Can You Name The New Trendsetter In Business Financing?
OVERVIEW – .Information on business credit lines in Canada. The asset based non bank line of credit, the ‘ ABL’ , is the new trend in finance from your Commercial Lender
Business Credit Lines Via ABL . It's our feeling that this business financing solution via a commercial lender is the newest trendsetter in commercial finance in Canada. We've checked with legal
and we're most comfortable in saying that. Why? Let's dig in.We're told that a ' trendsetter ' is simply a person or thing that establishes a new trend. And that new trend, as far as we are concerned is the ' ABL ' (Asset based line of credit for business).
Thousands of business in North America, Canada included by the way! , are utilizing this unique business financing service to grow their company. ABL , most people agree originated in the U.S. and has gradually over the years moved to Canada and other European countries.
And what is ABL? It's simply speaking a method of borrowing against all your business assets under one operating line of credit formula. Those assets are receivables, inventory, equipment and real estate if that latter is applicable.
The true beauty asset based business credit lines is that they work in a large variety of circumstances. Those include:
- Fast growth scenarios
- Management buyouts
- Acquisitions
- Turnaround refinancing
Unlike some methods of financing it’s also perfectly suited to both public and private companies
It also works well in both good and bad times - good time’s typically meaning fast growth situations where maximum borrowing power is needed, and those not so good times when business credit is hard to achieve.
Why is this new form of business credit lines gaining more traction everyday? Top experts in the field say that it’s because of the flexibility that’s available to business owners and their financial managers. More and more companies are using it, so it’s all about market acceptance we suppose. While Canadian chartered banks provide tremendous amounts of liquidity to Canadian business it definitely can’t provide it all, primarily due to lending restrictions.
How much new working capital/cash flow can be obtained from a commercial ABL lender? We can comfortably say that it often is anywhere from 30-100%, as we have seen those examples all the time. Take the simple fact that ABL typically offers 90% A/R margining versus the banks 75%. Also inventory and equipment are then bundled into the equation; create a new surge in your borrowing power. It’s simply a case of quickly reaching your maximum borrowing power.
One key point that we make to clients is that the actual approval criteria when you compare bank credit lines with ABL are significantly different. While the chartered banks, by virtue of their mandate rely heavily on the quality of your profits, strong balance sheets and ratio and covenants that define those the ABL lender focuses on one thing - ASSETS!
Business owners and their finance managers that plan for the future pay close attention to their future borrowing power. When that ability to borrow what they need to survive and grow is restricted... well you can take it from there!
We point out to clients that there are some unique ' sub sets' of ABL business credit lines. They might just be for A/R, or just inventory (in the case of a retailer), or combinations of those that might include equipment, tax credits, etc. That same day / all day access to credit capacity is what differentiates ABL as the new ' trendsetter' in business finance.
Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with the needs you require from a commercial lender.
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 :
7 PARK AVENUE FINANCIAL – ABL BUSINESS CREDIT LINES
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
