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YOU ARE LOOKING FOR AN ASSET BASED LENDING AND A  BUSINESS CREDIT SOLUTION FOR YOUR COMPANY! 

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

Let us help your firm just like our hundreds of other satisfied clients.

        Financing & Cash flow are the biggest issues facing businesses today

   UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com  

 

ASSET BASED LENDING IN CANADA - A BUSINESS GUIDE

 

 

Asset based lending.  The only business credit tool your firm will ever need?

 

 

"The lack of money is the root of all evil." - Mark Twain  

 

At 7 Park Avenue Financial we think Mr. Twain had it right -  It's challenging when a business doesn't have the resources it needs!

 

It's possible, and we've seen it work all the time. How could one type of business financing, i.e. asset-based lending, be the only business credit tool our firm will ever need? Let's dig in.

 

 

WHY CANADIAN BUSINESS IS TURNING TO ASSET-BASED LENDING FOR CANADIAN BUSINESS FINANCING SOLUTIONS 

 

Asset based lending solutions, also known as ' ABL ' are a type of financing that secures financing for a business using the ' assets ' of the business as collateral. This method of financing a business is popular with businesses who cannot access all the bank unsecured financing and who have sales and assets to collateralize. 

 

It is an increasingly popular method of accessing needed capital that is ' non-dilutive '; allowing business owners to retain their equity ownership while obtaining needed funding.

 

  

FROM INVENTORY FINANCING TO HARD ASSETS AND SALES- WHY ABL IS REVOLUTIONIZING CANADIAN BUSINESS FINANCE

 

  

Many of our clients want to discuss non-bank alternatives to cash flow and working capital challenges. In most cases, one type of Canadian business financing is not necessarily going to do the entire job you need - Except..! Except when it’s an Asset-based lending solution for business credit.

 

  

BEYOND BANKS - THE RISE OF ALTERNATIVE FINANCING / ASSET BASED FINANCING IN CANADA  

 

The 'ABL'  asset based loan is sort of the new kid on the block - it’s vastly popular in the U.S. and rapidly taking off in Canada, some say in fits and starts, which is partially due to the entry and departure of various firms that dominate the market.

 

ABL, which is our acronym for the solution can be tailored very specifically to be the total one-stop financing solution your firm needs.  The two greatest dynamics of ABL are that it offers your business more credit availability (isn’t that what it’s all about) and at the same time can be customized to your industry and specifically, your company!

 

 BRIDGING THE GAP - WHY ASSET BACKED LENDING CLOSES THE CANADIAN FINANCIAL DIVIDE FOR YOUR BUSINESS 

 

In its purest form is simply putting in a customized loan facility to allow you to draw daily against the value of your receivables, inventory, and in many cases fixed assets and real estate. It’s kind of the business version of a home equity line of credit we like to explain to clients!

  

  

THE BENEFIT OF ASSET BASED LENDING VERSUS TRADITIONAL LENDING IN CANADA    

 

But wait a minute, clients say, isn’t it exactly what a bank does? Well, yes, and absolutely no! Conceptually it is still the same, but the asset-based lending business credit facility focuses solely on the assets, so you will rarely if ever hear terms such as rations, covenants, outside collateral, personal guarantees, etc in the context of an ABL solution.

 

  

IS ABL RIGHT FOR YOUR BUSINESS?  

 

So is it the right financing tool for your firm - we'll let you be the judge of that. But if your firm required working capital and cash flow revolver in excess of 250k and you have some financial challenges you are immediately a candidate. Oh and by the way, you absolutely need to have receivables, inventory and fixed assets to get this type of facility, that’s really the main premise.

 

Typical candidates we work with all the time have margin pressures, they don’t have the business financing in place to support sales growth and new orders, or they have some real business and balance sheet issues revolving around restructuring, turning around, coming off a bad year, receiving a mega-contract, etc.

 

If that sounds like you we can assure you that you're a candidate for asset based lending business credit.

 

WHY ASSET BASED LENDING WORKS - COLLATERAL / CASH FLOW / BUSINESS CREDIT

 

  

The majority of businesses in Canada need business credit lines to fund day-to-day operations and meet the cash flow demands around their current liabilities and obligations. Using business assets as collateral to access that needed cash flow is what ABL lines of credit and business loans are all about.

 

Lenders place specific values on the business collateral, with balance sheet assets such as accounts receivable and inventory receiving a  high level of margin financing. Physical assets are sometimes subject to appraisal or valuation but can be a key component of the borrowing facility.  Interest rates and borrowing costs are generally higher in ABL lending but provide more access to business capital than unsecured loans.  

