Have You Considered Mining As An Option To Business Finance Success?
OVERVIEW – Information on asset based lending in Canada . ‘ ABL’ financing is a more recent version of commercial credit line requirements for firms that can’t access the chartered bank financing they need
Asset based lending in Canada, we maintain, in the context of a commercial credit line puts you in the mining business! What are you mining? Answer: your balance sheet! Let's dig in
Ever felt like you're getting 'squeezed '. Thousands of businesses in Canada in the SME sector feel that way as most top experts see them search for Canadian business financing alternatives. Asset based credit lines (called ‘ABL’s) use your total business assets (or parts of them as applicable) to address financing needs.
Many reasons draw businesses to ABL commercial credit facilities. It might be the general cyclicality that comes with many industries, or in certain cases it might be best for firms that are having financial challenges and can't be 'banked' properly by our venerable Canadian chartered banks.
What are the key differences then in a senior loan facility from asset based lending versus ' traditional' financing as offered by Cdn banks? Simply speaking it’s the essence of ' collateral ' - your ability to borrow heavily against inventory and receivables, as well as your fixed assets if you want those in the mix also. The result: More operating funds! , even when cash flow is still not yet positive.
While your balance sheet takes on no debt in an ASSET BASED LENDING commercial credit line in certain cases it might makes sense to structure the fixed asset portion of the ABL facility as a term loan. Bottom line – to quote our lawyer friends ‘it depends’ !
While some of the largest and most successful corporations in the world utilize asset financing today for their business credit lines we're old enough (unfortunately!) to remember when there was actually some element of a negative stigma to firms that used non bank operating credit facilities! One proof of that? Boutique divisions of banks actually also offer this financing, competing with their ‘regular banking ' peers for these type of facilities. (The one caveat of a bank ABL is that minimum facility size is in 5-10 Million $ range - often an unrealistic requirement for firms in the SME COMMERCIAL FINANCE sector.
While an alternative for many firms in certain circumstances is a term loan or an unsecured cash flow loan many business miss the only key requirement for that type of financing - Positive cash flow. Enter ABL operating financing to the rescue. It's very safe to say that more often than not new equity capital is either totally unrealistic to consider, or impossible to access.
Fluctuating sales often drive business owners to look for business credit alternatives such as asset based lending. In certain cases some of these operating funds might be used to pay down or help organize other existing debt.
One other major difference in the eternal ' bank vs. abl ' struggle is the noticeable lack of ratio and covenant requirements in asset based lending. We've always thought that using financial ratios to run and manage your business is a better use rather than borrowing on them!
While there is no doubt that the majority of ABL loans probably lean towards Canadian businesses that have finance challenges - some of that driven by the ebb and flow of success and challenge in many industries . Example - automotive seems great now... in the past? Not! using the General Motors bankruptcy as an example. While a combo of fast and high growth is desirable by many entrepreneurs’ banks don't necessarily like the unpredictability of the financial complications and challenges that come with that. ABL likes high growth / fast growth.
If you're ready to consider ' mining ' your balance sheet for additional operating line business credit seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can help your balance sheet back to full employment !
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 . Info /Contact :
7 PARK AVENUE FINANCIAL = CANADIAN ASSET BASED LENDING AND COMMERCIAL CREDIT LINE 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
' 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
