YOU ARE LOOKING FOR BUSINESS LOAN & ASSET-BASED LENDING SOLUTIONS FOR BUSINESS GROWTH OPPORTUNITIES!
HAVE YOU CONSIDERED ASSET-BASED LOANS AS A BUSINESS FUNDING SOURCE?
UPDATED 05/13/25
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Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing businesses today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
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CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
WHY CHOOSE ASSET-BASED LENDING FOR CASH FLOW FINANCING?
Business cash flow financing for many companies in the SME sector involves the necessity to turn receivables into liquidity for the company.
We're talking about ' invoice cash, 'which is the sort of business loan financing that clients here at 7 Park Avenue Financial are looking for need capital i.e. cash flow-based asset-based lending.
That term is synonymous with commercial lending cash flow challenges that hit many firms all the time.
How, then, does the use of an AR finance company assist in meeting that challenge? It's important to understand how abl financing competes with commercial banking and how it differs when it comes to loan collateral and asset-backed security.
There are in fact, multiple forms and types of 'ABL FINANCE', offering a broad range of financial solutions for your business based on a specific asset or all your assets - unlike a bank unsecured loan. Receivables lending is a type of loan that companies may utilize to borrow funds against their accounts receivable.
Breaking Through Financial Barriers
Running a Canadian business often means facing unexpected financial hurdles that threaten growth and stability.
Limited cash reserves, seasonal revenue fluctuations, and missed opportunities can create mounting pressure on even well-established companies.
Let the 7 Park Avenue Financial team show you how Business loans offer tailored financial pathways designed specifically to overcome these challenges, providing the capital needed to stabilize operations and fuel strategic expansion.
WHAT CASH FLOW DOES YOUR BUSINESS NEED?
Sooner rather than later, there is a need for business owners who want cash flow to support their company requirements. In many cases, specific industries demand a lot more cash for companies that participate in the sector. That might mean more focus on capital assets or even market research into new products and services.
Asset-based lending allows firms to deliver funding for those specific needs around accounts receivable, inventory and fixed assets.
What happens, though, when you can't get the credit financing you need from traditional banks / business-oriented credit unions, other financial institutions, etc.? That's where an accounts receivable finance company comes in.
LET A/R FINANCING ELIMINATE THE NEED FOR DAY TO DAY CASH NEEDS
Your ability to quickly and efficiently set up a accounts receivable discounting facility allows you to immediately remove the problem of waiting for 30, 60 or even 90 days to receive client funds for your goods and services.
WHAT ARE THE REQUIREMENTS FOR CASH FLOW LOANS
To receive full funding for your receivables from a Canadian chartered bank, there is, of course, an extensive loan and business application, with a lot of emphasis spent on-
Historical cash flow analysis
Balance sheet analysis
Income statement
Operating ratios
Asset-based lending brings a higher loan to value ratio financing on assets. Invoice cash services eliminate 90-95% of that waiting and negotiation around collections and do not focus on financial covenants of your business, but instead place emphasis on a reasonable net orderly liquidation value of business assets and a simplified reporting process for funding sales.
The interest rate for asset-based loans is typically higher than those on other types of traditional bank credit, but they provide access to capital, and the ' covenant light structure' is welcomed by firms more used to bank emphasis on ratios and covenants.
This type of sales revenue financing is a solid alternative to term debt via a working capital loan or BDC loans.
WHY IS FACTORING THE MOST POPULAR METHOD OF FUNDING WORKING CAPITAL IN CANADA
Whydoes ' factoring, 'the more technical name for invoice cash, work and, in fact, become more popular every day when it comes to ' cash lending ' solutions?
The answer is simple, an immediate flow of funds based on your sales revenues. That becomes most of the solution to what the pros call your ' working capital cycle. ' That cycle, simply speaking, is the amount of time it takes a dollar to journey through your company and makes it back onto the balance sheet as cash.
FINANCING RECEIVABLES BRINGS NO DEBT TO THE BALANCE SHEET
When you finance through an invoice cashing - also called an invoice discounting facility- you will not borrow funds on a long-term basis. Your balance sheet does not accumulate debt; you are simply liquidating current assets more efficiently.
THE MAIN BENEFIT OF CONFIDENTIAL RECEIVABLE FINANCING
How can asset-based lending help a small business? Is there one type of facility in the area of ' invoice cash ' that works better than others? We're glad you asked! We constantly recommend Confidential Receivable Financing; it's the 'non-notification part of this solution, allowing you to:
1. Bill and collect your own accounts receivable with excellent advance rates that are often high than bank advances on A/R.
