A Secret Portal To A New World Of Business Credit Lines ?
OVERVIEW – Information on an Abl credit facility as an alternative to business bank loans and Chartered bank commercial revolving credit lines
An ABL credit facility. Could this be the solution to business bank loans your firm has been seeking for your revolving credit needs? We believe the weight of evidence strongly suggest you take a look at one of Canada's newer methods of financing business commercial credit lines.
So what in fact do we think you need to know about this type of asset borrowing facility? Well, you asked for it, so here goes.
- The ABL (asset based lending) credit line is used by many Canadian businesses as an alternative to Canadian chartered bank lines of credit
- While this method of financing your business is not as widely known yet some of the Canada's largest corporations have used it, and continue to use it, for years.
- The main advantage of the facility is the fact that’s it’s based on all the assets of your company - those assets include receivables, inventory, equipment, tax credits and real estate. All of those assets are more aggressively margined than at a bank, so your firm has the ability to in many cases double its borrowing power. Yes, we said ' double '.
- Canadian business owners and financial managers look to this method of financing for a variety of reasons. We have already mentioned increased daily borrowing power, but other reasons include pricing , inability to achieve the bank financing you need, and the ability to leverage other assets rather than traditional bank a/r and inventory financing .
- Almost any firm can utilize an ABL Credit facility. Types of firms that typically consider this as alternative to business bank loans include start ups, high growth firms, companies in ' special loans ', and firms in turnaround or restructure mode. You can be a very 'normal' company, or a firm that has issues and challenges. Public and private companies alike have the ability to access asset based lending, as well as major retailers.
- Companies utilizing this type of line of credit can be expected to report more stringently on their assets - but it’s simply the basics, ie aged receivables, inventory lists, equipment lists, and aged payables as well as your monthly balance sheet and income statement. We don’t think any of those should surprise the business owner.
- The margins on a typical ABL funding scenario are usually 90% for A/R, 30-70% for inventory (it depends!), and appraised value of equipment, real estate, rolling stock, etc.
- Covenants and ratios typically demanded by our Chartered banks in their wisdom dont normally apply to asset based lines of borrowing. The full focus is on the value of your business assets and their turnover. High growth, viewed by commercial bankers as a minus, not a plus, is welcomed in an ABL funding environment.
So, how was your visit through the portal into a new world
of asset based commercial revolving credit facilities?! Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in determining if your focus on business bank loans should instead be on an ABL credit facility.
7 PARK AVENUE FINANCIAL
CANADIAN ASSET BASED CREDIT LINE EXPERTISE
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 :
ABL CREDIT FACILITY BUSINESS BANK LOANS
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
