Asset Based Line Of Credit Solution : The Future Of Business Credit Lines? Unlocking The Power Of Your Business Assets

 

 

YOUR COMPANY IS LOOKING FOR A CANADIAN ASSET-BASED LINE OF CREDIT FINANCING!

UNDERSTANDING ASSET-BASED LOANS / UNSECURED LOANS  IN CANADA

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the  biggest issues facing businesses today 

                              ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

 

 

ASSET BASED LOAN SOLUTIONS IN CANADA

 

Money is like gasoline during a road trip . You don't want to run out of gas on your trip, but you're not doing a tour of gas stations - Tim O'Reily

 

Asset based loans and the asset based lines of credit are solid solutions for Canadian business financing needs when it comes to a line of credit.

 It might just be the future of business credit lines. Common asset-based borrowers come from every industry in Canadian business when it comes to the decision or needs to borrow money -

 

Let's dig in on how asset-based business credit lines via asset based lending can help businesses grow while maximizing working capital potential.

 

WHAT IS AN ASSET-BASED BUSINESS LINE OF CREDIT - HOW DOES IT WORK?

 

 An asset-based business line of credit is a method of financing employed by many businesses which allows the business to borrow against the value of business assets in the company - Typical assets financed are accounts receivable, inventories, and fixed assets/equipment. Asset-based business lenders evaluate the value of each asset category and create an ongoing borrowing base which allows the company to draw down on the facility as cash is needed. The business borrower only pays interest on the amount utilized under the facility.

 

  

ASSET-BASED LENDING IS THE BANK ALTERNATIVE!  ASSET BASED LENDING SOLUTIONS VERSUS TRADITIONAL BANK LOANS  

 

It's an alternative to a Chartered bank line of Credit that offers minimal financial covenants with a focus on the company's assets  - (in some cases the banks themselves even offer this unique financing as a subset of their services!) Typically banks prefer more highly liquid collateral /  liquid assets. At 7 Park Avenue Financial we're unabashed supporters of ' ABL ' ... so... let's dig in.

 

 

 

 

HOW ASSET BASED LENDING WORKS

 

Asset based lending should not be confused with 'loans' or 'term debt'. It’s a working capital or line of credit facility that is tied to your firm's inventory, receivables, and in some cases, physical assets such as equipment and commercial real estate can be added - allowing a company to fund payroll expenses and to cover day to day and short term needs around funding operations.

 

Fun fact?  Some of Canada’s largest corporations in Canada are now utilizing this type of financing. So if some of Canada's largest corporations have abandoned traditional bank financing to obtain lines of credit should your firm at least consider and learn more about this type of facility. The benefits are worth investigating.

 

 

  

 

 

 

UNDERSTANDING THE COST OF ASSET-BASED FINANCING / INTEREST  RATES

  

 

 

Rates on ABL facilities in Canada vary, and you can pretty well guess the parameters of why they vary - which is simply:

 

1. Deal size of the facility ( there is no maximum loan amount )

 

2  Your firm's overall credit quality, and some component of assessing what industry you are in with respect to borrower defaults

 

3. How your industry functions vis-a-vis profitability, seasonality, and other industry dynamics.

 

4 . We can say in general that rates on ABL facilities in Canada go from 7-9% per annum to 1 ½% per month depending on most of the factors we listed above.

 

Overall credit quality challenges should not deter you from looking into a Canadian asset based lending solution - for the simple reason that this type of financing focuses on assets, not overall balance sheet and income statement quality. Simply put, your company might be currently losing money or experiencing a unique challenge, but you might find you still qualify for a very significant facility.

 

HOW CAN I BENEFIT FROM ABL?

 

On a day-to-day basis  the most significant feature of an asset based line of credit is the ability for you to bridge cash flow that you have tied up in inventory and receivables via a higher loan-to-value ratio for your assets compared to traditional commercial banking and financing.

 

 Your asset-based line of credit will fluctuate based on the key elements of the ABL security, namely the accounts receivable and inventory.  A/R and inventory are typically a company's most liquid collateral based on sound management and asset turnover. The good news is that as your receivables and inventory grow you can draw down on more funds - unlike a bank facility which might have certain caps on how much exposure the bank will take with your firm on an operating line basis.

 

The one aspect that you should consider in such a financing solution is additional reporting, but if you can properly account and report on receivables, inventory, etc. you should not be concerned.

 

Many clients tell us that some of the additional 'reporting' that comes with an asset based credit line actually has helped them understand their business better!

 

KEY TAKEAWAYS - ASSET-BASED CREDIT LINES

 

Asset-based lending solutions are the loaning of funds utilizing the assets of  a business as collateral versus a bank unsecured loan credit approval

The more liquid collateral such as accounts receivables and inventories provide a higher borrowing margin versus physical assets such as equipment

Businesses utilize  Asset-backed loans / eligible  collateral to cover shortfalls in day-to-day cash flow demands and their business needs which in some cases might revolve around the seasonality or cyclicality of the business

 

CONCLUSION - GETTING CASH FLOWING SMOOTHLY WITHOUT TRADITIONAL LENDING BARRIERS

 

Looking for liquidity, working capital and cash flow and a solution that is non-bank in nature?

 

Talk to 7 Park Avenue Financial, an expert in the area, determine if this financing meets your needs for credit availability, and ensure, with the help of a trusted credible and experienced Canadian business financing advisor, that you can access the type of facility that provides you with working capital and growth opportunities into domestic and global markets in a manner that suits your company's cash cycle. Obtaining comprehensive financial solutions  for your business needs is our focus.

 

  

FAQ: FREQUENTLY ASKED QUESTIONS  / MORE INFORMATION

  

 

What is asset based lending?

 

Asset-based lending is a type of financing that uses the borrower's value of the assets as collateral - and they are an alternative to term loans. Non-bank commercial lenders can approve flexible financing loans by providing higher advance rates using the physical assets of a company as collateral if they don't have enough cash assets - This type of financing is for businesses, not consumers - and provides operational flexibility to funding needs.

Small, midsized businesses and large corporations utilize asset-based lending. A lender may loan up to 90% of the face value of a security if it is highly marketable, such as eligible accounts receivable,  and only 60% for other less liquid assets such as real estate.  Advances vary based on the type of asset - ABL has a ' covenant light structure ' as opposed to a focus on only historical and present cash flows. The maximum loan for a physical asset is less than the book value of the assets.

