Asset Based Lending : We’re Hacking Into The Alternative Finance Solution For Cash Flow Without Debt !

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Asset Based Lending - Everything Your Wanted To Know But Were Afraid To Ask

OVERVIEW – Information on asset based lending in Canada. These cash flow and working capital finance facilities can help you fund operations and finance growth

Asset Based Lending - Canadian business owners and financial managers continue not to take advantage or investigate one of the most powerful business financing strategies available to Canadian firms today. Afraid to investigate? Let's dig in.

While asset based lending, or ABL lending as it is sometimes called, is a very common U.S. and European financing tool Canadian business has been slow to catch on and investigate this option.

ABL lending is coming into popularity on a slowly but increasing basis in Canada because it provides your firm with increased liquidity - i.e. more working capital and cash flow! Asset based lending is certainly not the only choice - your firm can be financed by a Canadian Chartered bank line of credit, a single factoring or invoice discounting facility, or possibly by some other mix financing strategies .

When we meet with business owners and talk about why asset based lending is coming into vogue it is our opinion that this is not a fad, but a financing solution and reality brought about by the 2008 and 2009 liquidity crisis in Canada which affected every aspect of Canadian business financing.

New, start up, and even established corporations found it more difficult to get business financing that suited their needs, so, necessity being the mother of invention, Canadian business owners looked to see what was working where! ABL, or asset based lending in Canada is a huge industry, with many market participants. The Canadian market place, similar to other aspects of Canadian and U.S. business comparison is smaller, more fragmented geographically, and a bit less robust.


We strong recommend that business owner's work with a trusted, experienced and credible advisor in this area to map out an asset based lending solution that works best for your firm, as each industry differs with respect to asset based and capital requirements.

We have all heard the term 'perception versus reality 'and asset based lending is a great example of that phrase. By that we mean that many perceptions exist about asset based lending that simply aren't true, or if they were perhaps true once they certainly are not now .

As an example your firm might not be willing to entertain asset based financing because 'ABL 'is simply unknown to many of your business peers. The reality is that many of the largest and most successful organization in Canada, some of them public entities utilize ABL solutions. You'd be surprised!

Asset based lending is clearly an 'alternative financing 'form for your business liquidity. Many customers view the word 'alternative 'as a negative statement, which might infer financial problems etc. ABL should simply not be viewed in such a negative way. If your Canadian firm had an asset based financing facility that gave you more working capital, greater cash flow turnover, less restrictive covenants, and competitive pricing would you view that as a negative? We clearly don't think so!


In summary, investigate asset based lending for your firm as an alternative long term source of working capital and cash flow. Work with a dependable and experienced advisor to structure a facility that meets your working capital needs.

You might quickly find that other firms in your industry and your competitors start to realize that your firm differentiates itself in a very positive manner based on your new financing facility - i.e. access to more working capital, better relations with suppliers, ability to finance more inventory and receivables and grow your business. ABL - investigate and inform yourself of the possibilities.


7 Park Avenue Financial :

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

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


Direct Line = 416 319 5769

Office = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing With The Intelligent Use Of Experience '

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

Bank Business Credit Line Alternatives In Canada. Inside The Hidden Sector Of ABL Loans And Financing

What To Pack When Going On A Trip For A New Business Credit Line Lender

OVERVIEW – Information on ABL loans in Canada . This busines credit line is the alternative to bank financing and just might work if you have … Assets!




Searching for a business credit line in Canada . One question to ask is what is the difference between bank financing of such facilities and the newer ' ABL LOANS' which offer a strong alternative to Canadian chartered bank facilities. So what should the business owner/financial manager pack when embarking on this trip? Let's dig in.

A tremendous amount of business owners/ financial managers still equate revolving lines of business credit with our Chartered banks. While it is true they offer the lowest interest/ financing rates, and unlimited capital to borrow from the reality is that every firm does not qualify for bank credit.

ABL (asset based) Loans serve the same purpose as bank lines. They provide your firm with cash flow/working capital that bridges the timing of turning your revenues into cash. Carrying inventory and receivables are the drivers behind that need for business credit.

ABL business credit facilities differ from the banks in that they often have no upward limit. While limits might be initially set, as your business grows and investments in A/R and inventory increase so does your borrowing power. Bank facilities tend to be traditionally capped at a certain borrowing limit, and are reviewed annually based on financial statements, profitability, cash flow coverage, and any other collateral the bank might hold.

Business owners can be forgiven for asking ' How can the non bank asset based lender offer this type of facility that is so different from our Canadian chartered banks?'

The reality is three fold:

1. They are non regulated and can do what they want

2. They focus solely on assets - not ratios and covenants

3. They perform a higher level of due diligence and reporting in both setting up the facility and then monitoring it - you can expect to supply monthly reporting in the form of aged receivable, payables, inventory and equipment lists - Bottom line - It's all about the assets.


What are the issues that allow a firm to consider asset based versus bank credit lines? One might be fast growth. When your financials don’t support the equity, debt and ratios required by the banks, or if there is seasonality in or ' bulge ' requirements for growth you're a strong candidate.