2. Bank your funds, and
3. Choose how much financing you need on an ongoing basis.
It's classic ' pay for what you use ' financing when working with the right partner. The proper level of due diligence will determine if your firm produces proper financial statements and regular a/r and a/p and inventory schedules, allowing the finance company to determine the proper face value of your business's current assets.
What Is A Cash Flow Loan? What Are My Firm's Options for Financing Cash Flow?
A/R Finance is not always the ' only ' way to fund cash flow needs. Other strategies might include:
Working capital short term loans
HOW ASSET BASED LENDING WORKS?
Asset Based Lending non-bank lines of credit - ' ABL' - a monthly borrowing base certificate is calculated by the ABL lender to determine your maximum borrowing power for the month.
Even real estate equity can be included in your lines of credit in asset-based lending credit lines. Interest rates are higher in ABL, but owners must consider the cost of capital versus their access to capital.
The type of asset that is commonly funder under ABL credit lines is balance sheet assets such as a/r and inventory, which, along with fixed assets are the bulk of the company's assets, including other assets such as commercial real estate.
It's information on these assets that the lender will always require information or updates on.
Larger deals will require field exams on those assets and potential appraisals - typically that type of work is on deals in the many millions of dollars. The quality of due diligence usually allows for a large percentage rate advance to your borrowing capability and a more positive lending experience.
Sale-leaseback strategies
Inventory finance
Tax credit finance ( sr&ed refunds are financeable)
Mezzanine Financing - (Unsecured loans/cash flow loans )
Longer-term solutions, of course, involve scenarios such as new equity. Asset-based financing allows business owners to eliminate further equity requirements that dilute ownership through the use of business loans and business credit lines that are not equity-related but capital lending-related, based on the net realizable value of your business assets.
To receive full funding for your receivables from a Canadian chartered bank, there is, of course, an extensive loan and business application, with a lot of emphasis spent on historical cash flow analysis, balance sheet analysis, income statement and operating ratios, etc..
Invoice cash services and accounts receivable factoring from asset-based factoring companies eliminate 90-95% of that waiting and negotiation.
Long-term financing activities, of course, might involve scenarios such as new equity by owners as an option to asset-based financing or taking on debt and term loans.
So let's recap: Your business requires additional cash flow. The asset-based loan world can deliver on that need.
You either have facilities in place, and they aren't working, or you are self-financing currently and need those cash flows to pay suppliers, employees, etc., as you collect accounts receivables.
HOW CAN A COMPANY BENEFIT FROM ' ABL' ASSET-BASED LOAN SOLUTIONS?
Prime candidates for ABL are asset-rich companies that have variations in cash flow that need substantial capital to operate and grow. Many companies face downs as part of normal operations.
For example, trucking firms can decide to invest heavily in tractor-powered units before new fuel savings regulations begin to take effect in the future. Retailers that have significant inventory but earnings volatility. New assets can of course be financed through a number of equipment financing solutions.
Case Study: Benefits of Business Financing
Challenge: A small Canadian manufacturer of specialized industrial components faced significant growth constraints due to outdated equipment limiting production capacity. With $1.2M in annual revenue but tight cash flow margins, the company couldn't afford to purchase the $175,000 CNC machine needed to fulfill larger orders from potential new clients.
Solution: After consultation with a business financing specialist, the company secured an equipment-specific business loan with a 7-year term, 6.2% fixed interest rate, and minimal down payment. The financing structure included a seasonal adjustment for lower payments during traditionally slower winter months.
Results:
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Production capacity increased by 37% within three months
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New equipment enabled securing contracts with two major clients, increasing annual revenue by $420,000
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Loan payment structure improved cash flow management during seasonal fluctuations
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Tax advantages through equipment depreciation partially offset financing costs
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Company hired three additional employees to support expanded operations
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ROI analysis showed the equipment financing would pay for itself within 19 months
The financing transformed a capital constraint into a growth catalyst, enabling the company to scale operations without depleting working capital reserves.
CONCLUSION- CASH FLOW & ASSET-BASED LENDING SOLUTIONS
Asset-based lending is the business of providing more financing for your business via secured loans and borrowing money for physical assets and liquid assets such as receivables in an agreement that is secured by collateral that is not a term loan in nature.
The financial products within asset finance provide maximum flexibility for your company's needs, including real estate financing for company-owned real estate if that applies to your business or inventory finance advantages.