 

 

What are the benefits of using an asset-based business line of credit over traditional bank loans? 

 

The main benefit of the asset-based business line of credit is that qualification for approval is easier than l lending via financial institutions such as traditional bank loans - Also if a business does not have the credit history required by bank underwriting policies the asset-backed credit line is more flexible financing with fewer restrictions than those of banks which will often insist on personal guarantees,  external collateral, high business and personal credit scores, etc. There is also typically no restriction on how funds are used with an asset-based credit line. The ability of a business to access more working capital for business operations and growth opportunities provides alternative financing options that historically were not available to the business borrower.

 

How do I qualify for an asset-based business line of credit?

To qualify for an asset-based business line of credit a company should be prepared to provide proper financial statements that reflect the assets of the business on the balance sheet, such as receivables, inventory and property plant and equipment. Business lenders will evaluate the  pledged asset/assets and lend on the ability of the company to generate sales with proper asset turnover so as to meet repayment terms/fluctuations under the revolving line of credit

  What are the risks of using an asset-based business line of credit?

 

One of the main risks of using an asset-based business line of credit is that if a business defaults on the credit facility and is unable to repay the facility on a lender's demand that assets are sold by the lender to recover the loan or line of credit.  Asset-based lending solutions are always higher, ( but not always ) when it comes to interest rates and financing costs.

  

  
How can I decide if an asset-based business line of credit is right for my business?  

  

To decide if asset-based business lines of credit are the right financing solution for a business the business owner should evaluate the business's cash flow and financing requirements - When the amount f  business capital needed is not available from traditional lenders such as banks the benefits of ABL solutions will typically outweigh the alternative to self-financing despite higher costs of borrowing. Business owners should speak to a reputable business financing advisor to help with due diligence and ensure proper business finance decisions and optimal finance structure is attained.

 

 

 

 

 

 

Secure Working Capital Financing For Your Business Today ! Cross The Threshold and Check Out Confidential Accounts Receivable Financing Today

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YOUR COMPANY IS LOOKING FOR CANADIAN BUSINESS FINANCING!

ALTERNATIVE WORKING CAPITAL FINANCING OPTIONS FOR BUSINESSES

You've arrived at the right address! Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the biggest issues facing businesses today 

                              ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

 

                                                                      

GUIDE TO WORKING CAPITAL FINANCE SOLUTIONS - WHAT YOU NEED TO KNOW

 

 

"Working capital management is a discipline that requires daily attention and continuous improvement." - Unknown 

 

 

Accounts receivable financing is becoming more and more popular as an alternative financing and working capital financing solution for Canadian business owners and financial managers.

 

 

WHAT IS WORKING CAPITAL FINANCING? 

 

Working capital finance is the funding of your business's day-to-day operations that provides cash flow to cover short terms expenses of the business. Typical expenses include salaries and payroll, short-term liabilities such as rent, and the purchase of inventory. To run a business successfully cash flow is needed to operate and grow the business and a number of solutions / business loans are available.

 

There are a number of sources of working capital loan financing - working capital loans, revolving credit facilities via a business line of credit, supplier financing, and a/r financing- aka ' factoring ' receivables for business customers.

 

 

WHAT IS FACTORING? 

 

Factoring A/R is a true form of an asset financing arrangement. Your company uses its receivables - ' AR ' as collateral in a financing arrangement. The financing can be on one receivable, all your receivables, and, more commonly, some or all of your receivables on an ongoing basis.

 

The industry tends to refer to the term 'factoring' as the day to day description of accounts receivable financing.

 

"Poor cash flow is the biggest killer of small businesses." - Robert Kiyosaki

 

 

THE ROLE OF A/R FINANCING FOR BUSINESS GROWTH AND EXPANSION

 

Factoring or receivable financing allows Canadian business owners to receive immediately, on billing, cash for the receivable. A portion of the invoice is always held back, representing a traditional 'holdback' plus some of the lender's financing fee. We would point out that the holdback is always paid back to your firm as soon as your customer pays the invoice.

 

The company receives an amount that is equal to a reduced value of the receivables pledged. The age of the receivables has a large effect on the amount a company will receive. The older the receivables, the less the company can expect - Generally speaking, invoices over 90 days cannot be sold - therefore no cash flow will result in those items.

 

 

 

 

 

  

^{WHAT'S THE BEST RECEIVABLE FINANCING FACILITY AND HOW DOES IT WORK?}

 

  

  

 

 

At 7 Park Avenue Financial, we recommend Confidential Receivable Financing as our recommended solution for clients with monthly receivable portfolios in excess of 250k. There is virtually no upper dollar limit on this type of facility. Under this type of non-notification financing your firm bills and collects its own receivables, with no notice to any clients, or suppliers,. etc. Your company receives all the benefits of a/r financing and factoring with none of the pain!

 

Another related alternative to your a/r financing needs is Purchase Order Financing, which facilitates the funding of your large orders or contracts if financing can't be arranged for that type of order. The solution pays your suppliers and allows you to take on large orders and contracts to propel business growth and profits.

 

  

NON-RECOURSE VERSUS RECOURSE FINANCING - HOW IT WORKS  

 

Factoring, or accounts receivable financing helps companies unlock capital that is invested in accounts receivables. Accounts receivable financing on some occasions transfer the default risk associated with the accounts receivables to the financing company; this type of facility is set up as a non-recourse facility, meaning the lender or finance firm that is doing your factoring in fact accepts the credit risk associated with the ultimate collection of your accounts receivable.

 

How does the lender do that - quite frankly the receivable portfolio originated on your customers in effect is 'insured' by the lender. We will let you guess who pays for that and if it is included in your cost of financing. Yes, you are right, you pay. Typically the cost of such insurance adds at least a percentage or two to your cost of financing.

 

The Canadian marketplace is dominated by a variety of firms that will factor accounts receivable. These firms are either divisions or subsidiaries of large U.S. or other foreign countries, or they are smaller Canadian-owned, operated and funded firms. Typically the latter type of firm, the Canadian single entity, has difficulty in accessing all the funding it typically might need for a large number of transactions. The factoring business requires a significant amount of capital.

