Asset Based Lending In Canada

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Asset based Lending - Canada is catching on quite quickly to a new breed of financing facility that has been in existence in the U.S. for a number of years. Whether your firm is relatively new, large or small, you have the option of looking at an asset based loan as an alternative financing facility in Canada, unlocking your assets for capital! Let's dig in.

The acronym for Asset Based Lending is ' ABL ' - ABL has grown popular for some very simple reasons :

1. ABL facilities will often resemble a bank credit line, providing the client with full-service banking needs

2. ABL lenders have a solid understanding of specialized asset values

3. Transactions are often very much ' customized ' to a particular firm or industry

4. There are limited or no ' financial covenants in asset-based lending; As an example banks are focused on ' leverage covenants ', thereby forcing firms to meet debt to equity ratios as an example that may be unachievable for many firms. Covenants in finance in banking scenarios become a real challenge as a firm tries to balance ratios versus growth opportunities.

5. There are no real ' upper limits' on the amount a firm can borrow in ABL, while the smaller transactions commence in the 250k range, which is considered a very small facility

6. An ABL loan line of revolving credit facility will almost always deliver more liquidity to a business because loan margins are much more generous; typical advance rates for a/r and inventory are significantly higher than bank credit lines. Stand-alone inventory loans can also be accessed as an inventory loan is a subset of asset based lending.

7. Many company's and certain industries, in general, are very ' seasonal ' when it comes to revenue recognition, need to build up inventory, etc. Asset-based credit address this issue head on. Additionally, certain industries become ' out of favour' in traditional financing circles, and ABL can often easily finance cyclical or industry specific challenges

8. Outside of general borrowing needs asset finance loans are very appropriate for acquisitions and or management buyouts.

9. Certain banks also offer ABL loans and pricing is extremely competitive KEY POINT: It should be noted that in general non-bank commercial asset based lenders have higher rates than Canadian chartered banks

10. Asset based non-bank revolving credit facilities are not really 'capped' with an upper credit limit - they can easily grow as your sales and asset base grows. This is a key differentiator vs a bank line of credit.

Asset Based Lending Versus Cash Flow Lenders

Part of the reason that asset-based lending - ' ABL ' has caught on in Canada is the current state of commercial business banking and in Canada and the access to liquidity challenges that many firms face in the post-2010 business environment. Suffice to say the 2020 pandemic has brought those same liquidity challenges to Canadian businesses

A BUSINESS LOAN WITH COLLATERAL

When your company has significant assets tied up in accounts receivable, inventory equipment, and sometimes real estate you want to ensure you are financing them at optimal levels for both survival and growth. Asset financing is the ultimate working capital finance option, as it comes with flexibility and can deliver urgent timely cash flow needs that many companies require when they are in a process of transition, or, alternatively, exploring significant growth options.

HISTORY OF ABL FINANCING IN CANADA

Although the basic financing concept is new ABL has been prospering in the U.S. for a number of years - Canadian firms compete with U.S. ABL lenders in our own business financing marketplace. Every industry in Canada has potential access to asset financing lending solutions - we note though that many industries are the perfect ' poster child' for ABl. Manufacturers, distributors, retailers are very typical users of the ABL solution.


As we noted some of the largest corporations in Canada utilize this type of financing, but the demand for ABL probably grew more out of the need for smaller and medium-sized firms in Canada - let’s say with revenues under 20 Million dollars - to get the operating financing they need.

BENEFITS OF ASSET BASED LENDING

The benefits of ABL financing seem very obvious to Canadian business owners and financial managers. The financing revolves totally around assets, and places only a very small reliance on debt to equity ratios, operating ratios, cash flow coverage, etc.



When Canadian businesses cannot satisfy their bankers on the above ratios and loan cash flow coverage they view ABL as an alternative financing solution. We would point out that ABL financing, similar to any other commercial financing, is not a solution to a firm who is in a death spiral - years ago ABL had the taint of a 'lender of last resort' - that is categorically not the case now and is utilized by firms who want to maximize operating and working capital financing but cant in many cases satisfy all Canadian chartered bank requirements.

