenue Financial about speeding up the application process based on our knowledge of the program

CASH FLOW LOANS / MEZZANINE FINANCING   

True cash flow loans can also enhance a company's liquidity and survival. They can be secured or be unsecured loans, but always come back to your firm’s ability to prove cash flow generation.

Lenders call that ' cash flow coverage’. While in the past typically these loans have typically been for larger firms, numerous short-term working capital loans are available today that might fit your current financing conundrum.

When loans are ' unsecured', they are often called ' mezzanine ' solutions. While they come with covenant and ratio requirements, if your company has a track record of success, this type of financing will enhance growth and profitability.

BUSINESS FINANCE SOLUTIONS

That's the roundup. So would any of the following solutions help your company?

Business credit lines - Revolving facilities secured by business assets

Inventory Finance - Converting inventory into working capital

Purchase Order financing -   Financing throughout the production cycle

A/R finance -  Using outstanding invoices as collateral - Accounts receivable financing alternatives

Cash flow loans

Case Study

AnOntario-based precision parts manufacturer  lost their largest customer representing 40% of revenue, their bank immediately moved to reduce their operating line. Despite having $3.7 million in inventory and $2.2 million in specialized equipment / physical assets, traditional financing focused only on their sudden cash flow challenge.

By implementing a $4 million asset-based loan facility secured by their equipment, inventory, and remaining accounts receivable, the company  accessed sufficient capital to:

• Bridge the revenue gap while pursuing new customers
• Fund retooling necessary to serve different market segments
• Maintain full staffing of skilled machinists during the transition
• Invest in marketing efforts targeting new industries

That's how asset based lending works, because within eight months, it had replaced 100% of the lost revenue with more diversified customer relationships. Their asset-based lender increased the facility to $5.5 million on the loan transaction to support the company's subsequent.

KEY  TAKEAWAYS -  CANADIAN ASSET LENDING OPTIONS

• Borrowing base formulations determine your available capital, calculated by applying advance rates to eligible collateral categories.

• Collateral quality matters more than business history, making these loans accessible to companies with strong assets but limited operating history.

• Minimum financial Covenants and structures typically focus on collateral performance rather than traditional financial ratios, offering more breathing room during growth phases

• Advance rates vary significantly by asset class with accounts receivable receiving highest percentages (70-85%) followed by inventory (50-60%) and equipment (50-80%).
• Lender monitoring involves regular reporting and periodic field examinations to verify collateral status and value.

• Facility sizes typically range from $1 million to $50+ million, scaling with business size and collateral availability.

• Operational control remains with borrowers during normal business conditions, unlike some factoring arrangements.

• Pricing structures include interest rates plus monitoring fees, typically costing more than conventional bank loans but less than equity financing.

• Documentation requires detailed collateral schedules and perfected security interests across all pledged assets.

• Utilization flexibility allows businesses to borrow only what's needed when needed, paying interest only on outstanding balances.

CONCLUSION - BUSINESS LOANS AND BUSINESS FINANCING IN CANADA

Your business can secure valuable needed financing through the monetization of sales, equipment, accounts receivable, and inventory.

Pledging these assets brings valuable business capital to the company. Unlike traditional financing, which focuses heavily on historical and present cash generation and overall business credit profiles, asset finance allows you to fund daily operations based on business assets with competitive business loan interest rates.

It is the value of those assets which now becomes an effective alternative to bank borrowing.

Call  7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with solutions that work via asset-based lenders that understand your company and industry-specific needs for small and medium businesses in Canada for business growth needs.

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