Could ABL Asset Based Lending Be Your Rude Awakening To Business Credit Line Success?

What's all the commotion about Asset Based Credit Lines?


Information on ABL asset based lending . Why does this unique business credit line facility work when others do not?



An ABL Asset based line of credit. Could this form of financing be the ' rude awakening ' you need when it comes to understanding what type of business credit line is available to your firm?

What many Canadian business owners and financial managers don’t understand is that there are different sources of business lines of credit, and while it might all seem like a blur sometimes its worth sorting through the differences to ensure your firm is financed properly.

Things you'll be considering in this sort of analysis include the rates around line of credit pricing, what type of financial strength is required and the overall risk and benefits associated with any type of financing you might take on for your business.

Asset based lenders in Canada consist of both Canadian and U.S. firms doing business in the Canadian marketplace. They are differentiated by the amount of capital they provide (in some cases unlimited), geographical preferences, and most importantly industry and asset type focus.

The most important thing you can derive from any analysis in determining if ABL finance is right for your firm is to ensure you understand the differences between bank lines of credit and ABL revolving facilities. They are the same, and they are different... in some cases very different.

Why the difference? It comes down to the fact that asset based lenders providing credit lines are not regulated like our Canadian chartered banks. In essence they can do what they want, as long as transactions meet their own risk criteria.

What does that statement in effect translated into then? Simply that there is a lot of flexibility, and probably liquidity around any ABL arrangement you consider. It comes down to the focus on collateral, whereas the bank is focused on ratios, covenants, cash flow formulas, etc. That’s not a bad thing; it’s just ' different '!

The total focus of ABL asset based lending credit lines revolves around the total value of your assets, with typical categories being receivables, inventories, and unencumbered equipment.

How does the ABL lender do this when the bank sometimes cannot? The key to that answer is that proper appraisals and closer reporting of your ongoing situations translates into greater borrowing power for your firms financing needs.

The concept of ' evergreen' is often a true ' rude awakening ' when it comes to the ABL business credit line. Simply speaking it’s that these unique lines of credit don’t have set repayment schedules - they grow as your firm grows, so the concept of a cap at a bank is a significant differentiator.

Oh, and about those qualifications. We can make a broad statement that almost every firm qualified, whether your company is enjoying strong sales growth and profits, or if you're at the other end of the spectrum and have some severe challenges and distress issues. It all comes back to your asset base and its value. To qualify you simply should be able to present proper updated financials and aged lists of receivables, inventory, etc.


In our business and even personal lives rude awakenings are either a good thing, or perhaps not so good. Canadian business owners and financial mangers might well find a positive awakening when it comes to differences and benefits in ABL asset based lending credit lines. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in defining the differences.

7 PARK AVENUE FINANCIAL

CANADIAN ABL ASSET BASED LENDING EXPERTISE




Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/abl_asset_based_lending_business_credit_line.html