YOUR COMPANY IS LOOKING FOR BUSINESS LINE OF CREDIT SOLUTIONS!
ASSET-BASED LENDING WORKS! INSIDE ASSET BASED LOANS IN CANADA
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
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Asset-Based Lending (ABL) is a powerful financing tool that utilizes a company's assets to secure capital and drive business growth.
Struggling to secure business financing? Discover how ABL can leverage your assets to unlock the capital you need.
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer ABL Asset Based Lending & solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
Canadian Business Financing with the intelligent use of experience
Business finance in Canada often requires asset-based financing in the form of a credit line. The ABL credit facility is one alternative to the traditional Canadian chartered bank solution. Let's dig in.
Discover the Benefits of Asset-Based Lending Today
Asset-Based Lending (ABL) is revolutionizing how Canadian companies secure financing for business credit lines - It's a solution for companies needing capital to grow and fund daily operations.
Asset-based finance leverages a company's assets—such as inventory, accounts receivable, and equipment—as collateral to secure loans. ABL optimizes your sales and assets - providing a flexible way to access funding
Looking for Specialized Help in ABL Asset Based Lending for Business Finance
The other day, one of Canada's major business newspapers had an interesting article about the need to treat specific aspects of business needs as a ‘ SPECIAL OPS’ assignment—focusing on issues such as understanding the mission, the value of success, and the necessary training and information so things don’t go wrong!
At 7 Park Avenue Financial we think that’s a solid analogy to address the need for business credit lines and revolving lines of credit via an asset-based loan.
Businesses might choose asset-based lending due to its flexibility and the broad range of assets that can be leveraged, such as accounts receivable, inventory, machinery, equipment, real estate, and intellectual property.
ASSET BASED LENDING HAS CHANGED THE COMMERCIAL BORROWING LANDSCAPE IN CANADA
The ‘ ABL ‘(asset-based lending) solution is a fundamental game-changer in Canadian business financing.
Asset-based loans provide fast, flexible financing by leveraging valuable assets as collateral. Although it originated in the United States and is even more utilized than traditional banking in the U.S., in Canada, it has become specialized lending 101, allowing any business with two key assets (Sales and business assets) to monetize that into a revolving line of credit.
A company’s assets on the balance sheet dictate the amount of business credit you can access!
FINANCING BUSINESS ASSETS AND CASH FLOW
The even better news is that depending on your circumstances, other asset categories such as accounts receivable, inventory, equipment, and your business commercial real estate (if the latter is applicable) can be easily combined to give you tremendous borrowing power relative to your sales’ ongoing value.
Using a company's assets as collateral for asset-based lending provides flexibility and significant financing, especially for companies facing fluctuations in cash flow, seasonal variations, or needing capital for growth and operational purposes.
It’s one time when ‘growth is good,’ allowing you to remove the concern around running out of ongoing cash flow needs.
ABL FINANCING IS SHORT TERM MAXIMUM BORROWING POWER
It’s important to review ABL financing in the context of short-term borrowing power and not the dreaded ‘ debt ‘ word.
ABL can help improve a company's cash flow by providing access to capital based on the value of its assets. Yes, its actual cash flow could be alleviated by a working capital term loan or mezzanine/cash flow financing - yet these solutions involved fixed payments, longer amortizations, etc.
In the case of a bank credit line, or our situation, ‘ ABL, ‘you will be repaying the facility constantly as your sales and accounts receivable come to maturity. Naturally, that is all part of what the finance folks call your operating cycle - the travel of a dollar through your business from materials purchase to inventory to receivable to… finally… CASH.
SALES, ACCOUNTS RECEIVABLE, AND ASSETS ARE THE ONLY COLLATERAL IN ABL FUNDING
Firms of all risk profiles are eligible for ABL asset-based finance solutions. Those solutions can be uniquely just inventory, A/R, or a combo of both. If you have the collateral, such as physical assets like equipment, real estate, and inventory, ABL has the solution.
Experienced business owners know that bank financing in the form of credit facilities requires a holy grail of profits, cash flow, and balance sheets/income statements that satisfy bank ratios. Great for some, but not accessible for all.
