YOUR COMPANY IS LOOKING FOR ASSET BASED CREDIT LINES!
IS A BUSINESS REVOLVING LINE OF CREDIT ASSET BASED LENDING SOLUTION RIGHT FOR YOUR BUSINESS?
THE BUSINESS CASH FLOW SOLUTION
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Financing & Cash flow are the biggest issues facing businesses today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
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THE BUSINESS CREDIT LINE SOLUTION
The ABL asset based revolving credit line in Canada just might be the ' APP ' you're looking for when you require business financing and liquidity in a total solution sense.
These days it’s all about ' APPS' we hear - they are handy, do the job more quickly, and are unique. That's why it occurred to us that Asset-based credit facilities are our version of a business financing ' app ', and the solution for a line of credit for small businesses and larger firms. Let’s dig in.
WHY WOULD A COMPANY USE AN OPERATING LINE OF CREDIT
Business credit lines allow your company access to capital via revolving facility that allows the company to fund short term obligations in the day to day course of business to cover expenses for a specified credit amount /limit - these business revolving credit needs might include purchasing products or services needed, retiring accounts payable, and funding the investent your company makes in carrying accounts receivable.
ARE YOUR BUSINESS FINANCING PROSPECTS LIMITED DUE TO A LACK OF BUSINESS REVOLVING CREDIT?
There's not a lot of argument these days around the factor that business owners in all sectors, particularly SME (small to medium enterprises) at least feel that the prospects of business financing solutions are limited. That’s where the 'old ways' don’t work, and the 'new ways' are being searched out. Asset credit lines are a new way.
THE BANK ALTERNATIVE - THE BEST BUSINESS LINE OF CREDIT IN CANADA?
This type of credit facility embodies practicality. And truth be told while we are positioning it as a solid alternative to commercial bank credit lines the reality is that it can be used to acquire a business, or even help a company rise from the ashes when it's been in somewhat dire straits. The only requirement? Assets!
CAN YOU GET A BUSINESS LINE OF CREDIT WITHOUT A PERSONAL GUARANTEE?
The majority of business credit lines available to Canadian business owners require a personla guarantee - A small number of facilities do not require a guarantee, and asset based lenders place less reliance on the ' PG' focus compared to Canadian banks. Businesses should be able to provide additional documentation such as business bank statements, and other documentation for a credit profile such as articles of incorporation.
BORROWING AGAINST ALL YOUR KEY ASSETS - INTO ONE CREDIT ONE
So what is the facility and how does it work? Think of it as borrowing power against your total pool of business assets. It allows you to borrow, at all times, against the collateralized value of your business assets - and that's the usual suspects: INVENTORY, A/R, EQUIPMENT, and REAL ESTATE. A ' borrowing base ' is established, usually on a monthly basis, on the value of these assets, allowing you to draw down on the funds you need. This is not a term loan - its a revolving line of credit. It's balance sheet financing 101.
While the business owner and manager might view this as a bit more of specialized financing the reality is that it provides the same working capital and cash flow that you would get from a Canadian chartered bank. The only difference - is more borrowing power!
WHO DO ASSET BASED FINANCING FACILITIES APPEAL TO?
It's been clear to us for quite a while now that the ABL borrowing line has appeal to a broad brush of Canadian business via asset-based lenders.
7 ASSET BASED FUNDING SOLUTIONS
Companies who don’t qualify for bank revolving lines of credit
Companies that don't qualify for enough bank credit!
Refinancing of a business
Acquiring another company
Startups
High growth scenarios
Management buyouts
THERE ARE SOME KEY SUBSETS OF ASSET BASED LOANS
While we speak typically of the asset-based abl facility in terms of the ' total solution' encompassing all your business assets there are a number of, let us call them ' subsets' of this method of financing.
These subsets include:
Accounts Receivable Financing
Inventory finance
PO/Contract financing
The above niche type of financings is available at all times to business borrowers depending on your unique need and industry specifics.
CONCLUSION
ABL credit lines on a day-to-day basis work the same way as commercial bank credit lines. The ABL lender though imposes more reporting and in some cases, funds coming in (not going out) may be directed to a blocked account that repays your ABL lender on a revolving basis as you draw funds needed.
If you want to get behind the scenes on that business ' APP' called ABL speak to 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can help you make that work for your business needs to grow profits and additional revenue.
FAQ: FREQUENTLY ASKED QUESTIONS / MORE INFORMATION / PEOPLE ALSO ASK
What is a revolving line of credit for business? How does a business revolving line of credit work?
Revolving credit lines / business line of credit loans allow a business due draw down on funds and are often subject to renewal and reviews - somewhat similar to a personal line - Interest rates are charged only on the amount that is drawn down and in some cases credit facilities require minimum interest payments - similar to a business credit card - The interest rate on borrowed funds varies based on overall credit quality and type of credit line.
Credit lines are a valuable tool for small businesses and medium sized companies. These facilities differ from a small business loan that is structured as a term loan with regular installent payments. Most credit lines have a credit limit that allows the company to borrow funds on the business bank account - unlike a lump sum term loan .
Credit aproval is based on a combination of business and personal credit scores when businesses apply for revolving line of credit and a bank line of credit for business.
Banks will offer an unsecured business line - These unsecured lines small business owners to pay interest only on funds drawn. The revolving line of credit for business is not a term loan structure.
What is the difference between a line of credit and a revolving line of credit?
Though revolving credit and lines of credit have similarities, there are some differences. Revolving credit remains open until the lender or borrower closes the account. A non-revolving line of credit, on the other hand, is a one-time arrangement, and when the credit line is paid off, the lender closes the account. Small business line of credit requirements vary depending on lender type - traditional and alternative lenders offer these facilities.
