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How To Get A Business Line Of Credit
Business line of credit solutions are often a key talking point when it comes to talking about business financing solutions for clients at 7 Park Avenue Financial. A talking point is, of course, just a ' succinct statement designed to be persuasive '. Let us take a look then at business credit line solutions , with a main focus on ABL
, otherwise known as asset based lending.
The problem with the term asset based lending
is that is is typically a common catch all for different times of financing that are cash flow and debt related - one example might be receivable financing, others might consider sale leasebacks, etc, etc,
In our discussion here we are referring to what we could call a ' comprehensive' business credit line solution - its a finance facility that rolls up you receivables, inventory, equipment, and yes, if applicable , real estate - all into one borrowing facility that your company can draw down on .
Although low interest rates are a key attraction of Canadian chartered bank financing the harsh reality is that thousands of firms simply down qualify for those rates based on the stricter borrowing criteria that banks put in place in order for your firm to achieve those lower borrowing rates . Spoiler alert - ABL business credit lines cost more, but they provide more liquidity and access to capital.
Whether your firm is start up, early stage, or a mid market or even larger corporation you typically require access to credit lines.
A lot of the asset based lending available in Canada today is based on the U.S. model of ABL, which is a huge, and we mean really huge, part of American business borrowing. In Canada this borrowing is typically done by private commercial finance companies who are not regulated like our banks . They deliver a commercial financing product tailored to your business needs.
ABL credit lines also work if your firm is in the process of restructuring - it's at those times that your require the most access to financing, which at that point in your firms history typically is not available from banks . As we noted, ABL increases access to funding based on your total asset structure! The ' A ' in ABL is assets and that's all you need for an asset based business credit facility.
So what are the key differences in when comparing asset finance facilities to bank financing, typically it's looking at alternative financing vs. traditional financing?
For banks it's all about the trifecta - profits, cash flow, and a clean balance sheet - and you pretty well need all those 3 to be in place to access those low bank rates.
ABL focuses on flexibility - little or no emphasis is place on ratios, covenants, outside collateral, spousal and owner guarantees, etc. Those items may be ' talking points' but rarely total deal breakers.
One key aspect of asset based revolving credit lines is that they can facilitate peaks and bulges in borrowing needs when it comes to sales . The temporary spikes that come with seasonality, large new contracts or purchase orders can almost always be accomodated when working capital is down to 'crunch time'. Traditional bank facilities are often very difficult to arrange in a short period of time.
Is the asset based credit line the best finance method to achieve cash flow and working capital nirvana ?! If you can't access some or all of the bank financing you need it just might well be.
Speak to a trusted, credible and experienced Canadian business financing advisor with a track record of business financing success on what you need to know about this innovative method of business finance in Canada.
Bottom line ? Understand the requirements and take advantage of the benefits!
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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