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OVERVIEW – Information on asset based line of credit solutions in Canada. These facilities margin your current assets , allowing you to borrow against receivables and inventory . Additionally fixed assets can also be financed within these facilities
It's an alternative to a Chartered bank line of Credit - (in some cases the banks themselves even offer this unique financing as a subset of their services!) We're unabashed supporters of this facility... so... let's dig in.
Asset based lending should not be confused with 'loans 'or 'term debt '. It’s a working capital or line of credit facility that is tied to your firm's inventory, receivables, and in some cases equipment and real estate can be added.
Rates on ABL facilities in Canada vary, and you can pretty well guess the parameters of why they vary - which is simply:
" Deal size of the facility
" Your firms overall credit quality, and some component of assessing what industry you are in and
" How your industry functions Vis Vis profitability, seasonality, and other industry dynamics.
" We can say in general that rates on ABL facilities in Canada go from 7-9% per annum to 1 ½% per month depending on most of the factors we listed above.
Overall credit quality challenges should not deter you from looking into a Canadian asset based lending solution - for the simple reason that this type of financing focuses on assets, not overall balance sheet and income statement quality. Simply put, your company might be currently losing money or experiencing a unique challenge, but you might find you still qualify for a very significant facility.
On a day to day business the most significant feature of an asset based line of credit is the ability for you to bridge cash flow that you have tied up in inventory and receivables.
Your asset based line of credit will fluctuate based on the key elements of the ABL security, namely the receivables and inventory. The good news is that as your receivables and inventory grow you can draw down on more funds - unlike a bank facility which might have certain caps on how much exposure the bank will take with your firm on an operating line basis.
The one aspect that you should consider in such a financing solution is additional reporting, but if you can properly account and report on receivables, inventory, etc you should not be concerned.
Many clients tell us that some of the additional 'reporting' that comes with an asset based credit line actually has helped them understand their business better!
Looking for liquidity, working capital and cash flow and a solution that is non bank in nature? Talk to an expert in the area, determine if this financing meets your needs, and ensure, with the help of an expert, that you access the type of facility that provides you with working capital in a manner that suits your company's cash cycle.
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 .
7 Park Avenue Financial
Office = 905 829 2653
Email = sprokop@7parkavenuefinancial.com
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