WHEN YOU SHOULD CONSIDER AN ASSET BASED LENDING SOLUTION

ABL finance is a business loan that relies exclusively on the value of assets that become the collateral for a loan or revolving credit facility. Banks as an example place a huge emphasis on a firm's ability to generate positive cash flow from operations. Firms that are unable to demonstrate cash flow but still require financing utilize asset based lending arrangements to generate cash. There may be a number of reasons why a firm cannot temporarily satisfy banking covenants - the firms' financials may not be ready or updated as an example.


The typical scenarios under which a firm considers an asset-based lending arrangement are:



Growing very quickly - in high growth mode



Expanding into new markets



Merging with another firm



In 'Special Loans 'now and wishes alternate financing



We can't over emphasis the before mentioned point about financial statement characteristics - Asset based lines of credit focus solely on assets, that is where the liquidity and the operating facility works at its best. In many cases firms that have previous financing arrangements can significantly increase their credit availability by switching to an ABL line of credit.

EXAMPLE OF AN ASSET BASED WIN!

Our firm, 7 Park Avenue Financial, worked with a firm that was in Special loans with a chartered bank. They had an original line of credit of 750,000.00 - the bank cut it down to 500,000.00 and also put the customer into a Special loans category. We originated an asset based line of credit for 1,000,000.00 based on the firm's receivables, inventory, equipment and real estate. The customer utilized the ABL for about 18 months and then migrated back to commercial chartered banking arrangements with another bank. That story plays out over and over again in Canada.


We can say that the amount of funding a company can receive in an ABL arrangement is really based on a hierarchy of value of any given asset category. So as assets become more liquid on your balance sheet and work up to 'cash on hand; they have higher loan to value ratios. So while it is improbably and very unlikely your firm would receive 100% financing receivables as an example typically qualify for 85-90% funding. Many firms owner their own premises and there is significant equity in real estate, so that category also would receive a higher 'ltv' ( loan to value) possible in the 75% range as is common. Standalone inventory loans are also a subset of ABL financing.



CONCLUSION

Asset Based Lending In Canada can be one of the most effective business credit facilities for customers unable to achieve full traditional bank financing. Securing liquidity through company assets allows your borrowing to expand and contract when you need cash flow. Companies of any size or transitional stage can take advantage of working capital provided by asset based lenders.


Asset based lending will work for your business credit needs if your cash flow requirements are seasonal and revenues fluctuate. If your business plan includes acquisition financing, a turnaround or restructuring, or even a need for capital outside of equity considerations ABL will work for your company. ABL allows you to leverage company assets and is often a bridge back to traditional financing for many companies in Canada. The ability to finance a firm when it is in transition is a key part of ABL's success in Canada.



Asset based lines of credit? Your mission, should you choose to accept it? Investigate this unique financing option and work with a trusted, credible and experienced Canadian business financing advisor if the solutions meet your working capital needs.






7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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.

' 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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020

Asset based lending canada

Can Asset Based Lending Help Your Company? The ABL Solution Works - Here's How!

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Asset-Based Revolving Lines of Credit and Term Loans

Is asset based lending the right financing for your business? That's a question that comes up all the time with our clients, and they want solutions now, not down the road! One ' size fits all' solution is, asset based lending. These 'ABL' techniques and solutions could provide all the financing your firm needs in today's competitive environment. Asset based lending industry statistics show explosive growth over the last decade .

What is Asset Based Lending, also known as ' ABL '?

Simply speaking it's a lending facility with the collateral being specific company assets. Utilizing the ABL formula allows your company fo fund A/R, Inventories, unencumbered equipment, and real estate is that latter asset is a part of your asset mix. The combination of those assets will significantly improve overall business liquidity/working capital.

