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How To Secure Business Financing Via Traditional & Alternative Solutions
Business financing often becomes a ' smackdown' when it comes to both traditional and alternative financing sources available to Canadian business owners. What type of business finance solution will work best for your firm if in fact it's somewhat of a contest for your cash flow and debt needs?
Two major competitors for your business credit lines needs are Asset Based Lending, known as ' ABL ' , as well of course, as traditional Canadian chartered bank solutions.
Although banks can provide virtually unlimited business credit there are numerous requirements that many firms cannot meet when it comes to borrowing criteria . Enter ABL ( asset based lending ) which is enjoyed incredible popularity when it comes to funding sources for business.
The business owner / financial mgr of a company needs to ensure they understand the benefits and options under both financing solutions.
Asset based lending really took off in Canada after the 2008-2009 recession.
When that economic implosion of happened thousands of Canadian businesses started to review their financing options with either their banks or on their own accord.
At that time it was certainly not unusual for businesses to have credit lines reduced or pulled, or , even worse, having a firm being put into a ' special loan ' category, which we can assure you is not a ' special ' feeling!
So why do asset based credit lines flourish when other forms of finance, often traditional in nature, just don't work .
ABL financing takes a 'holistic' approach and takes all of your business assets and sales growth into account. Risk management at non bank commercial lenders has the underwriter looking at your firm in a whole different matter .
Naturally banks focus on key issues in lending that focus around their own mandate based on capital ratios, borrowing bases , etc . They then adjust their risk accordingly. That means ratios, covenants, the need for outside collateral,personal guarantees,etc.
Asset based lending takes a different approach, focusing on your assets and sales and liquidity needs in those two areas . The goal is achieve a maximum liquidity/borrowing power via a business line of credit that makes sense for your business.
Abl costs more , but will almost always achieve a higher level of financing than your company enjoyed previously . By the way in some cases, albeit fewer in nature, asset finance might actually cost less!
Assets that are margined in your credit line include receivables, inventory, equipment that is owned, and , where applicable, real estate. All of those assets are in effect thrown together to get you a business line of credit that makes sense.
Snapshots are taken typically monthly on your sales and assets to ensure your borrowing power makes sense.
It is therefore no surprise that thousands of Canadian firms are gravitating to asset based loan financing for their lines of credit. Abl lenders take more risk and that risk and return issue they face translates into more liquidity for your company.
So who in fact wins the batter for your business credit line facility ? Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who has a track record of business finance success putting yourself in a better position to determine which business financing solution works best for you when it comes to a business line of credit.
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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