 

When a Canadian business originates an account receivable financing it is prudent for the company to ensure they understand the overall profile, reputation, and capabilities of the firm that will be financing your accounts receivable.

 

Unless the business owner negotiates a very special type of facility the accounts receivable financing firm generally has a good amount of customer contact with your customer base; they will want to validate your invoices, confirm customer acceptance of your invoice and products and services, and in most cases follow up directly with your customer for payment.

 

In summary, Canadian firms can increase cash flow by the use of the alternative financing method known as 'accounts receivable financing', commonly called factoring. Cash is secured for your receivables soon that your customer actually paying for it - As we have pointed out that comes at a cost in both financing cost as well as some level of customer intrusion.

 

  

THE BENEFITS OF EFFECTIVE WORKING CAPITAL FINANCING  

 

  

Effective working capital solutions such as factoring and other types of  a/r financing provide numerous benefits for a business via surplus capital - Those benefits include :

 

The ability of the company to  cover temporary gaps in  cash flow to fund payment obligations - along with effective accounts payable management  a business can maintain liquidity

 

Working capital solutions typically bring no debt to the balance sheet and do not require additional collateral as well as a limited emphasis on personal guarantees

 

Short-term working capital and accounts receivable financing solutions are faster to obtain and are often tailored with a strong level of flexibility for the borrower - Traditional lending financial institutions such as banks are known for longer credit approval timelines as well as often demanding additional collateral

 

Effective working capital financing and management improve asset turnover in key areas of the business such as accounts receivable and accounts payable and leads to greater profitability and return on assets. Additionally, these types of financing are 'non-dilutive' and do not require any equity transaction or ownership change.

Typically these financings increase as sales and business assets grow!

 

  

 KEY TAKEAWAYS - WORKING CAPITAL MANAGEMENT 

 

" Don't ignore working capital " Thats from a great Harvard Business Review article

 

 

Businesses use working capital finance solutions to fund everyday operations

Short-term financing solutions around working capital needs should not be used for the purchase of long-term assets or investments in long-term operations

Businesses that experience seasonality or cyclicality in their business model or industry are prime candidates for short-term financing

Depending on the size and creditworthiness of the company good business and personal credit scores are required

 

CONCLUSION - UNDERSTANDING BUSINESS WORKING CAPITAL NEEDS AND CASH FLOW

 

Canadian business owners should dutifully look into who they are dealing with, their capabilities and their procedures.

 

Speak to 7 Park Avenue Financial, a trusted and credible expert with a track record of business finance success to determine their best receivable finance/working capital and business loan solution.

 

 FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION

What is working capital financing?

 

Working capital financing is a borrowing arrangement to fund the daily operations of a business when a firm does not have consistent cash flow.  Proper business financing solutions allow a business to achieve optimal business growth via business financing solutions such as short-term loans, lines of credit and overdrafts, and accounts receivable financing. Steady cash flow allows a company to sustain its growth objectives.

 

Businesses of all sizes and in every industry will typically require working capital finance to expand sales and operations. The majority of small businesses in Canada utilize these solutions to bridge cash flow gaps and ' lumpiness' in cash inflows

 

  

Why is working capital financing important?  

Working capital financing is important   as it allows a business to maintain funds to continue the daily operations of a business - without access to a sufficient amount of working capital a company may not be able to meet short-term obligations or maximize growth opportunities in sales revenues,

 

  
What are the different types of working capital financing?   

 

Different types of working capital finance include short-term working capital loans, lines of credit /  a revolving credit facility, business credit cards,  invoice factoring via trade credit receivable financing, and sr&ed financing solutions for refundable tax credits - Other ' venture debt ' type solutions include purchase order financing, MMR lines of credit, and merchant cash advances. Different needs and circumstances make every possible financing solution unique to a business based on sales and the company's balance sheet and businesses will only pay interest on amounts borrowed and used in any facility.

  
How does a business determine how much working capital financing the business needs?  

 

Determining working capital financing needs are determined by examining the working capital ratio and operating cycle and asset turnover of a business in key current assets and current liability accounts such as accounts receivable, inventory, and accounts payable.

 

What factors should I consider when choosing a working capital financing provider?

In choosing a working capital financing provider for small business financing a company should consider factors such as interest rates on the facility, miscellaneous fees, as well as repayment term flexibility offered in the financing solution. Businesses should align themselves with reputable lending institutions and established financing providers who can meet the specific funding needs of the business.

 

SOURCES/CITATION

"What You Can Do About Excess Working Capital" by Michael C. Mankins and Lori Sherer, published in the July-August 2016 issue.

1. "A Smarter Way to Improve Cash Flow" by Richard V. Hays and Frank V. Cespedes, published in the May 2014 issue.

2. "The Most Neglected Fact About Cash Flow" by Philip Campbell, published in the May 2017 issue.

3. "The Case for Behavioral Strategy" by Dan Lovallo and Olivier Sibony, published in the March 2010 issue (which includes a section on working capital management).

 

 

Click here for the business finance track record of 7 Park Avenue Financial

What Makes A Corporate Line Of Credit So Hatke?

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YOUR COMPANY IS LOOKING FOR A CORPORATE LINE OF CREDIT!

We've Got Your Unsecured  Business Lines Of Credit Solution - The Business Line Of Credi Canada

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the  biggest issues facing businesses today

ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT  BUSINESS  FINANCING OPTIONS?

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

EMAIL - sprokop@7parkavenuefinancial.com

 

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8

 

SECURING A CORPORATE LINE OF CREDIT - BEST PRACTICES

 

"Money is a terrible master but an excellent servant." - P.T. Barnum

 

A  corporate line of credit in Canada. And what in fact does ‘ HATKE ‘ mean? It’s actually a Hindu term for ‘ different ‘, so why do firms, including your competitors by the way!.. seem to get commercial banking facilities in place in a timely fashion, and with amounts and terms and conditions and covenants that suits the needs of small business and the SME sector.

 

At the same time, your firm struggles to achieve the senior financing you need to grow... or survive. Let's change that.

 

THE POWER OF PRE-APPROVED FINANCING

 

We think it's all about strategy smarts and attitude when it comes to a credit line, we'll share with you how we do it at 7 Park Avenue Financial and we'll let you decide. Let's dig in!

