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Looking For A ‘ Secret’ Financing Strategy : ‘ ABL ‘ Just Might Be Your Answer !
OVERVIEW – Information on the growing use of asset based lending as a business finance strategy . ' ABL ' financing can deliver cash flow and capital in a variety of manners - here's why and how !
Business finance solutions in Canada are on a regular basis delivered via asset based lending and financing. For the business owner and financial manager who hasn't heard of (or checked into) this type of funding solution they might just mistake this for a new ' secret ' financing strategy. Frankly though, the secrets out! Let's dig in.
Asset based loans (‘ABL ' ) are often considered an ' alternative ' strategy in the brave new world of nontraditional and ' fintech' solutions. But guess what? Main street is using this form of financing everywhere in Canada, in all industries, and all size of companies.
Asset based lending in Canada differs based on transaction size and the methodology around which day to day transaction are handled., and which assets are being financing . We can broadly put ‘ABL ‘solutions into several key categories
Non bank business lines of credit
A/R Financing
Inventory Finance
Tax credit financing
Sale Leasebacks
Working capital term loans / merchant loans
There are different levels of due diligence in setting up any of these facilities, often dependent on facility size, what industry your firm is in, and the quality of your assets being financed.
When Canadian business owners and financial managers sit down with us and ask us to explain ' asset based lending ' we cover a fair amount of ground, as there are various types of ' ABL ‘facilities.
The benefits of asset based financing? They are pretty basic - you will often differentiate yourself from your competitors given you have increased amounts of capital and cash flow - allowing you to secure more sales/contracts , as well as enhancing relationships with suppliers and other lenders you might have in place. In many cases ABL finance addresses the seasonality challenge you might have in your company/industry.
Asset based lending is simply the monetizing of your assets to their maximum cash availability. The most common assets financed include:
A/R
Inventory
Fixed assets
Real estate
Technology
While ' purchase orders ' of new ' contracts ' aren’t technically an asset on your balance sheet asset based lending includes PO / CONTRACT financing solutions! The emphasis is clearly on your ' assets ‘!
ABL business finance frequently replaces traditional bank financing, or in many situations provides more cash flow and working capital that banks can't deliver on due to their lending constraints. This is no more evident than in the SME COMMERCIAL FINANCE sector. Flexibility is often the differentiator given that ABL solutions don’t rely as heavily on ratios, covenants, outside collateral, personal guarantees, etc. Note though that costs of this type of financing are almost always higher - so the decision becomes access to capital versus cost of capital!
We spend a lot of time with customers showing us how some of the ' perceived 'higher costs are in fact not really that due to the ability of the company to convert assets into cash and repeat their business cycle over and over, generating additional profits based on faster inventory turns and receivable collections .
If your firm has been affected by liquidity concerns and you need additional funding to survive and grow check out asset based lending as a way to unlock cash flow and capital. Speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your financing 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
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Office = 905 829 2653
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.
Stan Prokop
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