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing expert who can deliver on invoice cash and other solutions for greater credit availability from asset-based lenders for your firm's need for growth in Canadian or U.S. and global markets. Asset-based lending - not just for bad times!
FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK/ MORE INFORMATION
What is asset-based lending?
Asset-based lending is when a business offers its assets as the security for the loan, a leveraged finance strategy - Through these ' bridging loans ' borrowers offer assets as collateral instead of cash flow with only a small emphasis on personal credit history.
Asset-based loans are not 100% of the value pledged. 'ABL' is not a personal loan. Small and mid-sized companies are frequent users of asset-based borrowing - even in an economic downturn, so it's important to know how asset-based lending work to be able to achieve the maximum loan amount required to run their business on a day-to-day basis.
It is not uncommon for a traditional lender, such as a bank, to reduce a line of credit and increase interest rates or take other actions to protect against losses. Loans are more likely to be granted when the borrower has highly liquid collateral that can easily turn into cash if needed,d if a borrower defaults.
What is cash flow lending?
In cash flow-based financial transactions, the institution provides funds to the borrower based on past cash flows or future interest costs. The advantage of this method is that companies may get financing much faster, as appraisals of collateral are not required. Lenders analyze its estimated future company earnings, its credit rating and its enterprise value. Larger firms may employ a securitization financing strategy.
How do you qualify for asset-based lending
Asset-based lenders review the sales and assets of your business to determine collateral loan values for a term loan or a business line of credit. Higher value and more liquid assets receive higher advances based on their ability to be converted into cash.
What do asset-based lenders look for?
Asset-based lending is a new and exciting way to finance your company. Instead of just focusing on past financial performance, lenders can look at your sales and asset values around assets such as accounts receivable or inventory and fixed assets, and equipment and real estate if applicable.
What are current assets?
Current assets are an important part of any company because they fund day-to-day business operations and pay for the ongoing operating expenses. A current asset is generally something that has higher liquidity, such as cash on hand or items like accounts receivable and inventory.
How ABL works versus bank financing
ABL financing is evaluated differently in different ways than most traditional methods in terms of funding, such as cash-flow financing. Cash flow typically focuses on the following standard indicators, such as EBITDA (earnings before taxes, amortization, and depreciation ), earnings margin, and operational cash flow.
ABL lenders concentrate on your business assets as collateral to secure a loan.
What assets can be secured as collateral for a loan
A corporation can own several assets that could serve to secure the payment of loans. This includes equipment and other fixed assets, inventories/ stock, and accounts receivable.
What is the reporting process under ABL financing?
In general, with ABL financing, you will be expected to report each month about the current status of your borrowing base certificate around your portfolio. While some companies may view this as a burden when they pursue an asset-based loan, the reality is that innovations in automation and accounting can simplify this process.
Can a business benefit from asset based lending?
Prime candidates for the ABL are asset-rich companies with varying cash flows but require significant cash to operate & grow sales revenues. These financial solutions can be applied across different types of companies and industries
What types of business loans are available for Canadian startups with limited operating history?
Business loans for startups with limited history include microloans, startup grants, angel investor funding, and venture capital. Government-backed programs like the Canada Small Business Financing Program specifically address this challenge by offering loans with favourable terms for new businesses.
Intangible assets / intellectual property, leasehold improvements, and working capital costs can be financed for small business owners under the program. A modest limited personal guarantee is required as part of credit approval / loan terms. Fixed rate and variable rate options can be selected.
What collateral requirements should Canadian businesses expect when applying for business loans?
Collateral requirements for various business loans depend entirely on the loan type and amount. Secured loans typically require business assets like equipment, inventory, accounts receivable, or commercial real estate. Unsecured business loan options exist but generally come with higher interest rates and stricter qualification criteria. The Canada Small Business Financing Program offers options with reduced collateral requirements, where the government guarantees a portion of the loan.
Where can retailers find specialized business loan funding for inventory financing?
Retailers can find specialized business loan funds for inventory through:
- Traditional bank inventory financing programs
- Supply chain financing arrangements with vendors
- Purchase order financing companies
- Government programs like BDC's inventory financing solutions
- Fintech platforms offering inventory-backed lines of credit
How do seasonal businesses qualify for loan solutions despite irregular revenue patterns?