We are assuming you have investigated lower cost options such as the bank and simply don’t qualify regarding their requirements. If you can produce clean financials, can report on assets regularly you're a candidate for ABL loans.

Typical ABL business credit line facilities start at 250k as a minimum - As for the upward limit there is really no upward amount that can't be financed if you're with the right lender.

It's a bit of a secret

that Canadian chartered banks, for the most part have small internal niche divisions of ABL credit that compete, to a certain degree, for this type of business. It's unclear to us whether their requirements differ that much from typical bank offerings - we'll let our clients decide that one.

By the way, borrowing power is greater with ABL facilities. A/R is margined at 90%, and healthy borrowing is in place for your inventory and equipment, all of which are bundled in the same facility.

While some may consider ABL as a ' hidden market’ it’s becoming more and more popular everyday. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in determine if your firm has what it takes to embark on that ABL loan trip!


Stan Prokop - founder of 7 Park Avenue Financial
http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.

Info re: Canadian business financing & contact details :


7 Park Avenue Financial = Business Credit Line Expertise





Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Phone = 905 829 2653


Email = sprokop@7parkavenuefinancial.com

Stan Prokop

Canadian ABL Loans Are Solutions To A Cash Crisis and Business Growth Financing ! Look Into Business Lending via a Revolver Loan Facility.

http://www.7parkavenuefinancial.com/abl_loans_lending_financing_loan_revolver.html




Asset Based Line of Credit Facilities In Canada


Information on ABL loans in Canada and why this type of business lending and financing revolver is the ultimate working capital loan facility.




Talk about two different problems... a cash crisis (or ongoing cash crisis!) and badly needed growth financing. Let's take a look at how abl loans via asset based lending and financing can be the perfect solution for your revolver facility loan needs.

In business there’s nothing more urgent than a ' call to action ' around a working capital or cash flow crisis. At this point it's all about ' righting the ship ' and allowing Canadian business owners and financial managers to get their business finances under control. It's more often than not a case of simple survival.

Naturally putting in a proper ongoing financial solution, such as an abl financing revolved allows you to get your eyes back on running the company normally on a daily basis - we meet with clients who regularly tell us that a huge amount of time is spent on managing cash crises and juggling things such as vendor payments . Bottom line, its time to stop putting out the fires and focus on a solution... that works.

A true asset based line of credit has the ability to allow you get back the confidence that your suppliers, lessors, and other lenders had in your business, and that’s important. It goes without saying that lenders, investors and suppliers truly have the ability to control the destiny of your company if the perception of a permanent cash flow shortage remains.

So, enough about the fear! Let's focus on a solution that works. Simply speaking, that’s asset based financing via a revolver facility that is generally non bank in nature. (Some Canadian banks now offer this facility but the credit requirements and deal size criteria are, in our opinion, exceptionally high).

The concept of asset based lending, aka ' ABL ' is simply securing your assets, leverage them to the maximum that is possible, with the result being greater liquidity for your company. And by the way, don’t think we have just leveraged up a ton of debt on your balance sheet - 100% wrong, we have simply monetized or ' cash flowed ' existing assets... allowing you to borrow against them .

Those assets are typically very clear categories of receivables, inventory, equipment, and occasionally real estate and tax credits due your firm. (Yes tax credits such as the SR&ED credit can be included in your financing package).

So the question then becomes, don’t banks do this already...? And you have tried that possible scenario. The quick take away here is two things. First of all abl loans and financing revolver facilities provide greater leverage on current assets. Receivables are typically margined at 90%, and inventory, often difficult to finance for cash flow, can be margined anywhere from 30-70% as an example. If you were getting 75% from your bank on A/R and nothing on inventory haven’t we just increased your working capital by anywhere from 50-100%?! Wow.

A very simple way to look at this, and we use this example with clients all the time is to simply think of the asset based lender solely looking at the collateral, while the banks will focus on collateral, but mainly historical cash flow, ratios and covenants, and outside collateral via personal guarantees, etc . (As a general rule very little emphasis is placed on personal guarantees when an ABL loan facility is put in place.

Oh and by the way, you absolutely don’t have to be profitable to qualify for asset based lending facilities, which in Canada start at a low of 250k and go to the tens of millions of dollars.

So, cash flow crisis. Growth challenges. Looking for a solution? Speak to a trusted, credible and experienced Canadian business financing advisor on ensuring an ABL working capital facility is right for your firm.






Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/abl_loans_lending_financing_loan_revolver.html

Forget About A Traditional Finance Loan - Discover Why Canadian ABL Lending & Financing Loans Work.

Change Can Be Good In Canadian Business Financing !


Information on ABL Lending in Canada . Why asset based loan financing is a solid lending solution for a business line of credit finance facility . Asset based loans leverage assets for working capital .




We’re the first to admit ' change ' is one of the most difficult things to cope with sometime, both in our personal lives and in business. Hindsight becomes a great friend, and that’s why we use this analogy in talking today about ABL financing in Canada. When business owners and financial managers discover the true power of asset based lines of credit finance and lending in Canada their first reaction is ' where has this been all my ( business ) life!’