 

The benefits? Greater cash flow, no covenants or ratio maintenance, and the ability to take advantage of opportunities otherwise not available. Not having to consider dilutive equity financing allows business owners to retain ownership while accessing cash flows needed in the business based on a higher borrowing for the face value of any asset. In many situations financing needed is ' time sensitive ' and ABL solutions are more readily obtained compared to the timelines of obtaining financing from traditional financial institutions.

 

KEY TAKEAWAYS -

 

Asset based lending is the financing of a borrower's assets as collateral for lines of credit/term loans

Each asset category has an assigned amount of borrowing capacity - liquidity

Asset based non-bank credit lines are strong alternatives to bank credit and allow a company to cover short-term cash flow demands with greater credit availability by virtue of higher advance rates,  as well as the ability to access growth opportunities

 

  

CONCLUSION - UNLOCKING THE POWER OF ASSET BASED LENDING  

 

So is it the be-all and end-all financing solution? Only you as a Canadian business owner and financial manager can decide - Call 7 Park Avenue Financial,  a trusted credible and experienced business financing advisor to see if this type of business credit is for your firm and your business needs.

 

 

FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION 

 

What is asset-based lending? How does it work in Canada?

 

Asset-based lending is a  business credit solution that allows a company to use the assets of the business as the sole collateral for securing financing. Typical assets financed by the ABL lender are working capital assets such as accounts receivable, inventories, and also fixed assets/property plant and equipment. This method of financing focuses on ' assets ' versus traditional banking solutions which place a high emphasis on balance sheet ratios, profitability, and cash flow generation - as well as often requiring personal guarantees and external collateral.

 

How does asset-based lending differ from traditional lending in Canada?

 

Traditional lending in  Canada focuses on business credit history and financial covenants and ratios in the regulatory environment of Canadian banking, while asset-based lending provides more flexible financing based solely on the sales and the company's assets of the business. ABL business credit solutions can also provide equipment financing and sale-leasebacks, as well as bridge loans on company-owned commercial real estate. This method of alternative financing focuses less on cash flow and traditional measures of creditworthiness and is a newer known form of financing in the Canadian lending market. The regulatory environment of Canadian banks precludes them from lending to many businesses that without ABL solutions would not be able to access credit.

 

What types of businesses in Canada can benefit from asset-based lending?

 

Asset-based lending provides more financing because the alternative lending market has created a more competitive landscape for business borrowers to access capital. Almost every industry has uses for asset-based lending institutions - Manufacturers, major retailers, and even some service industries are high users of asset backed lending.

 

Inventory financing is also best suited to an ABL solution- and any business experiencing seasonality or cyclicality can benefit from asset-backed financing/underwriting revolving around credit or term facilities. Understanding loan covenants is key to the benefits and use of ABL lending as little or no emphasis is placed on loan covenants.

 

 

What are the risks associated with asset-based lending in Canada?

 

Although asset-based lending solutions provide access to business credit and capital this method of financing comes at a higher cost/interest rate versus a bank unsecured loan - And as well borrowers must realize that the business lender can take possession  ( if a borrower defaults ) of a pledged asset or assets under a defaulted business loan within an asset based facility.

 

 

How can Canadian businesses find a reputable asset-based lender? 

 

In order to find reputable asset-based lending in  Canada business borrowers should perform a proper level of due diligence based our the lender's experience in their industry as well as the terms and conditions in lending agreements.  The two types of asset based loans offered by ABL asset based lenders include business lines of credit securing a/r, inventories and fixed assets, as well as term loans around specific assets such as commercial real estate owned by the business.

 

 

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

Unlocking Your Business Potential With Asset Based Lending Solutions

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YOUR COMPANY IS LOOKING FOR  BUSINESS CREDIT VIA AN ABL LOAN!

IS ASSET BASED LENDING YOUR KEY TO BUSINESS SUCCESS

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the  biggest issues facing business today

ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS  FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop7parkavenuefinancial.com

 

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

 

"Access to capital is one of the biggest constraints facing businesses today." - Karen Mills 

 

ABL LOANS - A FLEXIBLE FINANCING SOLUTION FOR YOUR BUSINESS

 

Business credit in Canada. Can ABL loan facility financing really provide you with that business  ' wind in your sails ' your company needs to generate ongoing working capital and cash flow needs? We think so, and here's why! Let's dig in on the asset based loan solution!

 

 

WHAT IS ABL LOAN FINANCING? 

