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Keep Your Company Moving With An Asset Based Lending Operating Line Of Credit - Your Competitors Do !
OVERVIEW – Information on asset based lending as Canada’s newest form of business lending via an operating line of credit . Why this solution works for your firm
Ever wondered by some of your competition out there seems to be enjoying what seems like unlimited cash flow for their sales and growth and expansion.
We think we know the reason why, and it’s called asset based lending - 'ABL' for short .This type of business financing, relatively speaking is new to Canada and supercharges cash flow and liquidity.
Naturally our clients, being the conservative types they are wonder aloud about several key issues, as in:
What are the qualifications for this type of financing?
What is the min and max deal size - Spoiler alert - there's no max, but there's a min!
What are some of the costs of this type of financing?
Let's cover those issues off in an effort to ensure you understand the power of asset based lending and why this type of operating line of credit could be your savior in business financing.
Qualifications? Just one - Business assets! Otherwise asset based lending doesn't work. The asset based line of credit competes with the operating line of credit offered by Canadian chartered banks. It is provided by non bank institutions that are specialized in asset based lending.
But what about banks, ask our clients? Banks are specialized in financial statements! What we mean by that of course is simply that charted bank business lines of credit in Canada focus on overall financial statement quality - the key underpinnings are solid financial statements reflecting profit, equity, liquidity, and overall solid cash flow. It's great business credit, if you can get it.
On the other hand the asset based lender only wants to know one thing - well two actually, do you have assets and are they managed well. What are those assets - they tend to be receivables, inventory, and in some cases equipment and real estate.
These assets mentioned above secured an operating line of credit which is margined on a regular basis. What interests our clients is of course the margining of those assets, and asset based lending does that very well.
So how much can you borrow / draw down? Typical structures are 90% of receivables, 50-75% advances on inventory (yes you heard us correctly) and working capital financing provided on the appraised value of hard assets that are unencumbered - i.e. the real estate and equipment if you have them and need financing for them.
Facility sizes for asset based lending tend to start at 250k and above - otherwise the facility , if under that amount, tends to be a receivable financing facility , which by the way works quite nicely also . There really is no maximum amt you can borrow as long as your business assets back up the drawdown.
Circling back to our final client question - cost. We can make a general statement that if your deal size is significant, i.e. over 5m you can generally achieve rates that are comparable with the bank.
Facilities under that amount are more expensive than bank financing - but , guess what ,you get all the liquidity you need, which has its benefits are growing your business, turning your assets faster, enhancing relationships with suppliers, and taking on more business than you ever could before .
Looking for an operating line of credit -? ABL could be your solution - Speak to a trusted, credible and experienced Canadian business financing advisor today on this new form of financing your working capital.
7 Park Avenue Financial :
http://www.7parkavenuefinancial.com
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations .
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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