Understanding Asset Based Loan Solutions: Navigating Business Funding Options / Stepping Out of Comfort Zones
Introduction
We can't speak for everyone but isn't it safe to say that either in our personal lives or in business we're often reluctant to enter into new situations simply because of the feeling of uncomfortableness?
That's one of the reasons why Canadian business owners and financial managers might be reluctant to step outside their zone of comfort when it comes to looking at financing via ABL finance; an asset based lending arrangement for their new business line of credit facility for key assets such as accounts receivable and inventory.
Mainstream Adoption: The Growing Popularity of Asset Based Financing
We would maintain it’s hardly a risk, as an asset based line of credit revolving facility is becoming more mainstream and popular every day.
Unveiling ABL: Exploring the Basics
In some cases, it is simply not knowing what an initial course of action might be. That's quite simple - investigate what ABL is, how it works, what are the benefits, what are the costs, and finally get a sense of how and why it differs from bank facilities.
Securing Business Growth: The Role of Asset Based Lending
It's clear to most business owners that the Canadian economy is improving over the challenges of recent years. That's why it’s critical that firms such as yours can secure sufficient funding for your company's cash flow needs to support their growth and survival. It has been that access to funding that has been one of the greatest hurdles
ABL vs. Traditional Banking: Evaluating Financing Options
It's clear to many Canadian firms that capital is available, it's simply a case of being able to access funding that in many cases Canadian chartered banks are reluctant to make available. Canadian bank facilities via commercial business lines are credit and are the low-cost solution and can offer numerous other services such as cash management, forex, etc.
Embracing Change: Transitioning to Collateral-Based Financing Via Asset Based Lenders
But what if traditional bank lines of credit are not available to your firm? Enter asset-based lending! This is where that feeling of ‘uncomfortable 'might be setting in. Why? Simply because it’s different, in that it focuses solely on your assets and your company's ability to turn those assets into cash flow.
Supporting Business Growth: Advantages of ABL
Why is ABL finance a better fit in many cases? We'll offer up simply the fact that it supports growth and several unique needs your firm might have.
The Surge of Secured Lending : Recent Trends in Canada
Recent studies suggest that asset based lending grew over 25% in Canada over the last year or so. The vast majority of this activity is the refinancing of existing bank lines and turning them into an ABL finance arrangement.
A Diverse Landscape: Asset Based Financing for Businesses of All Sizes
In Canada, large-cap asset based term loans or lines of credit are very different from facilities sought by smaller firms. Larger facilities often start in the 5-10 Million dollar range and go into the tens and hundreds of millions of dollars. The same type of facility is also available to firms in the SME sector where these working capital faculties start in the 250k+ range. Talk about a broad spectrum.
Bridging the Information Gap: Educating SMEs on Asset Finance Solutions
There is a lack of information quite often to the SME borrower who has heard about ABL finance, wants to know more, and might think his or her facility isn’t relevant, if not for size alone. In our opinion, the majority of Canadian business owners and financial managers are 'desperate' for quality information on Canadian business financing alternatives.
Key Takeaways
Understanding the advantages and perks associated with ABL funding , such as flexibility, improved cash flow, and collateral-based lending.
Familiarize yourself with the step-by-step process involved in securing an asset-based lending solution, including assessment, due diligence, and funding.
Grasping the various factors that influence Alternative financing rates, including interest rates, collateral value, and borrower creditworthiness.
Financing Eligibility: Knowing the criteria and requirements for qualifying for ABL alternative finance , such as asset types, financial stability, and industry risk.
ABL vs Traditional Loans: Contrasting ABL with traditional bank loans, highlighting the differences in structure, collateralization, and risk assessment.
Conclusion
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you in both understanding and creating an ABL facility to turn your collateral into cash flow, quickly, and efficiently.
