business revolving credit line

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The Best Business Revolving Credit Line Is Actually A Choice For Canadian Companies
Business Credit Lines Are A  4  Way Highway : Which Lane Are You In ?

 

 

 

 

 

 

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Financing & Cash flow are the  biggest issues facing business today

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7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

 

Direct Line = 416 319 5769


Office = 905 829 2653

 


Email = sprokop@7parkavenuefinancial.com

 

 

 

 

Business revolving credit line needs are a necessity for almost all Canadian businesses in the SME Commercial sectors of the economy. But did you know that this type of credit / borrowing facility is actually a 4 lane highway. The challenge? Which lane are you in? Let's dig in.

 

Why does business prefer revolving facilities? It's probably because they have maximum borrowing flexibility and it's established once up front.

 

Your business might not need a line of credit if you're one of the lucky ones that actually have ' negative working capital ‘, which is in effect a cash type business where you collect monies before you pay suppliers, etc . Examples might be an internet retailer or certain retailers. But that's the rarity of course and the category your company probably does not fall into.

 

So, as we asked, if biz credit lines are a 4 lane highway, which lane are you in?!

One of those lanes is a traditional Canadian chartered bank line of credit. It's in effect an open ended credit facility which your business draws on as needed. Given today’s low rates its maximum flexibility at lowest cost - if you qualify!   (Miscellaneous fees typically apply) .Security for bank credit lines is typically an all encompassing security agreement (‘GSA’) and guarantees of the others. Potentially outside collateral is also required, as well as the potential requirement to maintain certain minimum account balances. Typical bank advances for receivables are 75% of your accounts that are less than 90 days old.

 

Let's not also forget that banks and other commercial lenders typically will ask you to maintain certain financial ratios and covenants when it comes to your balance sheet or cash flow. Failure to meet those makes you ' off side'!

 

A 2nd type of revolving credit line is a more basic solution. It's A/R financing on its own, often called ' Factoring' but coming with many additional ' flavors ‘. In many forms of factoring you will be required to have your clients notified of the whole process - with client payments going to the lender.  To avoid this somewhat ' undesirable ' process we recommend a better solution to clients:  CONFIDENTIAL RECEIVABLE FINANCING. This form of ' factoring' allows you to bill and collect your own receivables with no notification to others. Canadian business owners no doubt love this type of control.

 

Key benefits of A/R financing inlcude the fact that no credit limit is set on your business - it fluctuates with your sales revenue. Typically higher costs come with this type of financing, but the benefits are significant - unlimited cash flow potential to grow your business.

 

A 3rd lane on our business credit line highway is the 'ABL ' Asset based business line of credit. This facility, offered by both banks and more notably commercial finance firms allows you to borrow under one facility based on the total ongoing value of your A/R, Inventory and Fixed Assets. Borrowing advances are therefore much more generous, and it’s very common to double your borrowing power under ABL facilities as compared to a bank fixed credit limit.

 

 

Our  4TH lane on  the business credit line highway includes your ability to access numerous miscellaneous single solutions to working capital borrowing - they inlcude inventory finance ( suited to retailers /distributors ) , tax credit financing for SR&ED claims, PO Financing, and Royalty finance .

 

Which lane on our business credit line highway does your firm belong in? Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your cash flow finance needs.

 

' Canadian Business Financing with the intelligent use of experience '