One way to view this newer method of financing is to look at it as a ' blending ' of your company assets. This lending formula, therefore, delivers on access to more capital than any one financing. There are numerous, let us call them ' subsets ' of asset finance -

A/R Financing
Inventory loans
Purchase Order Financing
Sale Leasebacks

All of these deliver solid financing when your business needs it. But combined into an Asset Based Borrowing solution your firm maximizes total working capital needs. View it as an option to run your business on a daily basis, or in the terms of considering a management buyout or acquisition. It's working capital when you need it most.




Companies that are constantly growing and in need of additional operating capital are the best candidates for the cash flow generating power of asset based lenders. Many of the best candidates for this business finance solution are financially leveraged and are not best suited for traditional Canadian bank financing .



Business owners and financial mgr's are looking for finance that grows with their business. As it became difficult to get all the financing they needed after 2008's recession many business owners investigated the ABL loan solution.

Typically, ( but not always ) asset based finance is non-bank in nature - it's offered by specialized commercial finance companies . It helps businesses access more working capital and cash flow - typically "Job 1 " for any business.

If your company has long term debt, and is looking to avoid taking on more debt, payables are rising, and you're waiting longer to collect receivables asset finance is a very logical solution. Ironically many business owners and financial managers in some cases haven't heard of this type of financing.

In the ' old days ' ( we remember them well ) abl was often touted as a financing of last resort. No longer!! Using it can grow your business, expand into new markets, buy a competitor, and oh yes, just survive day to day!

Summary Of The Benefits Of ABL

New clients at 7 Park Avenue Financial always ask us to clarify the benefits of the asset based lending solution.

A combination of business assets delivers a higher level of liquidity than any one type of finance

The ability to unlock assets traditionally not margined by Canadian banks as part of a working capital revolver

The ability to restore your firm to a level of financial stability - we meet with a lot of management who by necessity are always spending mangement time on cash flow needs

Every industry requires different levels of expertise and funding - ABL suits a wide variety of industries

ABL is a legitimate ' catch-all ' for expansion, restructuring or refinancing ( Yes you can finance the purchase of an existing business )

Asset finance solutions are low cost when compared to equity financing

Traditional Canadain bank requirements around covenants, ratios, etc make ABL more accessible and it's ability to ' co-exist ' with other types of debt is viewed as a key positive for firms that have different levels of senior and junior debt.It is a funding structure that works! That what we at 7 Park Avenue Financial call ' covenant light '!




In it's purest sense asset based lending is often just a revolving line of credit that allows you to borrow against all, repeat ' all ' of your assets. Those typical asset categories include receivables, inventory and fixed assets.. even real estate if your company occupies and owns its own premises. Therefore the prime security of the loan is a focus on the overall value of your asset base, with less, or no reliance on external collateral, the focus on personal guarantees, etc.

LEVERAGING BUSINESS ASSETS TO ACCESS WORKING CAPITAL

The entire subject of leverage and margining your assets in ABL is critical to understand for the business owner and financial manager . ABL funded revolving credit facilities are based on a formula based on the liquidation value of your current and fixed assets. Naturally, a/r and inventory rank very high in liquidation value and will provide the maximum borrowing power . Typical advances on receivables are 90%, and percentages will vary based upon the many types of inventory specific to any one industry in Canada.

How Is The Exact Value Of ABL Secured Loans In Canada Calculated?

The asset based lender will focus on your firm's balance sheet with a view towards ensuring a detailed analysis of your overall potential liquidity. Factors that come into play include specific industry issues as well as current economic conditions, pandemics included!

As an example, the ageing for a/r and inventory will determine eligible amounts of borrowing under the facility, i.e. all receivables under 90 days is usually a typical measure of borrowing power. There might be a ' dilution' part to the formula - that might be an allowance for bad debts/uncollectible accounts.

The final borrowing base certificate will demonstrate maximum borrowing power for your firm.It should go without saying your firm should have a good reporting and accounting systems capabilities .



Canadian asset based finance candidates can appreciate that numerous fluctuations in their business sometimes deliver a challenge to those borrowing base calculations. Retails or distributors might require excess borrowing capacity at certain times of the year so seasonality must be factored into any common sense formula.