Seasonal businesses can qualify for loan solutions despite irregular revenue by demonstrating consistent year-over-year growth during peak periods. Lenders specializing in seasonal industries evaluate performance based on comparative seasonal cycles rather than monthly consistency. Providing at least two years of financial records highlighting successful peak seasons strengthens applications. Options like lines of credit with flexible draw periods align particularly well with seasonal cash flow patterns.
Who offers business financing specifically designed for Canadian exporters?
Export Development Canada (EDC) offers specialized business financing for Canadian exporters, including working capital guarantees and direct lending programs. Business Development Bank of Canada (BDC) provides export expansion loans. Major Canadian banks offer trade financing specifically for international business. Global Affairs Canada administers CanExport funding for market expansion. Provincial agencies like Ontario's Export Development Fund also provide region-specific export financing programs.
What documentation is typically required when applying for business funding?
Documentation typically required for business loan funding includes:
- Business financial statements (2-3 years)
- Tax returns (business and personal)
- Bank statements (last 6-12 months)
- Business plan (especially for startups)
- Proof of ownership and business registration
- Accounts receivable and payable aging reports
- Existing debt schedule and repayment history
- Financial projections (particularly for growth financing)
- Personal credit reports of business owners
How can specialized business financing solutions help manage seasonal cash flow fluctuations?
Specialized business finance solutions for seasonal fluctuations include flexible lines of credit that allow businesses to draw funds during slow periods and repay during peak seasons. Inventory financing helps stock up before busy periods without depleting cash reserves. Revenue-based financing adjusts repayment amounts based on actual monthly income. Some lenders offer seasonal payment schedules with reduced or deferred payments during predictable slow periods, aligning debt service with cash flow patterns.
How do business loans/leases specifically designed for equipment purchases improve cash flow management?
Equipment-focused business loan solutions improve cash flow through structured payments that match the equipment's income-generating lifespan. These financing options preserve working capital by requiring minimal down payments (often 0-20%). Many equipment loans offer tax advantages through depreciation while simultaneously building equity in valuable assets. Fixed payment schedules create predictable expenses for easier budgeting. Some lenders provide seasonal payment options that align with business cycles, reducing pressure during slower periods. A business loan calculator can be used to review different terms and rates.
When should a business consider refinancing existing business loan solutions? Businesses should consider refinancing existing business loan solutions when interest rates drop significantly (1% or more) below current loan rates. Improved business credit scores or financial performance may qualify for substantially better terms. Cash flow challenges with current payment structures warrant exploration of extended amortization options. Consolidating multiple loans can simplify finances and potentially reduce overall costs. Before refinancing, businesses should analyze prepayment penalties against potential savings and consider whether better options exist for their current business lifecycle stage.
How do business loan solutions impact a company's ability to secure additional financing later? Business loan solutions impact future financing capacity through their effect on debt service coverage ratios—a primary metric lenders evaluate. Responsible management of initial financing builds positive credit history, potentially improving terms on subsequent loans. Establishing banking relationships through successful loan repayment creates pathways to additional capital. However, excessive leverage from multiple loans can restrict further borrowing capacity. Strategic debt scheduling that creates gaps between major obligations optimizes the ability to access additional financing when new opportunities arise.
- Collateral requirements based on industry assets
- Repayment structures aligned with industry cash flow patterns
- Underwriting focused on relevant industry metrics
- Higher approval rates through industry-specific risk assessment
ABOUT 7 PARK AVENUE FINANCIAL
7 Park Avenue Financial originates traditional and alternative financing and asset-based financial services providers that offer lease financing, cash flow and working capital financing, and business acquisition loans.
The company works closely with clients to develop key business strategies based on their unique needs. The company is committed to providing the highest level of customer service and innovation to help businesses succeed.
Combining our experience and solutions, we help our clients achieve profitable cash flow and debt financing and streamline the process with a full range of credit offerings.
Citations / More Information
- Business Development Bank of Canada. (2023). "Canadian Business Financing Trends 2023." BDC Research Report. https://www.bdc.ca/research
- Statistics Canada. (2024). "Survey on Financing and Growth of Small and Medium Enterprises." Government of Canada. https://www.statcan.gc.ca/financing-reports
- Canadian Federation of Independent Business. (2023). "Access to Capital Report: Challenges and Opportunities." CFIB Publication. https://www.cfib-fcei.ca/reports
- Export Development Canada. (2024). "Trade Finance Solutions for Canadian Exporters." EDC Research Publication. https://www.edc.ca/financing
- Royal Bank of Canada. (2023). "Small Business Financing Trends in Canada." RBC Economics Research. https://www.rbc.com/economics
