Asset Based Lending . Upgrade from an 8 Track Mindset
to IPOD Mindset Via Changing Times In Canadian Business!
OVERVIEW – Information on the asset based credit line as an alternative to traditional business financing and operating borrowing facilities
When it comes to business financing in Canada what would the you do if you could take one of your finance alternatives and take it from the days of 8 track players into the world of IPODS and all the other technology we have access today . Talk about a change in speed and features and ease of doing business, not to mention more for your buck!
That's the analogy we're using today for the Asset based credit line, which is a non bank business finance alternative that provides your company with cash flow and working capital in a manner similar to a Chartered bank business line of credit. But there are significant differences in how these facilities are obtained and how they work. Let's examine some of those key differences.
When we compare how facilities such as this operate it's all about ' revolving ‘. The analogy to your personal lines of credit in your own life isn’t far off here. So if the bank facility and the ABL (asset based line) fluctuate in the same manner, what’s the difference our clients can be forgiven for asking?
One of those key differences simply boils down to availability of funds, because you are in effect borrowing against the whole asset base of your company. To be clearer, most bank facilities focus on conservative margins of 75% of A/R and an even more conservative margining of your inventory. The asset based business facility typically lends at 90% of your receivable, and anywhere from 25-60% of inventory and other assets such as equipment.
How then does the asset based lender take comfort in offering your firm so much more liquidity?
They do that buy utilizing two techniques that are typically ignored by the Canadian chartered bank credit facility. Those two lending techniques are due diligence on the valuation of your assets, and more extensive monthly reporting. But those two techniques deliver because we have often seen clients go anywhere from 50-100% in total additional borrowing power. Talk about a potential liquidity explosion in your firm.
So why isn't ever business borrower in Canada utilizing this method of business finance? We wonder about that one a lot also! but the reality is that this method of revolving business credit is , on balance relatively new in Canada , having come to us from our good friends in the U.S. . Some estimates in the U.S. place asset based lending at 30-40% of all borrowing activity if you can believe that.
Is the Asset Based Credit Line for your firm? It certainly covers all categories, including firms who are in the following phases of their existence:
Start up's
Fast Growth
Special Situations
Firms currently in Special Loans
Companies with solid credit but who are unable to access the full amount of financing they need from our Chartered banks
Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you determine the benefits of the ABL credit facility as they relate to your firms cash flow needs. Let this facility, as in our analogy; take you from 8 Track to IPOD...quickly.
CANADIAN ASSET BASED BUSINESS CREDIT LINE 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/business_financing_asset_based_credit_line.html
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