The best way to address that is to ensure your lender has visibility to historical documents around cash on hand, current asset levels, accounts payable, etc. Heres where overall averages can really help the final formula. Yes, assumptions must be made but those cushions will be an excellent ' shock absorber' in available borrowing.



Traditional bank financing often revolves around strict reporting periods on financial statements, and aged reports on receivables and inventories and often comes with a term loan structure. If your firm requires what the pro's call ' bulge financing ' traditional bank type facilities cannot necessarily solve the cash flow crunch. The more liquid your receivables and inventories are re turnover will mean a higher loan to value in drawing down on your facility.

THE ABL DIFFERENCE?  Simple - You can borrow significantly, on an ongoing basis, against those assets. Smaller ABL facilities tend to be in the 250k range, but they can easily run into the millions. Many large corporations use ABL also by the way!

By now you may have picked up on the fact that as your business grows you can borrow more on an ongoing basis, as your assets have grown also - with virtually no upper limit.

While Canadian chartered banks focus on ratios, covenants, personal guarantees and high net worth the asset finance solution focus.. you guessed it.. mostly on your business assets.

ABL comes in different flavours and can be specifically based or full service against all assets. That allows you to not postpone business success! Can you afford not to access this solution?

So what can ABL do for your company - if you're growing let asset based financing finance that growth? Growth financing is a challenge for every business .If you are considering funding an acquisition ABL can play a part in that financing. Many entrepreneurs don't realize the critical part asset finance can play in acquisition financing. It is often the cheapest, quickest, and most efficient way to fund acquisitions versus going the equity financing route. An asset based lending mortgage can also be part of any new facility.

If your requirement is a turnaround or recapitalization this method of business finance is well suited to your needs and can be delivered in a timely manner when timing counts! Working with an experienced advisor with a track record of financing success will also allow you to address any cross border financing that might be required.


The seasonality of any industry can greatly impact cash flow - let this form of financing help you with the cash flow strain. And should your company require the ' turnaround' asset finance is a proven method of restructuring your firm.



Speak to a trusted, credible, and experienced Canadian business financing advisor with a track record of success on achieving benefits of ABL finance. Let our team tailor a specialty facility tied to your business within its industry. We will demonstrate how to unlock working capital to meet all your cash flow needs with the right total financing option. Next step? Growth/success!






7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



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.

' 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. He is an experienced

business financing consultant

.

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 financing 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
7 Park Avenue Financial/Copyright/2020

Can Asset Based Lending Help Your Company? The ABL Solution Works - Here's How!

Asset Based Lending In Canada : 7 Park Avenue Financial

7 Park Avenue Financial - In the News

The Editorial team at CANADIAN EQUIPMENT FINANCE magazine recently asked us to comment on ASSET BASED LENDING in Canada . Here's the article below from this excellent Industry/business magazine - CLICK HERE FOR LINK TO DIGITAL VERSION OF THE APRIL EDITION






The Growing Popularity of Asset Based Lending

By Stan Prokop, CEO, 7 Park Avenue Financial

From a general overview, asset backed lending (ABL) is both popular and
readily available across almost all industry sectors within the Canadian
marketplace. With its uptick in popularity over the last several years, ABL
has not only seen an increase in traditional asset backed lending, but most
Canadian chartered banks have embraced ABL finance in some form as well -
either through direct ownership of ABL entities or through partnerships.

The Current Trends

Asset backed lending is currently seeing some of the lowest borrowing rates
in years. The result of these low rates has been the placing of tremendous
pricing pressure on those deals that have higher credit quality.

When looking at sector trends, within retail there are many larger retailers
taking significant advantage of ABL inventory credit lines to finance
growth, expansion, and basic refinancing needs. Certainly ABL lenders that
place significant emphasis on the liquidation value of assets have made
major inroads on transactions. The healthcare sector is also a fast-growth
sector that is benefitting from asset backed lending.

