Asset Based Lending : The Only Business Credit You Might Ever Need?

Tweet



Why an ABL Solution might be your Cash flow Saviour!

OVERVIEW – Information on asset based lending solutions. The challenge of proper business credit is many times solved by the ' ABL ' solutions available in alternative financing

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

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.

Many of our clients want to discuss t 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.

'ABL' 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 is 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!

In its purest form is simply putting in a customize 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!

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 every hear terms such as rations, covenants, outside collateral, personal guarantees, etc in the context of an ABL solution .

So is it the right financing tool for your firm - we'll let you be the judge of that. But if your firm required a 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.

The benefits? Greater cash flow, no covenants or ratio maintenance, and the ability to take advantage of opportunities otherwise not available.

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



7 Park Avenue Financial :

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

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 .







7 Park Avenue Financial



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

Business Financing In Canada : Solid Tips On Cash Flow Finance & Company Finance Strategies & Solutions

Tweet






Looking to Enhance The Power Of Business Financing ?

OVERVIEW – Information on business financing in Canada. Numerous debt and cash flow solutions are available for your company finance strategy

Business financing in Canada probably can deliver on more options that most owners/financial mgrs might be aware of. The truth is some of these options are ' external ' and some might be surprisingly ' internal ‘. Let's dig in.

Taking on some business debt, or monetizing/cash flowing assets you already have (receivables/ inventory/ equipment) is the alternative to bringing more equity into your company. Yes, you don't have to repay equity but to the current ownership is simply a devaluation of what is currently a growing asset - your business! So while equity and new share capital is not selling all of your business, you're certainly selling a part of it.

That brings us back to external business financing solutions, which of course have a cost and risk to some degree. A preferred solution for many companies is the business revolving line of credit. That comes from one of two sources - A Canadian chartered bank, or alternatively a commercial finance company that is independent and unregulated as the banks are.

Those two types of credit line both give you liquidity and don’t add additional debt to your balance sheet. If managed and accessed properly those credit facilities grow as does your sales and asset base.

How can the owner/financial mgr increase cash flow ' internally '? The most obvious manner should be to accelerate your receivable collections. By the way, either the bank or commercial finance company will always be more impressed if your A/R is in good shape!

Don't forget also that you can bring in cash by postponing cash... outflows! How do you do that? Simply by managing payables more effectively, using long term asset acquisition strategies such as equipment leasing to acquire new assets, technology, software, etc.

Inventory is often a large component of many a firms overall asset base - certainly in the case of retailers. They can almost always be included in business credit lines as part of your overall financing strategy, but inventories can also be financed via inventory loans, and also as part of a purchase order financing solution.

Types of term debt and cash flow solutions available to your firm might include:

A/R financing

Revolving credit lines

Govt Small Business Guaranteed Loans

Royalty Financing

Unsecured cash flow loans

SR ED tax credit financing

Sale leasebacks

To ensure you're harnessing the true power of business financing seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your cash flow and long term asset financing needs.



Stan Prokop - founder of 7 Park Avenue Financial –

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 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 & Contact Details :

http://www.7parkavenuefinancial.com



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

Looking For A Business Bank Credit Facility ? Loans And Biz Credit Lines 101 !

Which type of Credit Facilities Does Your Firm Need?



Information on a business bank credit facility for Canadian firms . Loans and Credit Lines are … different!




A Canadian business bank credit facility. For the majority of Canadian firms chartered bank loans and credit lines are the optimal solution for operating and growth needs. Not every firm qualifies or has access to these ' preferred ' facilities, and for those that don't other financing alternatives, traditional and alternative are certainly available.

But let's focus in on the two types of typical credit facilities that are most sought after by firms needing credit. They are essential term loans and operating lines, also commonly known as ' revolvers '. There are different characteristics and qualities to each one.

Let's explore that ' revolver ' first, aka the ‘operating line of credit '. A bank credit line will almost always have a capped limit. But while they have a defined limit they actually fluctuate, sometimes wildly depending upon the asset levels of your firm. The two most common asset categories within the revolvers ' borrowing base' are accounts receivable and inventory. That of course is why there are those fluctuations - typically your A/R and inventories change, pretty well everyday. You purchase product, you move out product, you invoice clients, clients pay... and on it goes.

So how is that overall credit limit set for the operating line? Two general guidelines for Canadian chartered banks are 75% of receivables up to 90 days old, and a defined percentage of inventories. Here is where things get a bit tricky with the bank as they typically prefer A/R to inventory as collateral.

So far things seem simply, but what you need to address prior to discussing and applying for such a facility are the make up of your a/r. ... by that we mean credit quality of your clients, are they out of country companies or are you a victim of account concentration . If the majority of all or your A/R is focused around one or two major clients this typically becomes a concern to the bank. Even government accounts, as solid as they are from a credit worthy respective (we can only hope!) might actually pose a problem when it comes to borrowing against them, as the government typically doesn't acknowledge receivable assignments. More so they have the right of set off if you have government arrears, known in finance as ' priority payables’


Lets recap the other type of bank facility you might be looking for - it’s the ' TERM LOAN '. It's a fixed loan with typically a fixed rate, and it’s typically a bit higher than a revolver rate. Amortizations tend to be 3-5 years and of course banks prefer that the assets covered in the term loan are typically assets that generate cash or are critical to your business. Banks love cash flow! Memorize that!

Alternatives to term loans for fixed assets come from the Canadian lease financing industry. They are often sought after as the alternative because they don’t usually interfere with your bank borrowings - it’s a common fact that borrowers like to spread the risk around and not have all borrowings with one institution. It's critical to remember that if you borrow for assets within your bank facility that those dollars become a part of your overall credit line and might limit your access to more operating lines of credit.

If you're looking for loans or credit lines in Canada ensure you understand terms, conditions, and ramifications, it’s as simple as that. Speak to a trusted, credible and experienced Canadian business financing advisor for your business credit and borrowing needs.

7 PARK AVENUE FINANCIAL
BUSINESS CREDIT BANKING 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 7 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/business_bank_credit_facility_loans_credit_lines.html