The Bank Credit Line Versus Asset Based Financing Credit Facility Alternative
OVERVIEW – Information on asset based lending in Canada. How does a bank credit line facility differ from the ABL asset financing alternative
Asset based financing alternative solutions for Canadian business offers many reasons for owners/financial mgrs to consider a bank credit line alternative. We're discussing some of those reasons. Let's dig in.
The ability to borrow the maximum you can under an asset based credit facility is a key part of the attractiveness of ' ABL ‘loans - in particular the revolving line of credit option. Those selected assets include almost always: Receivables, Inventory and Fixed Assets.
Note also that potentially you can include real estate and in some cases even your intellectual property if either of those applies to your company. Those latter two are more rare additions to your borrowing, but they are there.
The best way we describe asset based credit line loans is simply that they bundle your assets into borrowing power, with less emphasis on the overall credit quality that our banks focus on as it pertains to balance sheet quality, cash flow, and profit/loss history.
ABL loans are offered by commercial lenders who in some cases even have significant expertise in your industry as it's been their niche. But at the end of the day every asset based lender focuses on the overall asset evaluation and the ability of you to report on regular basis those assets. That is often easily accomplished by reports that include aged receivables, aged payables, inventory lists, etc. We suggest to clients that if you can't supply those basics you probably have other problems!!
Asset based credit lines also distinguish themselves via ' flexibility ' - It's all about providing a finance solution that is focused on any complexity in your business and industry.
Remember also that another key difference here is that whole bank credit facilities from our Chartered banks tend to offer fixed upper limits and are reviewed almost always on an annual basis. ABL credit lines can easily fluctuate with your sales levels, with increases in borrowing power most often easily accomplished as seasonality and sales bulges occur in your business. Many firms gravitate to asset based lending lines for the sole reason that is allows them to take on larger business, new contracts, etc.
Thousands of firms are checking into the asset based financing alternative - it's about flexibility, specialization, and increased liquidity.
Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your borrowing needs.
Stan Prokop - founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :
http://www.7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
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