Historically technology-based firms have not utilized ABL to any major
extent - typically because their assets are heavily focused on intellectual
property with lower emphasis on the staples of ABL borrowing such as
receivables and inventory. However, with the competitive nature within the
current lending environment, many asset based lenders are compelled to
consider alternate asset categories, such as purchase orders, contracts,
patents, and tax credits, as financeable assets.

Along with the widening of alternate asset categories, maximum deal sizes
continue to be almost unlimited in nature. However, many firms are lowering
the bar on minimum transaction size. While Tier 2 lenders will consider
$250,000 deals, Tier 1 lenders are more apt to consider transaction sizes
below $5 million. In the past this has not typically been the case. On
larger transactions it's certainly not unusual to see inter-creditor
agreements between ABL lenders and other secured lenders.

Gains in Market Share

In recent years, 'subsets' of ABL have made huge gains in market share.
These include such sectors as factoring firms, working capital lenders,
purchase order/supply chain financiers, floor plan lenders, and merchant
cash advance firms. While considered a part of ABL lending, these firms are
generally smaller, more nimble, and niche oriented.
As well, although the venture capital market in Canada is currently
considered to be emerging from a very difficult period, many private equity
lenders are now considered real competition to true ABL lenders and are
providing both equity and liquidity to transactions.

Knowledge and Awareness

ABL is still significantly misunderstood and oft miscategorized. Many CFOs
and business owners still continue to view Canadian chartered banks as the
only primary financing solution. However, increasingly, business owners,
managers, and boards now recognize that asset backed lending solutions are
often the solution to refinancing troubled firms that face insurmountable
challenges from the traditional lending environment. And as a result, the
role of the intermediary is taking on ever-increasing importance as business
owners recognize that they don't have the time and expertise to source ABL
financing solutions without the assistance of qualified, trusted, and
experienced advisors.

Despite some lack of awareness and knowledge among CFOs and business owners,
asset backed lending is nevertheless coming into its own in Canada. The
recent IPO from Callidus Capital suggests this to be the case - certainly
from a public acceptance point of view - and the oversubscription of that
public offering seems to suggest true interest and validation of this aspect
of Canadian business financing.

Stan Prokop of 7 Park Avenue Financial provides business financing for
Canadian firms. He specializes in working capital, cash flow, asset based
financing, equipment leasing, franchise finance, and Canadian tax credit
finance.

END OF ARTICLE




Stan Prokop - 7 Park Avenue Financial :

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 90 Million $ of financing for Canadian corporations . Info /Contact :






Stan Prokop









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

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Asset Based Lending Canada. Why Financing Companies Allow You To Reboot Your Business Credit Needs

Do Not Pass Go .. Do Not Collect $ 200.00 Until You Have Looked At Asset Based Lending

Information on asset based lending in Canada. Non bank financing companies provide business credit solutions for cash flow and working capital needs


Asset based lending in Canada comes in all shapes and sizes. When it comes to looking at alternative finance strategies for your business it just might be time to ' REBOOT' your thinking.

And Canadian financing companies just might have the solution you're looking for .Let's dig in.

Many business owners and financials managers, particularly in the SME sector in Canada continue to find that all their finance needs can not always be met by traditional Chartered bank / Credit Union sources. While Canadian banks continue to have virtually unlimited capital to serve business needs in many cases the borrower can't meet the requirements needed to attain those solutions.

So while public companies and large well heeled corporations are borrowing at will the challenge is much more difficult if you're not in one of those two categories.

Enter... stage right...

Asset based lending in Canada. Through a variety of , shall we call them ' subsets' of Asset financing your company can achieve the financing structure it needs to either grow your business or in certain cases even acquire a business.

Financing companies providing these solutions don't make it complicated either. They take all, or certain of your assets (depending on the amount and type of capital you are looking for) and put them into collateral pool that you can borrow against. They can be a combination of working capital/line of credit solutions or even term loans if that makes sense.

The assets in question?

