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

Is The Asset Based Credit Line And Loan A Threat To Bank Business Lines Of Credit In Canada . You Decide After This!

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Is There A New Triple Threat In Canadian Business Financing?

Information on the business line of credit in Canada . Differences in bank and ABL asset based loan facilities are worth knowing for the Canadian business owner / manager

Not all business owners and financial managers in Canada are familiar with the new (relatively speaking )kid on the block in Canada , the business line of credit know as the ABL , which is basically an asset based loan , non bank in nature .

Is the ABL a real ' triple threat ' when it comes to the alternative, the bank commercial credit facility? We'll let you decide but we’re quite sure you will agree there is a market for both as you will soon see.

Oh, and by the way, the banks agree with us, because many of them, unbeknownst to many, offer their clients both alternatives. Talk about a secret we have let you in on!

So if the ultimate goal of both the ABL and the bank facility is to provide you with revolving credit, how in fact are they different? One way is simply the focus - for the bank its on cash flow and profits, while the ABL facility focuses on... you guessed it, just assets ! While our chartered banks view collateral as a back up to their credit decision the Asset based lender views your assets, the collateral, as pretty well the only back up plan.

The way bank credit lines and ABL facilities behave is partly driven by regulations. That is to say that our strong Canadian banking system is driven by rules and regulations around the amount of funds they have, what they can lend, who they can lend to . Given the fact that our banks are all pretty well public corporations on the stock market we can further imagine all the visibility around their lending that that garners!

And the asset based lender then? Well we are certainly not portraying them as drunken cowboys doing what they want and when they want, but the reality is they are not regulated, are more often than not private firms, and make their own risk ratings and decisions based on management experience and their opinion of your assets - typically A/R, inventory, equipment, and even real estate. All of those components become part of your business credit line.

Here's another little surprise we'll share with you today. When bank loans go bad they are placed in a ' non performing ' part of the banks books, a special place known as ... you guessed it ' SPECIAL LOANS '. Do you know who often refinances these loans and pays out the bank? Surprise! It's the asset based lender!

So when a company is consuming too much cash, rather than generating it the asset based business line of credit is a great business credit solution. So all of a sudden historical cash flow and profits, critical to a bank, are a non issue when you are looking for an ABL facility. Big difference!

Do we criticize our banks for their behavior .Some might, but not us, because Canadian chartered bank solutions deliver the lowest cost based on the risk they are prepared to take.

That brings us of course to pricing. In fact certain ABL business lines of credit are in fact 100% competitive, even lower than bank offerings. However, the majority are in fact priced higher, with the offset being the tremendous amount of additional liquidity and working capital your firm achieves when monetizing assets via an asset based ABL loan.

So, co-existing. Absolutely. Just be prepared to recognize the price, limitations and benefits that your firm is prepared to take one when looking for a true business line of credit. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your business credit decision.

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


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.
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

Without an ABL Lending And Loan Facility Financing Where Will You Be Tomorrow ? A Canadian Non - Bank Alternative !

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A Formula For Canadian Commercial Business Financing

Information on ABL lending in Canada . How can investigating this financing loan facility today via a non bank working capital solution secure the future of your Canadian operating financing needs

Concerned about your ability to achieve business operating financing over the long term - if that’s the case an ABL lending solution might be the alternative to a traditional bank financing facility .

We think the whole issue revolves around the term alternative - and we mean that in two ways. First of all from a pure technical reason ABL ( Asset Based Lending ) is in fact ' alternative financing ' , a term that has become very much in vogue since 2008 -2009 when the Canadian business financing landscape changed dramatically due to the global financial recession.


And secondly, it’s just basically another word for choice and we guarantee you that you need choices in your business financing decisions.
So, can you ignore asset financing and let other firms, including your competitors use ABL as their new choice of operating financing? Of course you can, but if this type of loan or facility (it’s not a loan per se) has the ability to virtually guarantee you access to financing for all future growth we think it’s remiss of you not to consider it. That’s just our humble opinion.

The bottom line is that this type of asset based line of credit financing facility is almost always tailored to your specific needs. It provides you with the flexibility to have a customized arrangement around the borrowing power you can generate via... guess what, Assets!

And what are those assets? Commonly they are receivables, inventories, and in some cases as an add on, fixed assets or real estate. It’s simply the monetization of those assets based on realistic values (often achieved by an appraisal)that gives you al alternative , and by the way, almost always larger ! operating facility .

If as a Canadian business owner or financial manager you're concerned about the future of financing for your firm and you have special needs or situations then ABL is probably the answer to your alternative, which is losing out on growth opportunities or having to look elsewhere for debt or outside equity.

