Tweet
Turn Your Business Financing Into a Successful Growth Strategy
OVERVIEW – Information on asset finance solutions in Canada – how do asset based lending rates compare to bank facilities and what are the advantages of an asset based line of credit facility
Let's dig in.
Asset finance can mean different things to different business folks. Asset based lines of credit is really the essence of our topic and discussion. Simply speaking it's the financing that your firm secures, on a revolving of operating basis, and it's collateralized by receivables and inventory.
But wait, we should also add that in many cases your firm's equipment and unencumbered fixed assets are also eligible for operating financing. Most business owners realize that Canadian chartered banks generally do not allow you to monetize or borrow daily against equipment and fixed assets such as real estate. Asset finance, i.e. our asset based line of credit does just that? That is the ' ABL ‘difference.
Why asset is based lending becoming so popular?
It's because it's:
An alternative
Its more liquidity
Its fewer rules
That's what an asset based line of credit is all about. We tell our clients we haven't seen one case where a customer's asset based line of credit didn't improve significantly from a viewpoint of borrowing power, with fewer rules.
What are those ' rules' we are referring to? Let's put it this way, you couldn't measure our respect for the Canadian banking system in Canada - it's immense. But the reality is that typically small and medium sized businesses in Canada - ( lets define that as , say anything from between 1 -30 Million in revenue ) are challenged when it comes to operating lines of credit .
How do asset finance solutions remove the liquidity challenge your firm faces? They monetize assets, allowing you to borrow against them on a daily basis. Very little if any emphasis is placed on balance sheet ratios, profitability (it helps and is nice to be profitable though!) personal guarantees, or outside collateral.
Are asset based lending rates different from bank credit facilities? In some cases they actually are the same of better from a viewpoint of a pure rate discussion, where they differ is that if you firms facility size is under the 3 Million dollar range from a viewpoint of A/R and inventory balances. At this point you can expect to pay a significant premium compared to a bank line of credit.
Is the ' premium' on asset based lending rates worth it to your firm? It absolutely isn't worth it, IF... and that’s a big IF... you don't place value on increased borrowing power, the ability to borrow against your assets as you grow, as well as the increased flexibility around the terms and conditions of you facility .
That's a big IF..!
Are asset based lines of credit becoming more popular in Canada - absolutely! Will they cost you more - probably, but not always - depending on the overall size and quality of the facility you require.
Are the advantages of increased liquidity important for you - that's for you to decide! Speak to a trusted, credible and experienced Canadian business financing advisor to learn more about asset finance solutions in Canada.
7 Park Avenue Financial :
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
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Office = 905 829 2653
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
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.