 

WHAT IS A BUSINESS CREDIT LINE AND HOW DOES IT WORK?

 

Unsecured business credit lines are a type of financing that provides your company with access to credit for day-to-day business expenses based on a pre-approved limit - those expenses might be items such as payroll, payments to suppliers, etc. 

 

This is a very flexible form of financing that helps business access and manage business cash flow as well as allows the company to invest in growth opportunities.  Businesses are paying for the financing they use - so it's a short-term financing solution.

 

Typically a business needs a business line of credit because they have an investment in accounts receivable and inventory that reduces cash flow. Getting a business line of credit can be a challenge for many companies because traditional financing such as that offered by Canadian banks requires firms that have a solid combination of cash flow, collateral, and owner guarantees. Many firms are turning to alternative lenders who provide asset-based lines of credit that work in a similar manner but don't have the constraints of bank credit lines. 

 

BUSINESS CREDIT CARDS

 

Business owners should think of a business line of credit, aka  ' line of credit  LOC ' as a loan that revolves around a specific limit that will meet their short-term business needs, allowing them to finance shorter-term working capital needs. A business credit card is useful but not a solid best solution for funding short-term obligations on a regular basis. In today's low-rate environment typically both a fixed and variable rate is offered on bank-type solutions.

 

There are different circumstances surrounding your need for an unsecured line of credit facility - i.e. a revolving line of business credit with an appropriate credit limit that meets your funding and growth needs. In some cases you have a longstanding relationship with the bank already - it’s just that you need more funding. In some cases, you're up for renewal.

 

 

CANADIAN CHARTERED BANK LINE OF CREDIT  REQUIREMENTS FOR APPROVAL

 

In a perfect world, you want to achieve an agreement with the bank that you're in a position to meet covenants, grow your business reasons, and that you have the ability to produce regular financial statements and reports that back up your facility. In the case of the majority of bank lines, today in Canada for private firms in the SME /middle market sector business owners also have to be prepared to address the personal guarantee issue. They never like doing that! Who does?

 

WHY AREN'T YOU " BANKABLE  "?

 

Another solid way to address why a corporate line of credit can’t be achieved is to put yourself in the shoes of the other party, i.e. the bank. Ask yourself or your financial management team why in fact the bank would decline a facility, not renew it, or decide not to increase it. In other words, to use a term the financial folks use - why aren't you ' bankable '?

 

 

IS YOUR BUSINESS ' UNDERSTANDABLE'? ! 

 

One basic reason, aside from some of the required fundamentals, is the reality that your business is not easily ' understood ‘. So if you don’t demonstrate how your business works (typically it's called the 'operating cycle’) and why you need cash flow and when you need it you are in fact somewhat doomed to failure in your search for financing. 

 

Technology-type businesses might be a great example of a challenge in financing - at the opposite end of the spectrum if you are manufacturing nails then the business model is somewhat clear! At 7 Park Avenue Financial, our goal is to make your business understandable for business financing solutions.

 

 

NEED A BUSINESS PLAN AND CASH FLOW PROJECTIONS? LET 7 PARK AVENUE FINANCIAL  PREPARE THAT FOR YOU 

 

A strong executive summary or business plan is critical. We favour concise overviews that identify succinctly what industry you are in, a financial recap of recent sales and profits, an overview of the supplier and client base, and a positive spin on the factors that affect your industry

 

  

HOW DO BANKS AND ALTERNATIVE LENDERS ASSESS BUSINESS CREDIT LINE NEEDS?

 

  

What does the banker do with that information? They put it into the context of the fundamentals we have spoken about. The majority of credit approval decisions in banks today, in fact, all decisions when it comes to corporate credit are made by a man or woman that you'll never meet. They are in the bowels of the bank and are trained to assess risk and evaluate financials.

 

 QUALIFYING FOR A BANK CREDIT LINE 

 

They in fact will focus on cash flow, collateral, historical and projected profits, and ratios and covenants. Could anything be more exciting than those?  We're financial types ourselves, so we actually do get excited about those, but we digress...

For small business owners, the interest rate on either business credit cards or a small business line of credit will be tied to a credit score and net worth analysis by a bank. Credit history and personal credit always weigh heavily on credit decisions when it comes to SME COMMERCIAL FINANCE.

The bottom line is that the best business line of credit is one that matches your needs when it comes to day-to-day funding and long-term growth possibilities as your sales grow. Interest rates are important and should be considered but ultimately access to capital in lieu of new owner equity injection is the most probable solution for business growth.

 

CONCLUSION - MAKE THE MOST  FOR BUSINESS LINES OF CREDIT FOR GROWTH AND SUCCESS

 

So our key point today. It’s all about understanding the process around business lines of credit and doing it right. Be in a position to create a finance proposal that will get your company the corporate line of credit that you in fact need. The business line of credit rates will vary with your overall credit profile.

 

  

NEED HELP?  

 

Need some help? Speak to 7 Park Avenue Financial,  a trusted, credible and experienced Canadian business financing advisor who can assist you with business advice and finance needs.

  

 

  

FAQ: FREQUENTLY ASKED QUESTIONS/ PEOPLE ALSO ASK / MORE INFORMATION

 

 

What is a corporate line of credit, and how does it work?

 

A corporate line of credit is a method of financing that allows a company to borrow funds on an ongoing basis within a predetermined credit limit set by the bank or other commercial lender - Unlike term loans lines of credit are a solid method of cash flow management because facilities are a revolving credit according to the inflows and cash outflows of the business and require no minimum monthly payments.

 

Businesses pay interest only for the amount of facility that is used. Interest rates vary with the type of lender and size of the facility and the overall credit quality and business credit score of the borrower. Unlike a term loan structure loan repayment terms are not defined as installments. Lines of credit are not suitable for capital investments which are long-term in nature - so for small businesses, long-term assets should be financed via equipment loans or equipment leases.

 

  

What are the advantages of using a corporate line of credit?  

 

The advantage of a corporate credit line is that it is a short-term financing solution that gives the company flexibility to manage cash flows -  Understanding the pros and cons of using a credit line for short-term financing is key - Facilities revolve and are drawn down only as needed - this type of business finance solution allows a business to better manage andy seasonality or cyclicality in the business, as well as allowing the company to address unexpected short term liabilities and expenses. Leveraging a corporate line of credit for growth opportunities is a key advantage of this type of facility. Major banks offer significant online banking services with business bank account offerings.