Let's examine some of the key differences, and benefits of asset-based loan financing in Canada, specifically the asset based line of credit revolving working capital facility. It seems simple... and also difficult to realize why this is different than traditional Canadian chartered bank financing. Because it’s simply a business line of credit financing facility secured by inventory and receivables. In many cases both equipment and real estate are added into our ' mix ', leveraging even more assets for working capital purposes.

So why do thousands of business owners utilize ABL loans (they are not loans per se ...more about that later)? The basic answer is that they cannot access this amount and type of credit elsewhere, predominantly at their bank.

So service firms, distribution companies, and companies that manufacture gravitate to this type of cash flow financing for the obvious reason - they can’t get financing elsewhere. In some cases clients have been asked to exit the bank and find themselves in ' Special Loan’ facilities - essentially a holding tank or purgatory for firms that have violated or cant meet bank ratios and covenants.

What size of facilities is available for asset based lines of credit in Canada? Small facilities start in the 250k range based on the overall size of your current assets, predominantly, as we said A/R and inventory. And from there? ABL financing loan facilities go up to the tens of millions of dollars, and some of the largest corporations in Canada have ' forgotten' about traditional bank lending and financing for credit lines, adopting the ABL model instead.

Oh yes... we had mentioned the term ' loans ‘. A true ABL facility is not new debt on our balance sheet; it’s not a term loan, its simply monetizing the current assets in to a revolving line of credit facility, that’s important to understand!

Start up firms in Canada can be financed by ABL lending, as can firms that have significant current operating and financial challenges... the one thing they do have, and need, is ' Assets ' to facilitate the type of lending we are talking about . That’s our other key take away point for clients, that the actual approval of such facilities is not, we repeat ' not ' dependent on balance sheet strength, profitability, or ratios and covenants. Even personal guarantees play a very small part in the approval of ABL facilities, or some of the subsets of this type of finance.

Naturally it helps when you are moving back to profitability via a plan that will work!

Our final point today on ABL loans is simply that it’s all about liquidity. Receivables are typically margined at 90% of your portfolio, and inventory is assessed on an individual basis, often ranging up to 70% in financing leverage.

So should you forgot everything you know about traditional finance business credit lines... maybe not a great idea, but we can assure you that you are missing out if you don’t consider the alternative ! Speak to a trusted, credible and experienced Canadian business financing advisor on the benefits of such a business financing in Canada.



Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/abl_loans_lending_finance_financing_loan.html

ABL Loans Are The Newest Trend in Canadian Asset Finance – Why Lenders Offer This Revolver For Asset Finance

Let's get right to the point. Are you not surprised that many Canadian business owners and financial managers are unaware of the importance that ABL loans via abl lenders play in the asset finance arena in Canada. Are you not even surprised that this type of loan financing (actually it’s not a loan - more on that later), called a ' revolver ' competes with Canadian chartered banking facilities on a day to day basis, and wins!?

Part of the confusion , misconceptions and mis information around this type of financing actually comes from the name and terms around the ABL revolver, which can ,and do mean different things to different people .

In the pure sense and most relevant meaning of the term in Canadian asset finance the ABL facility provides a comprehensive asset financing or monetizing of current ( and in some cases ) fixed assets which allow a company to significantly enhance their working capital facilities . This type of facility competes head on with Canadian charted bank facilities.

The asset finance lenders in Canada have recently gained significant traction. We feel the primary reason is simply that their facilities offered enhanced borrowing with a focus on assets, unlike comparable chartered bank facilities which come with a stringent requirement of clean balance sheets, profitability, ability to maintain ratios and covenants, and in many cases requiring outside collateral.

The 2008 and 2009 global recession enhanced the viability and visibility around ABL loans. Banks all over North America pulled back on commercial lines of credit and revolver finance - leaving thousands of companies with reduced, restricted, and in some cases no borrowing or operating facilities.

Most Canadian business owners and financial managers are simply not aware of who the ABL asset finance lender is. Typically they are smaller boutique firms, often subsidiaries of major U.S. corporations and banks .Their teams are small, highly focused on one thing ( monetizing assets for cash flow and working capital !) and offer facilities anywhere from 250k to hundreds of millions of dollars .

Many Canadian companies are also not aware that several of the Canadian charted banks have created asset finance lenders within their bank, and the ultimate irony is that when a loan is called by a chartered bank a competing division within the bank can often rescue the company. We'll let you mull that one over!

As we noted facilities are available for any amount over 250k but the pure play ABL revolver typically comes in at 3 to 5 Million dollars as an entry point. Rates are often competitive to Canadian banks, and small firms can pay a significant premium in financing charges , the offset being able to access working capital to facilitate growth and profits,

In summary, every business owner or financial manager concerned with operating finance should investigate and consider an ABL solution. Normal banking criteria does not apply and you have the ability to grow, restructure, and in some cases easily acquire a competitor using this finance strategy. You consider your firm unique and different, so investigate a new and unique type of business financing. Confused? Hopefully not. Interested? Speak to a Canadian business financing advisor on ABL loans today.

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Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/abl_loans_lenders_revolver_asset_finance.html