Why A Business Credit Line Or Asset Based Loan Is A Key To Success In Your Company

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Not All Business Credit Line Solutions & Asset Based Loans Are Created Equal.

OVERVIEW – Information on the important of securing and being able to access a business credit line or asset based loan in Canada. Growing and Running Your Business with all the available financing you need is a ‘ key to success ‘

Business credit line needs in Canada call for either a bank facility or an asset based loan. Both of these solutions aren't equal in how they deliver, what they cost, and how they work. Understanding those issues helps the business owner plot a ' key to success' strategy that helps ensure business growth and survival. Let's dig in.

While both the bank credit line and the asset based loan are revolving facilities asset loans are more focused to the actual assets in your business.

All of your borrowing needs are often (not always, but often) tied to your sales revenues. As sales are generated receivables are collected (hopefully!) and paid off. For companies that sell products, as opposed to just services, inventories are often coupled into your borrowing needs. These two asset categories, A/R and inventory, form your current asset.

From the asset based lender or banker perspective these form your ' borrowing base ' on which you will draw down working capital cash flow needs. Asset based lenders lend more against your assets, and in turn they tend to monitor your a/r and inventories more closely - as those two assets are typically the prime collateral for your asset based loan.

While banks do require some ongoing reporting on your assets, typically monthly, sometimes only annually, they instead focus on your operating characteristics of profit, cash flow, debt load, and character and personal collateral of owners. (Many banks are challenged by the ability to both understand and monitor inventories - while asset lenders have developed experience in numerous industries and inventory types.

What's my rate? That's the ongoing battle cry of business owners and financial mgrs when they consider line of credit needs and benchmark the offerings of their bank or asset based lender. While your borrowing capacity can often double or triple in asset based revolving facilities they do come at a higher cost.

Conventional bank financing is cheaper, but more challenging to be approved for. An interesting note is that in recent times, due in part to general competitiveness and the low rate environment asset loans have in fact dropped in overall cost.

Start up, fast growing, as well as financially challenged companies are prime candidates for asset based lines of credit. They have limited or challenged cash flow generation performance, but require rapid access to cash flow and working capital. The conservative financial position as demanded by banks focuses on ratios, cash flow, debt to equity relationships, and owner guarantees.

It's important to note that many, shall we call them ' subsets’, of asset based loans can help deliver liquidity to your business. They include:

Factoring/Confidential A/R financing

Inventory loans

Bridge loans

Sale leaseback strategies

P O Financing

SR&ED Cash flow loans

If you're focused on ' keys to success ' in your working capital and cash flow needs seek out a trusted, credible and experienced Canadian business financing advisor who can assist you with your finance needs.


Stan Prokop - founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :

http://www.7parkavenuefinancial.com


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


' Canadian Business Financing with the intelligent use of experience '


ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.