We mention debt because you do have alternatives to ABL lending such as cash flow term loans, sub debt, etc but surely the ability to monetize assets to the maximum and not borrow relative to the balance sheet is appealing?

We've referenced the ability of your firm to secure the future of your financing and growth via an ABL lending and financing facility. Clients who want to make this drastic change to non bank financing always ask a question that could generally be summarized as ' whats in it for us '. The answer is pretty simple, increase cash flow for firms that have assets, both current and fixed, that aren’t being monetized now. Although you might end up reporting more on the monthly values of those assets most clients are happy to know that these reports are no longer tied to covenants and ratios, etc as required by traditional Canadian chartered bank financing. Issues of seasonality in your working capital, or being flexible to take advantage of new opportunities (including acquisitions by the way) make ABL lending a solid ' loan ' financing facility alternative choice.

So whats the bottom line in the future of your operating financing? And where will you be tomorrow in your business financing ? Its simply that you should investigate asset based lending facilities, non bank in nature, as a method of creating long term access to working capital and growth ability . Speak to a trusted, credible, and experienced Canadian business financing advisor for the lowdown on ABL financing.

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

Click here for 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 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.
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

Why An Asset Based Loan Might Be Your Best Business Line of Credit Solution in Canada

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How to use Asset Finance for Working Capital

Information on the asset based loan strategy to facilitate a business line of credit solution for all your company's working capital and cash flow needs for growth

Canadian business owners and financial managers fully realize that based upon their working capital and cash flow needs a business line of credit is a necessity for the overall financing needs of the business.

An asset finance strategy can sometimes be the best solution for your overall business financing needs. Clients we speak to have trouble differentiating this type of solution from a regular Canadian chartered bank line of credit.

The difference is simply the overall focus of the financing – an asset based line of credit focuses solely on the variety of different business assets you have – they include predominantly inventory, receivables, equipment, and in some cases real estate .

When you successfully set up an asset based loan facility you are in effect monetizing these assets to their maximum, and borrowing against them as you need funds, on a daily basis. Naturally the main and most liquid assets in this type of financing tend to be receivables and inventory, but those other hard assets can nicely shore up an even higher credit facility for your firm.

So let’s get back to the difference between this type of facility, which some companies have never heard of, and a bank revolving line of credit. Your asset based business line of credit, unlike the bank facility, focuses 99% on the value of the assets in your business – so the bottom line is that as those assets grow you have unlimited working capital to grow ! – And that’s a good thing.

Another way of looking at this or explaining it more clearly is the manner in which these loans are set up and approved. Asset based loans for a business line of credit in this asset finance strategy focuses on collateral and its value. If you have now, or in the past secured a bank facility on the other hand you of course recognize the banks puts a lot of emphasis on non asset issues such as overall financial statement quality, external collateral, personal guarantees, etc. That is the main difference between these two types of financing. If you can demonstrate positive cash flow and cash flow from operations to a Canadian chartered bank it is unlikely you can obtain a business line of credit that suits your overall needs. Asset finance on the other hand is collateral based – if you have A/R, inventory, and perhaps equipment and real estate you can draw down on a daily basis against the value of those assets!

One other critical difference is that less covenants and ratio requirements are in place in an asset based line of credit. So if your firm has ongoing liquid and fixed assets you are in an excellent position to negotiate a business line of credit for an asset based financing facility.

How does this facility work on a daily basis? Is a question we always get from clients? You still of course do your banking at a bank or perhaps a credit union – but you supply on a regular (perhaps a weekly or monthly basis) what is known as a borrowing base certificate for your assets. The asset based lender then advances funds into your account which you can use to finance your business.

Asset based loans, or working capital facilities as we also like to call them have different levels of pricing based on overall facility size and with whom you are financing the line with. We recommend you review the benefits of an asset based business line of credit and speak to a credible, trusted, and experienced business financing advisor to determine if this type of working capital arrangement suits your firm. Many Canadian businesses are moving to this type of facility to fund future growth and profits.

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

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 .

' 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

Is it Advisable to Consider Sale-Leaseback Financing?

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Many business owners and financial managers are often faced with the consideration of utilizing a sale - leaseback to generate cash. This strategy became much more popular over the last year or so as banking and credit liquidity scenarios deteriorated.

The overall strategy can be viewed as giving some operational flexibility to the business. The bottom line of course is that it brings additional cash into the company at a time when ash is king. The customer is of course, essentially 'tapping into equity 'that the firm has built up in the asset. What is that asset?

Typically assets given up for consideration in sale leasebacks are manufacturing equipment, computers, and even a firm's real estate.