 

  

What are the risks of using a corporate line of credit?  

 

The risk in using a corporate credit line is that the business may rely too heavily on the facility and place less emphasis on overall financial risk management. Depending on the type of facility and financial institutions or commercial lenders external collateral and personal guarantees may be required to secure the facility - analyzing the impact of interest rates on the facility is key to good business financial management and helps business owners navigate the risk and rewards of such a facility.

One potential risk of using a corporate line of credit is that businesses may become too reliant on it and find themselves unable to pay back the borrowed funds. Additionally, interest rates on lines of credit can be higher than those on traditional loans, and businesses may need to provide collateral and proof of creditworthiness to secure the line of credit.

 

 How do businesses qualify for a corporate line of credit?  Can Your company meet the business line of credit requirements?

 

To qualify for a corporate line of credit a business must demonstrate either sufficient business collateral in the case of asset-based lenders or solid creditworthiness for unsecured credit facilities from banks, - Types of collateral that may be used to secure credit line include inventories, accounts receivable and potentially any commercial real estate secured by the company.  A business plan will often help a company secure a credit line and should demonstrate growth potential and profitability potential.  

  

 

What should businesses consider when evaluating repayment terms for a corporate line of credit?    

 

When evaluating repayment terms for credit lines business owners and financial managers should consider factors such as borrowing costs/interest rates, miscellaneous fees and potential penalties for default of financial covenants and balance sheet ratios under the credit agreement.

 

  

How does a business line of credit work?  

A business line of credit has a set amount of credit limit and a company can borrow up to that limit - Interest is paid only on the amount of funds that are drawn down on the line of credit - To qualify companies must meet general creditworthiness guidelines around past financial history, and be able to produce proper financial statements that reflect good cash flow. Businesses can draw down on funds electronically or write cheques on the business bank account. As the credit line is replenished with cash inflows to the business new availability is determined under the credit limit. Banks and commercial lenders will periodically review the facility limit based on the business performance of the company.
 

 

What are business line of credit rates in Canada?

 

The rates for a business line of credit in Canada will vary based on the type of lender of financial institution as well as the general creditworthiness of the borrowing company. Most line of credit rates are variable and fluctuate based on a formula geared to the bank of Canada overnight rate.

Other factors that determine the rate are the financial health of the business and the quality of the financials. Some industries may benefit or suffer based on current economic conditions in the country and industry. Businesses have the potential to access credit lines from banks or non-bank commercial lenders, with banks typically offering the lowest borrowing rates - Certain fees, terms, and conditions should be reviewed and researched by borrowers.

 

  

 What is the difference between a business line of credit or a loan?   

A business line of credit is different from a loan - Loans are typically term loan structures with fixed amortization and installment payments - on the other hand lines of credit are revolving credit facilities typically funded at variable interest rates.

Repayment terms under credit facilities are made via inflows of cash to the business which lowers the amount owing so the company has maximum repayment flexibility. Another major difference is that credit lines are used for short-term financing and loans are for asset purchases or long-term investments.

 

 

 

 

    

Click here for the business finance track record of 7 Park Avenue Financial

How To Finance A Business Purchase In Canada - Finance In Canada: Takeover Financing For Acquisitions

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YOU NEED TO FINANCE A BUSINESS ACQUISITION

BUSINESS PURCHASE FINANCING CANADA / OWNER FINANCING BUSINESS BUYOUT SOLUTIONS

You've arrived at the right address! Welcome to 7 Park Avenue Financial

Financing & Cash flow are the  biggest issues facing businesses today

ARE YOU UNAWARE OR   DISSATISFIED WITH YOUR CURRENT 

BUSINESS  FINANCING OPTIONS?

CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com
 

FUNDING BUSINESS ACQUISITIONS IN CANADA

 

Information on buyout financing in Canada, including due diligence and financing strategies to complete a successful acquisition and takeover financing. Are you thinking of buying a company or acquiring a competitor in your market?

 

Business purchase financing and your optimal financing structure on your acquisition deal - Simply speaking it's the process of funding the purchase of an existing business with sources of financing provided by banks, commercial finance companies, or asset-based lenders. let's dig in!

 

HOW TO GET A LOAN TO BUY A BUSINESS IN CANADA

 

Business purchase finance in Canada often requires some, shall we say ' deft ' takeover financing strategies when an acquisition is made. This might often include a management buyout scenario. Let's look at some of the acknowledged ' smart ' ways to buy and finance to buy an existing business. Let's dig in. There are often great rewards when an existing business is purchased properly with the right underpinning of finance and mgmt skills - the challenge is the right loan to buy an established business.

 

  

WHY ARE YOU CONSIDERING BUYING A BUSINESS OR A COMPANY BUYOUT?   

 

If it's an add-on ( the pros often call it a ' bolt-on ' ) to your current business, it's obviously a solid mechanism to grow your customer base as part of your acquisition deal,  and that might even mean acquiring a competitor or a vendor with whom you do business with. When executed properly, it's a solid method of gaining market share, acquiring skilled staff and an infrastructure and business model that is already established.

 

There is a huge transfer of wealth in today's Canadian business environment as employees consider management buyouts, businesses consider mergers and acquisitions, and family successions are in full force. Since the millennium turn, we have experienced the first-ever large-scale transfer of businesses in Canadian history. No matter if we are talking about management buyouts, mergers/acquisitions or family successions, we have a lot more experience today than we did 15 years ago.

 

At 7 Park Avenue Financial, we find many business purchase leads come from business brokers, real estate agents or even online listings of businesses for sale. A business purchase might also be the acquisition of a new or existing franchise in various types of industries when it comes to the challenge to finance an acquisition solution properly.

 

 

 

 

FINANCING OPTIONS WHEN ACQUIRING A BUSINESS - BUSINESS ACQUISITION LOANS IN CANADA

 

Different sources of capital might be used to fund a merger or the acquisition of a target company. The overall solutions are known as your final ' capital structure. 'In many cases, a combination of sources of funding will ultimately lead to a successful transaction, so it's all about the right ' mix ' at appropriate terms, rates, and structure. Certainly not rare, but typically uncommon is to use your own personal or company cash reserves to purchase a business outright - that is possible. Still, more often than not, external financing will be needed when financing acquisitions.

