Business Line Of Credit Needs – We’ve Got A Solution & That’s No Fake News!
OVERVIEW – Information on business line of credit needs in Canada. ‘ABL’ aka ‘Asset Based Lending’ is a true cash flow solution – Here’s why
So why is ABL becoming one of the fastest ways to get your business financing going? The answer - This business line of credit is a working capital facility, similar to a bank facility that provides working capital on a regular basis against inventory, receivables, and in many cases equipment and real estate if that is applicable.
One can argue the case forever on whether Canadian banks are providing the right amount of financing and support for small , medium, and yes even large businesses in Canada - we don’t think we’ll get full closure on that discussion although most top experts and studies say that that SME COMMERCIAL FINANCE needs are certainly not fully delivered by traditional banking institutions as it relates to new firms, high growth firms, or businesses with any kind of financial challenge on their balance sheets and income statements.
So assume you either can’t qualify for a chartered bank business line of credit or that you perhaps do, but the facility doesn’t meet your needs. That’s where an ABL, or asset based line of credit comes in.
How does ABL work then? It’s a simple, no nonsense form of financing provided by non bank type firms - typically commercial finance companies. Many call it 'alternative financing', but we can assure you this form of ‘business financing ‘is becoming more mainstream and popular every day.
Because the chartered banks focus on traditional metrics such as your overall financial performance, outside collateral, personal guarantees, etc you will find the overall ABL process much simpler and common sense. It’s simply a case of borrowing against your real assets, with little or no reliance on the issues we outlined above relative to a bank type facility.
The specialty of an asset based line of credit provider is simply their strong knowledge of your industry and assets, so because of that your ability to generate almost unlimited working capital becomes very obvious very early on in the picture.
What do we mean by that? Simply that if you have receivables, assets and equipment you can always borrow against them on an ongoing basis so typically you can draw down on 90% of receivables, 40-70% of your inventory values, and pre agreed upon amounts on the appraised value of unencumbered equipment .
Typically companies that are the best prospects for this type of financing are firms with fast growth and in some case a limited track record i.e. a start up, etc.
In some cases this type of business line of credit could possibly be complimentary to your existing bank facility, but more often than not if replaces it totally.
How are ' ABL'S priced? While there are a number of key advantages to an asset based line of credit they do normally cost more than bank facilities. Depending on the size of the facility and the overall nature of your firm, its industry, and other challenges you might be facing the final pricing will reflect a realization of those issues.
So yes, it will cost more, but those costs can be significantly offset by increased cash flows via inventory turns, ability to purchase smarter with that cash, and to convert receivables immediately into cash for additional sales efforts.
Don't forget though that you have in effect just negotiated unlimited working capital, and have the ability to turn assets more quickly and generate increased cash flow, revenues and profits. That’s a true business financing triple threat! If you're looking for more good news understand also that asset based operating credit lines are suitable for pretty well every industry in Canada - Again, it's always about the assets.
Speak to a trusted, credible and experienced advisor in this area to ensure that you determine if you can benefit from such a business financing arrangement.
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 13 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
' 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.
Stan Prokop
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