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Business Owner’s Guide to Asset Based Financing Solutions
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Financing & Cash flow are the biggest issues facing business today
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"Asset Based Lending Business Financing revolutionizes how companies access capital, harnessing the power of their assets for unprecedented financial flexibility."
Attention Grabber: "Unlock your business's potential with financing that grows as you do – explore Asset Based Lending today."
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Asset Based Lending Business Financing solutions that solve the issue of funding operations with cash flow – Save time, and focus on profits and business opportunities
Asset Based Lending: The Smart and Fast Business Financing Solution in Canada
I recently searched for the term 'business financing' in Canada. Last month, 350,000 searches were performed for that term in Canada. WOW! We're quite sure that asset-based lending could satisfy many Canadian business owners and financial managers looking for business credit facilities that are 'smarter and faster'. How? Let’s take a look.
Asset Based Lending Business Financing offers a smarter, faster route to liquidity for businesses across Canada. It leverages a company's sales and assets, such as receivables and inventory.
Asset-based Lending (ABL) enables growth and stability in an unpredictable business financing market.
What is Asset Based Lending (ABL)?
Asset-based lending is business-to-business lending that provides cash flow and revolving credit facilities for firms of all sizes in Canada based on multiple forms and combinations of sales and collateral.
In truth, the facilities work for firms requiring a monthly business credit line over 250k and ranging upward to tens of millions of dollars. We're quite sure that covers many of those 18,100 queries made on the internet.
By the way, asset-based lending uses your receivables and inventory to provide a lending facility against those two assets. Because of how these types of credit lines are calculated, you can be sure that you will have access to more cash flow 99.99% of the time. And that's what business financing is about, right?
ABL (asset-based lending) business financing is business credit that can be used to grow your business, acquire another business, or, simply speaking, fix a lot of the financial challenges that you are experiencing almost immediately.
A key benefit often overlooked in the approval process is that your firm is now in a position to negotiate better terms and prices for the products and services that you need. Why? Because you have 'business buying power' due to your newfound access to more business credit.
Why Not Traditional Bank Financing?
So when we look at those 18,100 firms that searched for business financing last month in Canada, why didn’t these companies call you know who... Canada's chartered banks?
The quick answer is that they probably have tried to arrange additional or new financing with their chartered bank or credit union but have exhausted all attempts at approval simply because they can’t meet more rigorous bank qualifications.
Unfortunately, in some cases, they have even been asked to leave the bank or find themselves in the bank's 'special loans' portfolio—we have to always commiserate with them that we know that’s not a 'special' feeling you want to have in business.
In many cases, the banks or other private equity firms will suggest or request that the business owners put up additional personal equity into the business to justify new financing. Asset-based lending does not require you to consider that option simply because you already have the one thing that ABL financing needs to work smart and fast... Assets!
The ABL Difference: Smart and Fast Financing
So, how does the ABL lender do it differently? The short answer is that they emphasize understanding your business and getting regular bi-weekly or monthly reports from you on the basics, such as a/r, a/p, inventories, etc. This business financing expertise allows asset-based lending to work in almost every industry in Canada—real-world working capital finance.
Key Takeaways
- Eligibility Criteria: Understanding what makes a business a viable candidate for ABL can streamline the financing process.
- Types of Assets Considered: Knowing which assets can be leveraged is key to maximizing your borrowing capacity. A/R financing is a subset and widely used type of ABL finance.
- Benefits Over Traditional Financing: ABL's flexibility and accessibility offer clear advantages over conventional routes such as bank unsecured loans with covenants and restrictions.
- The Valuation Process: Comprehending assets' value helps businesses anticipate how much capital they can access from any pledged asset
- Interest Rates and Fees: Awareness of the cost implications of ABL enables more informed financial decisions.
Conclusion
Suppose you want your company to be on the growth trail again without taking on extra debt (ABL business credit financing is cash-flowing your assets, not adding debt to your balance sheet).
Call 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor - let 'smarter and faster' work for your credit needs via flexible funding solutions... Today.
FAQ:FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION
What exactly is Asset Based Lending Business Financing?
Asset Based Lending Business Financing is a type of credit extended to businesses, secured by company-owned assets like receivables and inventory, o
How does Asset Based Lending compare to traditional bank loans?
Because it's based on the value of your assets, not just your credit scores or financial history, it is an excellent option for businesses that do not qualify for traditional loans. Fewer restrictions on borrowing are a highlight of ABL solutions.
What types of assets can be used for ABL?
Typically, accounts receivable, inventory, equipment, and sometimes commercial real estate can serve as collateral for an Asset Based Loan, providing various ways for businesses to leverage their existing assets.
Who can benefit from Asset Based Lending?
Businesses of all sizes with tangible assets and need working capital can benefit, especially those looking for more flexibility than traditional banking methods offer.
What makes Asset Based Lending an intelligent choice for businesses?
Asset-based loans provide immediate cash flow based on a company's assets, the flexibility they offer, and the opportunity for businesses to negotiate better terms and prices for products and services, making ABL a smart financing choice.
Can startups qualify for Asset Based Lending?
While typically more accessible to established businesses with assets, some startups with valuable assets may qualify, depending on the lender's criteria.
How long does the ABL process take?
The time frame for accessing asset-based financing can vary but is usually quicker than securing traditional loans. Some businesses access funds in as little as a few weeks after completing the application and valuation process.
Are there any industries that particularly benefit from ABL?
Industries with high inventory or receivables ( the most liquid assets ) and physical assets, such as manufacturing, wholesale, and distribution, often find ABL especially beneficial.
What happens if the value of the collateral decreases?
Lenders may conduct periodic revaluations, and if asset values decrease significantly, they may require additional collateral or adjust the borrowing base of the revolving line.
How do interest rates for ABL compare to other forms of financing?
Interest rates for ABL are generally competitive, especially for businesses that might not qualify for traditional financing for an unsecured loan. Still, they can vary based on the risk assessment of the collateral.
How is the borrowing base in ABL determined?
The borrowing base is calculated based on a percentage of the appraised value of the eligible assets, providing a clear framework for how much capital a business can access.
What role does asset valuation play in ABL?
Asset valuation is crucial as it determines how much financing a company can secure; accurate and fair valuation practices are vital for lenders and borrowers.
How can businesses prepare for an ABL application?
Ensuring accurate, up-to-date records of assets and their values, along with having a clear understanding of financial needs and goals, can streamline the application process for Asset-Based Lenders.