They include:

Receivables
Inventory
Equipment
Tax credits
Real estate
Large contracts/orders

And here's the good news. You can mix and match!

So who is this type of financing well suited for? Typical clients we meet tend to be:

High growth
Start Ups
Restructuring
Acquisition oriented
Management buy outs

A key attraction in Asset based lending in Canada is simply the fact that it requires less equity as the focus is all about those assets.

In business financing its not always a perfect world , so typical financing /interest rate costs offered by financing companies that are in effect non bank lenders are going to be higher , one reason being those finance firms borrow the funds they need for you from the banks!

We do point out to our clients that if they can meet typical bank borrowing criteria often an asset based line of credit will be both competitive with the banks but most importantly give you a lot more borrowing power. The simple reason for that is that assets are 'margined' or ' loaned against' more aggressively. In many cases companies that temporarily use Asset financing often migrate back to a traditional bank solution.

If you're looking for innovative solutions for business assets and sales growth for your firm consider seeking out and speaking to a trusted, credible and experienced Canadian business financing advisor with a track record of success who can assist you in your particular needs. It's time to ' reboot ' your thinking on the financing solution you require!




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 = Canadian Asset Based Lending Solutions





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

Asset Based Lending Canada - Why An ABL Working Capital Loan is Your 2011 Finance Solution

Optimistic as us? We would bet a nickel that you're a lot more optimistic about business growth and prospects heading into 2011 - Could it have gotten any more challenging over the last two years? Doubtful !

So how asset could based lending Canada and a working capital loan facility give you all the business financing optimism you might have lost over the last couple years.

Simply for the reason that, when properly utilized and structured an asset based line of credit, aka an ' ABL ' is in our opinion your best bet for a one stop shopping solution for all your cash flow needs.

That’s a pretty powerful statement, so let’s examine what an ABL solution is, how it works, and more importantly, why you should potentially consider it for your business financing and working capital solutions.

Simply speaking asset based lending is a cure all for firms that are highly leveraged, have had some challenges in financial performance, and at the same time have an asset base to move forward on and grow the business .

The term asset based line of credit is in no way misleading - it’s simply a line of credit that finances your assets (receivables, inventory, and potentially equipment and real estate) on a revolving basis. To put it in better context think bank line of credit without the rations, covenants, additional collateral, emphasis on personal guarantees and personal net worth, etc.

An ABL working capital loan or revolving facility simply gives you the tool to grow your business, and that tool is cash. No longer will you have to worry about negotiating seasonal or one time bulge needs in your finance needs, and you could even consider an ABL facility as a solution to acquire a competitor.

In many cases the asset based lending Canada solution that you need is a stop gap against two key challenges, the ability to grow your business when you don’t have enough owner equity and are potentially over leveraged.

Naturally the alternative solution to a working capital facility such as this is for the owners of the company to put in more equity and long term working capital. That typically has a lot of challenges to it, and if you talk to anyone seasoned in business finance you'll quickly learn that giving up equity is a lot more expensive than monetizing your assets, which is what a working capital loan facility does when you consider the ABL solution .

So how does the facility work - it is a non bank solution with an independent firm, and provides you with 90% receivable financing, and inventory borrowing that’s based on the actual value of your inventory, not some pre determine cap or limit that many banks impose. (That’s because banks generally don’t have the ability to understand your inventory values - ABL lenders do!).

Asset based lending, in our experience is a bit more costly than traditional banking, but the upside is you have unlimited cash flow financing for your growth and unique business challenges. One other perceived disadvantage of asset based lending in Canada is simply that you have to report on your a/r and inventory in a more timely fashion - Quite frankly though we often tell clients that type of reporting will help them understand their business better .

So, you're probably intrigued! As we have shown you a solution to expand, meet cash flow needs, and access working capital cash flow that might otherwise not be available. Speak to a credible, experienced and trusted Canadian business financing expert on how to access a working capital loan and operating facility today - It’s your 2011 best bet for business financing.

--

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 6 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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