Sale-leasebacks have to make sense to both the lessor and the lessee. We view the largest ' negative ' aspect to such a transaction being the potential perception by the lessor, or other lenders that the firm is making a last ditch ' cash grab '. There has to be, as referenced above, an agreement that the transaction works for both parties.

If we analyze a typical example of a transaction we will hopefully get a better sense of why this strategy can in fact be a common sense financing alternative. Company A has manufacturing assets, shown as fixed assets on the balance sheet. In the sale - leaseback scenario the assets of course remain at the company - they do not move. The company receives cash for the sale of the asset to the lease firm. Quite frankly customers who consider this transaction have explored other traditional options by this time, such as reviewing additional financing with their bank or other senior lenders. Naturally the equipment is used on a daily basis to continue to generate sales, (and hopefully profits) for the firm.

In certain instances the sale-leaseback can in fact enhance the customer's balance sheet. One additional major flexibility is that the new sale-leaseback financing can in fact be used to generate additional flexibility at the end of the lease - i.e. the customer can again regain ownership of the asset if it will have economic value, or might choose to negotiate a return of upgrade with the vendor or lessor.

In summary, does a sale-leaseback of assets make sense? The answer as we have seen is ' yes ' if in fact it is done for the right reasons and makes sense for the customer and the lender.

Stan Prokop is founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com The company originates business financing for Canadian companies,specializing in working capital, cash flow, and asset based financing. In business 6 years the company has completed in excess of 45 Million $ of financing for companies of all size.

For info on Canadian business financing and contact details see:

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







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

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 .

' 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










Article Source: http://EzineArticles.com/expert/Stan_Prokop/432698

Asset based Line of Credit – Canada

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What's In It For Me ? We're Glad You Asked ! Here's How Asset Based Credit Lines Can Benefit Your Company

Information on the benefits of asset based lines of credit in Canada

Your best financing solution in Canada just might be an asset based line of credit facility . These facilities are gradually becoming on of the newer and more popular methods of business financing in Canada.


The facility is generally totally focused on what we generally refer to as working capital, or more specifically, short term working capital. The largest part of the asset based financing facility tends to be your firms accounts receivable, but quite frankly in our experience it can be inventory also, as well as a component of equipment even purchase orders .


Most business owners are surprised when we tell them they are in a position to quite accurately calculate their own amount of total credit facility. That is because there are some very accepted rules as to how much is advanced and on what. By now the business owner or financial manager of a Canadian business understands that this type of financing is an alternative to a Chartered bank line of credit. The facility ‘ in general ‘ works in the same way , but there are some major difference in setting up the facility and in the effects , or rather lack of effects it has on your business .


Let’s clarify. If your business has a Chartered bank line of credit there are three things that facility has that don’t apply to an asset based lending facility. They are as follows:


A facility cap or maximum

Loan covenants and ratios

Additional collateral often required, with heavy emphasis on owner guarantees


Asset based credit facilities, also called ‘ABL’’s” are generally able to increase to the same extent that your firm can increase its receivables and inventory. The bottom line is that you are not constrained to grow!


There are little or no covenants or ratio requirements in an asset based lending facility, it’s totally based on the amount of assets you have


In general the assets financed are the only assets secured


One of few similarities of an asset based credit agreement is that, similar to a bank facility, receivables under 90 days are the only receivables that are financed.


So let’s just focus on the receivables portion of our asset based line of credit for a moment. A quick example would be:


Your firm has 500,000.00 in accounts receivable - Under your facility you can borrow up to 80 or 90% of that amount at any given time. Naturally the line fluctuates daily, (similar to a bank facility) because you are receiving payments every day and you are invoicing every day.


We can say as an across the board statement that asset based lines of credit are less restrictive than bank lines, they also cost more. Customers we meet with regularly though are in a position where they frankly don’t qualify for traditional bank financing – this could be for a variety of reasons. (A net loss in the current year, a high debt/equity ratio, can’t meet bank interest coverage requirements, etc.)


So yes, your firm has a higher cost of borrowing – asset based credit facilities in Canada have a wide spectrum of pricing, from 8-9% per annum, or in some cases 1-2% / month . But if your firm needs financing for growth, or even survival, and you have no access to traditional bank or term credit, asset based financing in many cases will save your company, give you almost unlimited access to working capital based on your sales, and at the same time position you for the next level of growth or a return to traditional financing. Many customers we have dealt with actually decide not to return to traditional bank financing once they realize and calculate the benefits of an asset based line of credit.


In summary, investigate asset based lines of credit via an experienced and credible advisor in this area of Canadian financing. Weigh the benefits and advantages and you may find this is the business financing solution you never heard of but works for you!



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

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 .

' 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