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ABL Is Your Back To Basics Business Finance & Cash Flow Conundrum Solver !
Business financing requirements for Canadian business often require very timely solutions .
Alternative finance solutions for your business are more and more becoming the new norm for funding companies in Canada. They get our clients to the ' goal line ' in a more timely manner when it comes to some of the timelines imposed on firms applying for traditional bank credit . Asset based lending , commonly called ' ABL ' solutions provide a solid funding alternative for your cash flow and working capital needs.
Clients of 7 Park Avenue Financial will often ask what is the key requirement for asset based credit lines, as well as the other funding solutions within the ABL world. That key requirement ? Assets ! Those assets can come in the form of receivables, inventory, equipment and fixed assets, company real estate, and in a round about way orders and contracts - those latter two being valuable but not on the balance sheet of course.
Those assets are collateralized or ' cash flowed ' in asset based borrowing facilities. A revolving credit facility, similar to a business bank line of credit is the common solution for many of our clients.
Cost always becomes a factor when it comes to ABL financing - it is more expensive than traditional bank rates, but the harsh reality is that many companies can't meet the key criteria required by banks such as solid consistent profits, clean balance sheets, and outside collateral and personal guarantees that available to secure bank financing.
It's safe to say though that most forms of business financing, however costly, are cheaper than giving up owner equity in your firm, especially for a firm that is growing and has promise of great value and success.
Although we stated that ABL typically costs more than bank finance solutions larger higher quality deals can actually compete with those bank rates, while at the same time providing much more liquidity !
So how does the asset based lender value and monetize those assets? Receivables are typically financed at 90% of the a/r base ; inventory margins vary depending on the nature and marketability of inventory and can range anywhere from 30-70% ; and finally equipment and real estate are typically appraised at their market or liquidation values. The bottom line? More borrowing power!
So what are some of the key benefits of asset based lending solutions? They include, as we mentioned, quicker approval . That is because the main focus of he ABL lender isn't all those financial covenants and ratios imposed by banks. For ABL it's all about .. you guessed it .. Assets!
Another point is flexibility. We see this lot. And it all comes down to the fact that there is a good chance that your business is different from many other businesses and in a different type of industry. We quite often see that a tremendous amount of flexibility can be applied, via ABL asset based lending, to your particular circumstances. Some of those circumstances might be seasonality of your revenues and cash flows, etc.
Asset finance has matured significantly in Canada. In historical terms we could say it's relatively new , but it has exploded onto the business landscape due to choices, costs, etc. Many Canadian banks have explored and are exploring these type of solutions . We keep reading in the Globe & Mail or Financial Post about the abundance of capital in the markets, and ABL lending is one of those reasons .
That's a good thing for Canadian business borrowers.
Asset finance solutions are typically revolving facilities and rarely add debt to the balance sheet . That's a good thing !
Speak to a trusted, credible and experienced Canadian business financing advisor who has a track record of success on a financing alternatives achievable for your firm, no matter what your particular circumstances are.
7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
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 .
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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