 

While it is often not considered in the early stages of business financing, it will often become apparent that some form of seller financing/vendor finance is required to close the gap in your financing package. This component of your financing has numerous advantages.

 

 

HOW TO BUY A BUSINESS WITH SELLER FINANCING  

 

Advantages of Seller Finance / VTB - Confirms the third party seller's commitment to the new owner - owner financing is generally viewed as a very positive by commercial lenders and assists the purchaser in closing the gap in total financing for the purchase price required when the seller agrees to participate in the deal in some manner. Terms of seller financing are often flexible and creative and include provisions for the seller if the buyer defaults. They are sometimes referred to as an ' earn-out.' A business purchase agreement with a seller financing deal component will always assist your transaction relative to your down payment.

 

" The buyer of a business is not buying bricks and mortar, he is buying the cash flow " - Robert Kiyosaki

 

BANK FINANCING - SECURING FUNDING FOR YOUR BUSINESS ACQUISITION

 

Industry experts agree that Canadian chartered bank financing is typically available for only higher-quality credits. Many larger businesses cannot be financed without the involvement of a bank loan or a commercial loan firm.

 

  The first step in understanding traditional financing is knowing that Canadian banks place a high emphasis on the reasonable personal credit history of the purchaser, industry experience to run the business, personal guarantees, and various borrowing covenants and ratios around their financing in the transaction. The interest rate from a financial institution such as a bank or credit union will always be attractive and competitive.

 

Banks will do a careful analysis of the financial health and cash flow of both the acquiring company and the target company if one firm is buying another in a combined company scenario. Alternatively, some transactions could have the 2 companies remain separate entities or under a holding company.

 

You can expect a higher interest rate from an alternative lender. Over the long term, the buyer must consider the cost of capital versus access to capital when evaluating terms sheets.

 

 

  

HOW TO FINANCE A SMALL BUSINESS PURCHASE WITH GOVERNMENT LOANS  

 

Two sources of ' bank financing ' outside of chartered bank commercial loans are the Government Of Canada Small Business Loan program for transactions under 1 Million dollars and the government's crown corporation, committed to entrepreneurs - Business Development Corporation. These two solutions should be explored but have some specific requirements around how their business purchases are constructed.

 

A recommended strategy for these two solutions is to work with an experienced business advisor to determine if one or both of these two ' government ' solutions will fit your business purchase plan.

The Canada Small Business Financing Program is the Canadian version of the U.S. SBA loan. SBL loans finance 3 specific assets - equipment, leasehold improvements, and real estate. It's an excellent finance solution when small companies or franchises are being acquired. Talk to the 7 Park Avenue Financial team about certain conditions required under the program.

 

As a general comment, we can say that both of these 2 ways to acquire a firm are very focused on hard assets such as land, buildings, fixed assets, qualifying leasehold improvements, etc.

 

Unsecured Cash Flow Loans - Mezzanine financing   Highly leveraged deals can also be financed successfully if the underlying assets are strong. You can demonstrate the acquisition will generate cash flow to support the higher leverage in the transaction. Pure cash loans, called ' mezzanine loans, ' are very focused on the business's past, present and future cash flows.

 

It is here where a detailed business plan and cash flow projection are absolutely required. Because  ' Mezz ' deals are unsecured by assets, it's all about the cash flow! 7 Park Avenue Financial business plans meet and exceed the requirements of banks and commercial lenders.

 

 

 

VALUATION 

 

We're told by ' experts' that the financial markets are ' imperfect ' to some extent, and that's probably the case with valuing and then buying a company. Business valuation comes down to cash flow analysis  and profits. Your goal is to ' normalize earnings' to reflect how the new entity will perform in the future in the valuation process. Business valuators use ' multiples ' of key data points such as sales profits, and they are critical when considering how to buy a business in Canada.

 

From a ' valuation ' perspective, there are, of course, several time-tested ways to value the target firm. Naturally, there are different motives for buying a business that is already doing well. (Or a business that needs to be repaired! which often presents an even greater opportunity and risk)Those motives might be synergies, economies, faster growth, less competition, etc. Because many valuation strategies are subject to opinion, we've often focused more on the business's assets.' Good mgmt can usually reverse any losses, grow the business, etc.

 

The bottom line? Business value impacts the amount and terms of your financing!

 

 EXAMPLE OF MULTIPLE VALUATION

 

If a firm generates 400,000 cash flow each year, it is not uncommon in many industries to sell at a 3 or 4 times multiple of that cash flow, thereby providing a potential selling price of $1,600,000.00 as an example 4x multiple. That suggested selling price must now constitute a financing package of your cash deposit, senior debt, operating debt, and potential seller financing.

 

The business's assets will allow mgmt to increase earning power if the asset's true value is understood. In many cases, a proper appraisal of assets may well be required or simply the right thing to do. The ' hard ' assets in the business are typically equipment, technology hardware, and vehicles. We also mustn’t forget leasehold improvements as a part of any firm's potential asset mix.

 

The ' current assets ' in the business will be providing the takeover with the liquidity and asset turnover it needs to be successful. Understanding the quality and turnover of accounts receivable and inventories are key to successful takeover financing. Note that almost always intangible assets and goodwill are normally not financeable in the SME (small to medium enterprise) marketplace.

 

Many firms invest in R&D, and in those cases, SR&ED tax credits can be part of the financing plan. All the analysis you do in the context of what we have discussed is knowns as ' going concern ' due diligence and may often require a final adjustment to an offer price to buy the business. All the valuation and diligence you perform will steer you to raise capital to buy a business. Getting proper financial statements from the target firm is key to any financing takeover success, again keeping in mind all the ' subjectivity' that comes with every item on the balance sheet ( except cash !).

 

 

HOW TO ACQUIRE A COMPANY - ACQUISITION FINANCING 101 

 

What strategies are used to finance business purchases and mgmt buyouts in Canada? They include Bank Loans - When Canadian chartered banks are the senior lender in your transaction, they will always require a total charge on all the company's assets, including current assets such as a/r and inventory and fixed assets, including real estate. Govt Small Business Loans (new limit = $1,000,000.00) - This program is one of two ' government sources ' of capital to purchase a business.