 

ABL loan financing is a type of business credit solution under the asset-based lending umbrella - allowing borrowers to obtain loans and financing using business assets as the sole collateral. Typical collateral in ABL loans includes receivables, equipment, and real estate -

 

In some cases, brand and intellectual property can also be included as a component of the asset base of the business. Companies in Canada use ABL finance to generate the working capital they need to operate and fund business growth . ABL loans are typically structured in a more flexible format than traditional bank loans.

 

These days, as we’ve noted recently, there isn’t a day when we don’t hear about the challenges of companies ' tumbling' when it comes to their challenges in finding working capital and even long-term financing. (Today, we're talking about working capital/ cash flow)

 

However, the good news about the revolving door is that when ' the bank says no ' or the bank says 'yes, but not that much, there is always an ABL asset-based lender willing to step up to bat.

 

WHY DO ABL LOANS WORK?

 

The simple reason asset-based lenders provide the business credit you need is that they are solely focused on the amount, quality, and monitoring of your business sales and physical assets. Those assets? They are receivables, inventory, equipment, and in some cases, real estate if that pertains to land or buildings owned by the company. 

 

 

ACCESS TRADITIONAL BANK FINANCING IS A CHALLENGE 

 

Our Canadian chartered banks, in their wisdom, focus on cash flow lending, with emphasis on financial statements, ratios, covenants, and outside guarantees. Who is right? We won’t weigh in on that one today; we'll say that each institution, the bank and the ABL lender, is one of two options to finance your business - we'll let you decide which one works best.

 

While ABL solutions are often more expensive (not always), that’s clearly one reason why companies gravitate to bank financing first. By the way, asset-based lending firms tend to be non-bank commercial financing companies, although some Canadian chartered banks have entered the ABL market.

 

ABL LOAN VERSUS TRADITIONAL FINANCING

 

An ABL loan or operating revolver, as it is termed, offers your firm continuous working capital as long as you have those assets. The key beauty of this type of borrowing is that it grows with you; it’s not set in stone once a year as it might be via a bank approval.

 

Who uses ABL? Pretty well, every type of firm in Canada includes manufacturers, service firms, retailers, and high technology firms. Again, pretty well, everybody!  The size of these facilities really determines who you deal with and your overall pricing and structure. Small deals start in the $250k range, while larger facilities can easily be tens of millions of dollars.  To show you the spectrum, a start-up can have an ABL line of credit, and some of Canada's largest and public corporations have abandoned bank financing in favour of ABL business credit.

 

THE BENEFIT OF ABL LOANS FOR BUSINESS CASH FLOW

 

A key benefit of this type of business line of credit tends to be borrowing power - receivables are margined at 90%, inventory ranges from 20-70%, and appraisals and valuations are done on your fixed assets allow them to be thrown into the mix also. Just imagine being able to borrow daily against the value of your fixed assets. That’s ABL power!

 

 IS YOUR BUSINESS ELIGIBLE FOR ASSET BASED LENDING? HOW TO APPLY FOR ASSET-BASED LENDING 

 

Your firm's ability to get approved for this type of borrowing will depend on your ability to produce regular and proper financial statements, as well as the need to ensure you can report on current assets on an ongoing basis - i.e. aged receivables, inventory, etc.

 

CONCLUSION - FINANCING BUSINESS GROWTH VIA ASSET BASED LENDING

 

Intrigued?  Is Asset based lending right for your business? As a Canadian business borrower, you should be. Speak to 7 Park Avenue Financial,  a trusted, credible, and experienced Canadian business financing advisor who can assist you with your ABL business credit needs and expertise in executing ABL transactions.

 

 

FAQ: FREQUENTLY ASKED QUESTIONS/PEOPLE ALSO ASK  /MORE INFORMATION  

 

What is ABL loan financing?

ABL loan financing is a form of business financing that allows businesses to borrow under a loan structure that uses the business's assets as collateral. Key assets normally financed under this structure include accounts receivable, inventories, and fixed assets of the business - in some cases commercial real estate owned by the business can be included in the facility via either a business line of credit or term loan structure.

 

Unlike bank financing, very little emphasis is placed on the creditworthiness of the owners of the business. Asset-based lenders are skilled in risk management and asset valuation, allowing their type f financial analysis to provide greater financing for cash flow and business growth - Loan flexibility in ABL finance solutions is the reason this method of alternative financing is becoming more popular in the Canadian business financing landscape.

 

 How does ABL loan financing differ from traditional loans?

 

ABL loans differ from traditional loan financing via banks or other traditional financial institutions because they are usually more flexible as the focus is on collateral, versus the emphasis, banks place on balance sheet ratios, covenants, personal guarantees, and profit and cash flows.