Typically, a line of credit is more cost-effective than term loans in some ways because you are only paying for the financing you are using.
ASSET BASED LENDING IS A SOLID BUSINESS ACQUISITION TOOL
In many cases, this type of Canadian business financing allows you to acquire a competitor through the use of asset finance and is also used by many firms as an interim ‘ restructuring’ strategy.
Compared to credit and term loans, which provide companies with committed revolving lines of credit and term loans under a covenant light structure, ABL offers more flexible financing for acquisitions.
KEY TAKEAWAYS
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Collateral Management: Effective collateral management is crucial as it directly impacts how much credit a business can secure through ABL.
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Accounts Receivable Financing: Leveraging accounts receivable allows businesses to unlock funds tied up in unpaid invoices, improving cash flow.
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Working Capital Solutions: ABL provides essential working capital, enabling businesses to maintain smooth operations and invest in growth opportunities.
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Loan-to-Value Ratios: Understanding these ratios helps businesses gauge how much they can borrow against their assets, aiding in better financial planning.
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Cash Flow Optimization: ABL facilitates better cash flow management by converting assets into immediate working capital, supporting day-to-day business needs.
CONCLUSION - LET 7 PARK AVENUE FINANCIAL BE YOUR SPECIALS OP'S TEAM IN BUSINESS FINANCING
If you're looking for some SPECIAL OPS assistance in the form of availability in a business credit line via ABL, seek out and speak to 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor who can ensure you aren't missing out on one of the most available solutions in financing and business development.
FAQ
How does Asset-Based Lending work?
Asset-based lending involves using your business’s assets, such as inventory and accounts receivable, as collateral to secure a loan. This type of financing provides quick access to capital, which can be crucial for managing cash flow and supporting growth. The terms and conditions of asset-based loans depend on the type and value of the pledged asset. ABL solutions are an alternative to bank unsecured loans.
What types of businesses benefit from Asset-Based Lending?
Businesses with significant assets, like manufacturing companies, wholesalers, and distributors, can benefit the most from ABL. It’s beneficial for companies with strong accounts receivable or substantial inventory but needing improved liquidity. Smaller firms access receivable financing which is a subset of the ABL solution.
What are the main advantages of Asset-Based Lending?
The main advantages include increased access to capital, improved cash flow management, and greater financial flexibility. ABL allows businesses to leverage their existing assets to obtain financing that might not be available through traditional loans.
How is the borrowing base calculated in Asset-Based Lending?
The borrowing base is calculated based on the value of the assets used as collateral. Typically, lenders will provide a percentage of the value of accounts receivable, inventory, and other assets. This percentage can vary depending on the type.
What is inventory financing?
Inventory financing allows businesses to use their inventory as collateral to secure a loan. This type of financing helps businesses maintain sufficient stock levels without straining cash flow.
How does equipment financing differ from ABL?
Equipment financing specifically involves using machinery and equipment as collateral for a loan, whereas ABL can include a broader range of assets such as accounts receivable and inventory.
What are revolving credit facilities?
Revolving credit facilities provide businesses with a flexible line of credit that can be drawn upon as needed, repaid, and drawn upon again, much like a credit card. This flexibility makes it a useful tool for managing cash flow fluctuations.
How do loan covenants impact businesses?
Loan covenants are conditions set by lenders that borrowers must comply with. These can include financial ratios, reporting requirements, and operational restrictions. Non-compliance can result in penalties or loan default.
What is the difference between secured and unsecured loans?
Secured loans require collateral, which reduces the lender's risk and can result in lower interest rates. Unsecured loans do not require collateral but typically have higher interest rates and stricter credit requirements.
How does ABL compare to traditional bank loans?
ABL typically offers more flexibility and quicker access to funds than traditional bank loans, which often have stricter credit requirements and longer approval processes.
What factors do lenders consider in ABL?
Lenders assess the quality and value of the collateral, the borrower's financial health, and the ability to repay the loan. They may also consider the industry and market conditions.
How can a business prepare for ABL?
Businesses should ensure their financial records are accurate and up-to-date, maintain a healthy asset base, and be prepared to provide detailed information about their operations and assets to potential lenders.