 

Terms are flexible and competitive, and the personal guarantee is limited. The government does not lend money directly under the program, which INDUSTRY CANADA administers. Instead, it guarantees a large portion of the loan to the bank that lends directly to fund your acquisition. The program's main requirements are a down payment, good credit history, and industry experience in the business you are targetting to buy. The ' SBL ' loan is often the best way to complete a small business acquisition.

 

Asset-based loans- Asset-based credit lines are a key source of business purchase financing, particularly when there is a leveraged buyout financing component. They monetize the business assets into a loan that can be both term and operating in structure. The revolving portion of these facilities provided day-to-day working capital and is paid down as sales are generated and clients pay. ABL facilities are often key to successful business purchase financing.

 

Sale leasebacks - Sale-leaseback financing can generate cash on already owned and unencumbered assets ABL Business Credit lines - these lines of credit are practical to the day-to-day running of the business and can combine all the assets of the company into one borrowing facility that margins receivables, inventory and equipment, as well as real estate if applicable.

 

Tax Credit Financing - SR&ED Tax Credits Can Be Monetized To Secure Cash Flow A/R financing - Receivable financing is a component of asset-based lending. The ability to finance business receivables is key to unlocking day-to-day working capital needs. Intellectual property, goodwill, and client lists are difficult to finance as an asset class.

 

Numerous forms of invoice financing can address the day-to-day cash flow needs of the business. Our recommended solution to 7 Park Avenue Financial clients is Confidential Receivable Financing, allowing you to bill and collect your own receivables, unlike the typical ' factoring ' model of invoice discounting.

 

Invoice financing is a term for arrangements that allow you to finance your business invoice receivables. It is mostly used by small businesses to improve working capital and cash flow by meeting short-term liquidity needs. The two most used solutions are invoice discounting and factoring.

 

Franchise loans - Many franchises in Canada are financed under the Government Small Business ' B I L ' loan and a combination of equipment financing and credit business lines or business credit cards for additional funds.

 

 

 DUE DILIGENCE  - WHAT YOU NEED TO KNOW

 

 

It's important to properly and quickly identify the documents and information you require to assess the purchase price properly. A typical package will include several years of financial statements and interims if available, corporate tax returns, premises lease, equipment lists, aged payables and receivables, copies of bank statements and details surrounding current secured lenders, and their agreements/collateral held / covenants, etc.

 

Assessing cash flow is a key consideration in business purchase finance.

 

 NEGOTIATING FAVOURABLE TERMS  / THE ART OF NEGOTIATION

 

The entire due diligence process should be considered with the assistance of your lawyer, accountant, and business financing advisor.  Large corporations typically used investment banking professionals.Their advice can be invaluable to the overall success of your purchase. It would help if you considered any cost-cutting or productivity improvements you can make to grow cash flow and profits in the overall financial diligence.

 

It should be recognized that many business purchases might also involve assuming some of the debt the company has in place and that new ' operating facilities such as business credit lines will often be needed when you're considering all your acquisition financing options and structures.

 

 

CONCLUSION - WHAT ARE THE BEST FINANCING OPTIONS FOR A BUSINESS ACQUISITION

 

Business acquisitions can be challenging for the owner/entrepreneur. In many cases, a combination of ways to finance a business and different methods may well be required. You need to ensure the right amount of debt, equity financing, cash flow, and working capital to get the right financing structure in place for the business you want. Use the power of proper leverage to acquire your dream business.

 

Speak to 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you in business purchase financing options that make sense for your transaction. If you are considering buying a business or acquiring a competitor talk to our team about business purchase financing takeover finance solutions you can use for a successful transaction around business acquisition financing.

 

FAQ: FREQUENTLY ASKED QUESTIONS / MORE INFORMATION

 

 What is a leveraged buyout? 

Leveraged buyouts are when the buyer of a company takes on debt to purchase a business. A significant amount of borrowed money is used to fund the acquisition. Debt becomes the main source of funding the purchase/takeover.

 

What is merger and acquisition financing?

Merger and acquisition financing is the combining of two legal business entities into one - in the transaction, one of the businesses purchases the shares or assets of the other business. Different financial benefits arising out of this type of transaction. M&A financing will have benefits that are both strategic and operational around areas such as shared expertise, new products and services and access to new markets domestically or internationally. In larger transactions, private equity might be involved in the merger.

Operationally speaking other benefits potentially included streamlined operations and greater buying power.

  

What types of financing are available for business purchases?  

 

The types of financing available for a business purchase include loans from traditional financial institutions such as banks, as well as financing provided by commercial finance companies and asset-backed lenders.  The type of financing available from these lenders will vary based on factors such as credit risk, transaction size, type of industry, etc.

 

  
How do lenders evaluate a borrower's creditworthiness for the purchase of a business?  

Business lenders evaluate business purchase transactions based on the overall creditworthiness of the borrower as well as the target company - Key areas of focus include the personal credit scores of buyers, business credit scores of the acquisition target, collateral available, and the ability of the business to generate cash flow and profits.

 

  

What is due diligence, and why is it important in the context of business purchase financing?  

 

Due diligence is the process involved in reviewing the value and financial health of the business being targeted for acquisition. Buyers and lenders will focus on areas of potential risk as well as the value of the business in relation to the amount being financed - The growth potential of the business is also key in the due diligence process.

   
What are the key considerations when negotiating the terms of buying a business and arranging to finance the purchase?

   

When buyers negotiate the terms of a business acquisition they should consider interest rates on the financing and the amount of flexibility offered on repayment schedules. In some cases, buyers will be asked to provide collateral.  The cash flow and profitability of the business must be sufficient to repay day and run the day-to-day operations of the business in addition to retiring the acquisition loan. In the due diligence process buyers must consider company and industry risks in the business purchase.

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"Access to capital is one of the biggest constraints facing businesses today." - Karen Mills 

 

ABL LOANS - A FLEXIBLE FINANCING SOLUTION FOR YOUR BUSINESS

 

Business credit in Canada. Can ABL loan facility financing really provide you with that business  ' wind in your sails ' your company needs to generate ongoing working capital and cash flow needs? We think so, and here's why! Let's dig in on the asset based loan solution!