Since collateral levels fluctuate the business has the ability to access more working capital as sales and assets such as the investment in carrying accounts receivables grows. The ability to use a pledged asset to access business funding is a key benefit of asset based lending ABL. Fixed asset facility limits greatly increase the size of a non-bank asset-based line of credit.

 

   

What types of businesses are eligible for ABL loan financing?  

 

Businesses of all sizes and industries are eligible for asset-based lending solutions - that includes start-up or early-stage companies and businesses that are temporarily financially challenged or in a restructuring stage - Assets remain the main eligibility focus - many subsets of asset-based loans can be accessed - such forms of financing include receivable factoring, tax credit financing, sale-leasebacks, purchaser order financing, etc. Traditional operating facility advance are often much less than is offered under an ABL borrowing base.

ABL lines of credit and term loans are covenant light structure based, focusing on the liquidation asset values of the company. If a business is in a cyclical or seasonal industry the ability to access capital is important so many types of industries qualify versus conventional lending criteria imposed by banks.

 

 

  What are the benefits of ABL loan financing?  

 

The benefits of abl loan financing solutions include more access to funding that otherwise might not be able to be obtained by a bank or other traditional financial institutions such as a credit union or an insurance company. Loans are typically structured around the customization of the assets of the business. In many cases, abl loans can help to refinance existing debt. Growth financing funding  is one reasons why many businesses consider asset backed loans.

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

Business Bank Credit . Understanding The Financing Habitat Of The Rare Great Commercial Banker In Canada

Commercial Bank Financing Seem More Like A Roller Derby Challenge ?

OVERVIEW – Information on bank business credit in Canada . Understanding what the Canadian commercial banker offers and requires is key to business financing success



Bank business credit in Canada. Our clients are very much forgiven for sometimes feeling that obtaining commercial bank financing in Canada is more akin to working there way through a roller derby tournament - high levels of navigation required at all times.

Key to understanding your ability to access and receive commercial bank financing is understanding the habits of that rare beast - the Canadian commercial banker. We say rare because we're talking about the good ones! Let's dig in.

Although it should not, in our opinion, necessarily be the case the hard reality is that most Canadian business owners and financial managers feel our Canadian banks are the ' go to ' when it comes to debt or operating capital finance. (They often forget, or worse, don't know, that those same solutions are offered in abundance by commercial finance companies, lease companies, and non bank asset based credit line lenders.)

The business owner/ financial manager can be forgiven though, because when bank financing is accessible by your firm the financing is in great abundance, and every type of business financing needed can be on the table.

Bank offerings in Canada today, depending on who you are dealing with, offers -

Term loans
Lease Finance
Securitization
Equity Capital
Revolving credit lines
Trade Financing
Letters of Credit

Well, you get the picture. The key aspect that needs to be realized is that banks are at their essence cash flow lenders, so a great deal of emphasis is placed on analysis of your historical, current, and projected cash flow. Each bank might look at this a little differently (but not that differently) and at the back stop of that analysis is your ability to offer secondary corporate and or personal) collateral and guarantees.

We have always been of the opinion that there is a general similarity to commercial bank lending and competition. The difference, again, in our opinion, is the quality of your commercial banker. He or she operates in a very regulated and bureaucratic environment - so finding the commercial banker that is genuinely interested in your business and its growth is key, because, unlike in the U.S. , banks are highly regulated they are somewhat predictable in their behavior and offering Therefore the amount of capital they can lend, the rates, and margins on loan to value lending are not that dissimilar.

Many clients find themselves at some point in time being ' out of favor' with the bank. This might also mean they are segregated into a ' special loans' portfolio. At this point it's often time to consider non bank solutions, especially if your assets and growth potential are still there.

In general, start up companies in Canada can not, we repeat, cannot access commercial bank financing. The absence of our aforementioned cash flow coverage, collateral, and predictability of financing performance isn’t there. Don't count on your bank to properly finance a start up - but do consider non bank commercial financing sources.

Just knowing a couple of basic ratio qualifiers will help you often to understand your chances of success with bank business credit. Cash flow coverage should be greater than 1:1, and debt to equity rarely can exceed 2 or 3 to 1, respectively.

While commercial bank business credit in Canada is the lowest cost for pretty well every type of finance you need your challenge understands the criteria and probability of success. And finding a great banker is key - its alwasys back to the people component.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your bank, and non bank commercial financing needs.




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 :

http://www.7parkavenuefinancial.com/bank-business-credit-canada.html





CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

Stan Prokop