The Chase Is On For Business Line Of Credit Solutions and Alternatives
OVERVIEW – Information on asset based financing in Canada. These types of facilities are strong alternatives to business credit line needs . Here’s how ‘ABL’ facilities can work for your company
Asset based financing in Canada is really another term for a ' simple design tweak' in the business credit line requirement your firm needs for cash flow/working capital operations. Clearly in the current environment ' the chase is on ' for alternate methods of financing your business. Let's dig in.
The Canadian chartered bank requirement for a revolving credit facility for firms both large and small is very clear - track records and financial statements that measure up in every way, from clean balance sheets, profits and cash flow coverage. But what if your firm can't meet one, much less all those criteria? One solution is the ' ABL ' - commonly called the asset based line of credit.
These facilities mirror bank financing and typically secure the same assets - i.e. receivables and inventory. Asset financing credit lines differ however in that they can, at your option , also include fixed assets/equipment and even real estate as a part of that revolving credit line. Talk about an increase in business borrowing power.
There is no need for business owners/financial managers to struggle in understanding how the asset credit facility differs from a bank line - Bank lending in Canada is steeped in what banks consider time tested methods of analyzing risk - i.e. debt ratios, covenant breaches, etc. Canada's strong banking system also imposes a lot of regulation on banks. Asset based credit facilities are typically offered by commercial finance firms that are not regulated via the constraints imposed on banks by gov'ts and shareholders.
The concept of the uses and needs of a business credit line in Canada is based around what lenders call your ' borrowing base' - namely the pool of assets that is being financed. Typically the current assets, i.e. A/R and inventory form the majority of your borrowing base. Typically these asset categories will fluctuate based on sales and asset turnover, i.e. days sales outstanding and inventory turns.
It's always important to remember that neither a bank line nor an asset based credit line are ' term loans'. Your business credit line fluctuates daily and does not add debt to the balance sheet - suffice to also say there are no fixed payments or amortization schedules.
Certain types of business present challenges to the need for a credit line - some examples might include construction industry exposure or government receivables. Also, for many companies ' inventory' is a key asset and a large part of the ' current asset ' mix. While banks might often be reluctant to finance certain inventory the asset based lender takes another approach, preferring to determine market values of inventory and advance based on that assessment.
If your company is looking to explore business credit line options and alternatives via either a bank or asset based financing solution seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your needs.
7 Park Avenue Financial
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 . Info /Contact :
7 PARK AVENUE FINANCIAL = CANADIAN BUSINESS CREDIT LINE AND ASSET BASED FINANCING EXPERTISE
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
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.
' Canadian Business Financing With The Intelligent Use Of Experience '
Stan Prokop
