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INFORMATION ON ASSET BASED BUSINESS LINES OF CREDIT AND BANK FINANCING IN CANADA
Secured business credit via an ABL asset financing or a bank line of credit . It's absolutely a tale of two. We guess the book might be called ' A TALE OF TWO FACILITIES’! Let's examine some of the key differences and benefits and disadvantages of both an ABL asset line of credit and the better recognized bank secured business credit facility.
Both public and private companies in Canada feel the squeeze when it comes to achieving the right financing for their firms in the current economic environment. Both the business owner and his or her financial managers can be forgiven for being a bit confused on alternative methods of line of credit finance.
So should you be doing what everyone else seems to be doing, or should you strike out on your own with some solid investigation in alternative business models when it comes to lines of credit for Canadian business?
Let's look at what some of those key issues might be in considering alternatives, the ABL facility, and the Canadian chartered bank offering. Clearly in both cases you want to be able to ensure you can grow, not just survive in business.
Price is a factor also; you want to know the total cost when it comes to acquiring the right finance facility. Naturally relationships are important also, you want to be dealing with the right people, it’s as simple as that.
So lets take a first pass at asset based lending via an ABL facility. It is just a business credit facility secured by the assets of your company. Many firms that either cant raise bank financing, or, more importantly, cant raise the amount of financing they need from banks consider ABL. Hundreds of Canadian firms now use ABL finance as there preferred method of leveraging their assets for a credit line . Those assets are used to bridge the timing of cash in, and cash out in your business. ABL is available for companies of all size, from major public and private corporations, right down the pecking order to start ups. The facility fluctuates with the amount of asset that your firm generates, typically around A/R and inventory. Funds are typically managed through a blocked account - that simply means that you deposit all your inflows into one account, while your balances to reduce the line are managed through a separate account. It's not as complicated as it seems. Key benefits are higher margins on receivables and inventory.
The more traditional alternative to business credit via a secured facility is the Canadian chartered bank. Facilities are low cost and can be combined with term loans. Banks are cash flow lenders, the ABL facility tends to be asset based, not cash flow based. Your financial statements and current financial history will dictate whether your firm is more cash flow or asset oriented. Banks will look to what they call secondary forms of repayment and are highly regulated with their offerings. ABL lenders for asset financing tend to be independent commercial finance companies that are none regulated. It's a little known fact that many of the banks have small boutique divisions of ABL finance that in some ways compete with their peers in Commercial business credit.
Investigate both the ABL secured asset financing revolver, and the more traditional Canadian chartered bank line. Weight the benefits and potential disadvantages of both in coming up with your preferred method of business financing. Speak to a trusted, credible and experienced Canadian business financing advisor today on differentiating that ' TALE OF TWO FACILITIES '!
7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
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 .
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
