YOUR COMPANY IS LOOKING FOR BUSINESS LINES OF CREDIT – ABL FINANCING MEETS YOUR NEEDS!
ASSET BASED LOANS TO MEET YOUR FUNDING NEEDS
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing business 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
Business line of credit solutions are often a key talking point when it comes to talking about business financing and asset based financing solutions for clients at 7 Park Avenue Financial.
A talking point is, of course, just a 'succinct statement designed to be persuasive'. Let us take a look then at business credit line solutions, with the main focus on ABL, otherwise known as asset-based lending.
WHAT IS ASSET BASED LENDING
The problem with the term asset based lending is that it is typically a common catch-all for different times of financing that are cash flow and debt-related - one example might be full service revolving lines, or just receivable financing, while others might consider sale-leasebacks, etc., etc.
HOW ABL WORKS
In our discussion here we are referring to what we could call a 'comprehensive' business credit line solution - it is a finance facility that rolls up your accounts receivable, inventory, equipment / fixed assets, and yes, if applicable, commercial real estate - all into one borrowing facility that your company can draw down on. In certain cases, intellectual property can be considered a key asset.
ESTABLISHING THE BORROWING BASE - HOW MUCH CAN YOU BORROW?
Those business assets are rolled up into one borrowing base, allowing you to draw funds as you need them based on sales and the collateral we just identified. It's cash flow financing that works and borrowing capacity against your sales revenues.
ABL CREDIT VS BANK CREDIT - WHICH ONE IS BEST FOR YOUR FIRM
Although low interest rates are a key attraction of Canadian chartered bank financing the harsh reality is that thousands of firms simply don't qualify for those rates based on the stricter borrowing criteria that banks put in place in order for your firm to achieve those lower borrowing rates. Spoiler alert - ABL business credit lines cost more, but they provide more liquidity and access to capital.
Whether your firm is a start-up, early-stage, mid-market or even a larger corporation you typically require access to credit lines.
WHO IS THE ABL LENDER
A lot of the asset based lending available in Canada today is based on the U.S. model of ABL, which is huge, and we mean really huge, part of American business borrowing. In Canada, this borrowing is typically done by private commercial finance companies that are not regulated like our banks. They deliver a commercial financing product tailored to your business needs.
ABL credit lines also work if your firm is in the process of restructuring - it's at those times that you require the most access to financing, which at that point in your firm's history typically is not available from banks. As we noted, ABL increases access to funding based on your total asset structure! The 'A' in ABL is assets and that's all you need for an asset based business credit facility.
So what are the key differences when comparing asset finance facilities to a revolving line of credit bank financing facility, typically it's looking at alternative financing vs. traditional financing?
ALTERNATIVE FINANCING ( ASSET BASED LENDING ABL ) VERSUS TRADITIONAL FINANCING
For banks it's all about the trifecta - profits, cash flow, and a clean balance sheet - and you pretty well need all those 3 to be in place to access those low bank rates.
THE ABL DIFFERENCE - IT'S FLEXIBLE FINANCING!
ABL focuses on flexibility - little or no emphasis is placed on ratios, covenants, outside collateral, spousal and owner guarantees, etc. Those items may be 'talking points' but rarely total deal-breakers. In many cases, term loans can also be structured against specific assets. ABL brings what is known as a ' covenant light structure ' to your borrowing compared to Canadian chartered bank requirements.
SPEED AND FLEXIBILITY
One key aspect of asset based revolving credit lines is that they can facilitate peaks and bulges in borrowing needs when it comes to sales. The temporary spikes that come with seasonality, large new contracts, or purchase orders can almost always be accommodated when working capital is down to 'crunch time'. Traditional facilities via commercial banking are often very difficult to arrange in a short period of time.
Is the asset based credit line the best finance method to achieve cash flow and working capital nirvana?! If you can't access some or all of the bank financing you need it just might well be!
CONCLUSION - ASSET BASED LOAN AND CREDIT LINE SOLUTIONS
Looking to improve your company's cash flow? The different types of financing ABL products can provide include:
Working capital,
Growth capital and
Acquisition
Typically Asset-based loans are often structured as revolving lines of credit, which means the company can borrow money when needed and on a continuing basis.
Services also extend to debt refinancing as well recapitalization or restructuring when needed for your company's needs!
Speak to 7 Park Avenue Financial - a trusted, credible and experienced Canadian business financing advisor with a track record of business financing success on what you need to know about this innovative method of business finance in Canada.
Bottom line? Understand the requirements and take advantage of the benefits for the growth capital you need today!
FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION
What is a commercial line of credit?
Commercial credit lines are a type of financial product that can be used by companies to finance day-to-day operations. Loans can be secured or unsecured - and there might also be other more specialized purposes depending on the needs or desires of an individual business concern
Is an Abl a line of credit?
The ABL is a type of business financing that's secured by company assets. Most facilities are structured to work as revolving lines, which allow you to borrow from your sales and asset base on an ongoing basis for expenses.
How does an ABL loan work?
Asset-based lending is a popular and often used form of business financing because it uses the borrower’s assets as collateral. Liquid assets, such as receivables or inventories can be quickly financed for quick funding when needed - Some banks offer some type of asset-based loan solutions, but most of these facilities are offered by non-bank commercial finance firms.
Click here for the business finance track record of 7 Park Avenue Financial