 

 

WHAT IS ABL LOAN FINANCING? 

 

ABL loan financing is a type of business credit solution under the asset-based lending umbrella - allowing borrowers to obtain loans and financing using business assets as the sole collateral. Typical collateral in ABL loans includes receivables, equipment, and real estate -

 

In some cases, brand and intellectual property can also be included as a component of the asset base of the business. Companies in Canada use ABL finance to generate the working capital they need to operate and fund business growth . ABL loans are typically structured in a more flexible format than traditional bank loans.

 

These days, as we’ve noted recently, there isn’t a day when we don’t hear about the challenges of companies ' tumbling' when it comes to their challenges in finding working capital and even long-term financing. (Today, we're talking about working capital/ cash flow)

 

However, the good news about the revolving door is that when ' the bank says no ' or the bank says 'yes, but not that much, there is always an ABL asset-based lender willing to step up to bat.

 

WHY DO ABL LOANS WORK?

 

The simple reason asset-based lenders provide the business credit you need is that they are solely focused on the amount, quality, and monitoring of your business sales and physical assets. Those assets? They are receivables, inventory, equipment, and in some cases, real estate if that pertains to land or buildings owned by the company. 

 

 

ACCESS TRADITIONAL BANK FINANCING IS A CHALLENGE 

 

Our Canadian chartered banks, in their wisdom, focus on cash flow lending, with emphasis on financial statements, ratios, covenants, and outside guarantees. Who is right? We won’t weigh in on that one today; we'll say that each institution, the bank and the ABL lender, is one of two options to finance your business - we'll let you decide which one works best.

 

While ABL solutions are often more expensive (not always), that’s clearly one reason why companies gravitate to bank financing first. By the way, asset-based lending firms tend to be non-bank commercial financing companies, although some Canadian chartered banks have entered the ABL market.

 

ABL LOAN VERSUS TRADITIONAL FINANCING

 

An ABL loan or operating revolver, as it is termed, offers your firm continuous working capital as long as you have those assets. The key beauty of this type of borrowing is that it grows with you; it’s not set in stone once a year as it might be via a bank approval.

 

Who uses ABL? Pretty well, every type of firm in Canada includes manufacturers, service firms, retailers, and high technology firms. Again, pretty well, everybody!  The size of these facilities really determines who you deal with and your overall pricing and structure. Small deals start in the $250k range, while larger facilities can easily be tens of millions of dollars.  To show you the spectrum, a start-up can have an ABL line of credit, and some of Canada's largest and public corporations have abandoned bank financing in favour of ABL business credit.

 

THE BENEFIT OF ABL LOANS FOR BUSINESS CASH FLOW

 

A key benefit of this type of business line of credit tends to be borrowing power - receivables are margined at 90%, inventory ranges from 20-70%, and appraisals and valuations are done on your fixed assets allow them to be thrown into the mix also. Just imagine being able to borrow daily against the value of your fixed assets. That’s ABL power!

 

 IS YOUR BUSINESS ELIGIBLE FOR ASSET BASED LENDING? HOW TO APPLY FOR ASSET-BASED LENDING 

 

Your firm's ability to get approved for this type of borrowing will depend on your ability to produce regular and proper financial statements, as well as the need to ensure you can report on current assets on an ongoing basis - i.e. aged receivables, inventory, etc.

 

CONCLUSION - FINANCING BUSINESS GROWTH VIA ASSET BASED LENDING

 

Intrigued?  Is Asset based lending right for your business? As a Canadian business borrower, you should be. Speak to 7 Park Avenue Financial,  a trusted, credible, and experienced Canadian business financing advisor who can assist you with your ABL business credit needs and expertise in executing ABL transactions.

 

 

FAQ: FREQUENTLY ASKED QUESTIONS/PEOPLE ALSO ASK  /MORE INFORMATION  

 

What is ABL loan financing?

ABL loan financing is a form of business financing that allows businesses to borrow under a loan structure that uses the business's assets as collateral. Key assets normally financed under this structure include accounts receivable, inventories, and fixed assets of the business - in some cases commercial real estate owned by the business can be included in the facility via either a business line of credit or term loan structure.

 

Unlike bank financing, very little emphasis is placed on the creditworthiness of the owners of the business. Asset-based lenders are skilled in risk management and asset valuation, allowing their type f financial analysis to provide greater financing for cash flow and business growth - Loan flexibility in ABL finance solutions is the reason this method of alternative financing is becoming more popular in the Canadian business financing landscape.

 

 How does ABL loan financing differ from traditional loans?

 

ABL loans differ from traditional loan financing via banks or other traditional financial institutions because they are usually more flexible as the focus is on collateral, versus the emphasis, banks place on balance sheet ratios, covenants, personal guarantees, and profit and cash flows.

Since collateral levels fluctuate the business has the ability to access more working capital as sales and assets such as the investment in carrying accounts receivables grows. The ability to use a pledged asset to access business funding is a key benefit of asset based lending ABL. Fixed asset facility limits greatly increase the size of a non-bank asset-based line of credit.

 

   

What types of businesses are eligible for ABL loan financing?  

 

Businesses of all sizes and industries are eligible for asset-based lending solutions - that includes start-up or early-stage companies and businesses that are temporarily financially challenged or in a restructuring stage - Assets remain the main eligibility focus - many subsets of asset-based loans can be accessed - such forms of financing include receivable factoring, tax credit financing, sale-leasebacks, purchaser order financing, etc. Traditional operating facility advance are often much less than is offered under an ABL borrowing base.

ABL lines of credit and term loans are covenant light structure based, focusing on the liquidation asset values of the company. If a business is in a cyclical or seasonal industry the ability to access capital is important so many types of industries qualify versus conventional lending criteria imposed by banks.

 

 

  What are the benefits of ABL loan financing?  

 

The benefits of abl loan financing solutions include more access to funding that otherwise might not be able to be obtained by a bank or other traditional financial institutions such as a credit union or an insurance company. Loans are typically structured around the customization of the assets of the business. In many cases, abl loans can help to refinance existing debt. Growth financing funding  is one reasons why many businesses consider asset backed loans.

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