Asset Based Financing Companies: Empowering Business Growth | 7 Park Avenue Financial

YOU ARE LOOKING FOR ASSET BASED FINANCING SOLUTIONS

   ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

Transform Your Assets into Capital with Asset Based Financing

CONTACT US  - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

Or Email us with any question on Canadian Business Financing

                   EMAIL - sprokop@7parkavenuefinancial.com  

 "Asset Based Financing Companies redefine the approach to business lending by prioritizing assets over traditional credit metrics."

 "Unlock your business's potential with asset-based financing—where your assets pave the way for growth, not your business  credit score."

7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer "ABL" ASSET BASED FINANCING solutions that solve the issue of cash flow and working capital  – Save time and focus on profits and business opportunities

Introduction 

Business finance solutions are never 100% perfect all the time, and of course, making a prediction is a sometimes risky scenario, potentially damaging to your credibility.

Still, we're pretty confident that Canadian business owners will recognize non-bank asset financing as credit facilities for business finance loans to be the best thing they ever heard of when it comes to financing their business. We're predicting a potential 'love at first sight'! Let's dig in.

 Asset-based Financing companies allow business borrowers to seek innovative financial solutions. This financing model, which focuses on leveraging a company’s assets and sales to secure loans, has become increasingly vital for businesses aiming for growth amid challenging economic landscapes.

By providing an alternative to conventional bank processes, asset-based financing companies unlock new avenues for companies to enhance liquidity and confidently pursue expansion.

Introduction to Asset Based Financing

Frankly, we're probably not exactly making a stretch comment because hundreds, if not thousands, of Canadian firms are investigating and utilizing this type of financing. You just may not have heard of it yet.

The Current Canadian Business Economy

As the Canadian business economy turns around, most of our clients are finally focused on growth again. But how can that growth be financed, since lending standards and criteria at institutions such as the banks don’t appear to have been liberalized at the same pace that your company hopes to grow?!

Asset Based Lending: A Trend Prediction

That’s where our trend prediction comes in. Asset-based lending focuses on your assets and growth opportunities - it doesn’t focus on ratios, tangible equity in your company, covenants, cash flow coverage etc., etc.! Are we forgetting the dreaded 'personal guarantee’?

So, are you picking up on the opportunity for an asset based line of credit?

Let’s see how things work. Asset-based lenders keep it simple: They lend a very high value against your ongoing assets. What are the typical assets lent against? You can almost guess what they are. If there's a real estate equation in your company's assets, they are accounts receivables, inventory, unencumbered equipment, and real estate.

 Unveiling Asset Based Lending Companies 

Based on conversations with our clients, the big mystery around asset-based lending in Canada is that business owners don’t really know or understand who these firms are. So we'll tell you.

They are specialized, Canadian and U.S.-based firms that focus solely on providing credit facilities and business finance loans with your assets as security. They take the same security as a Canadian chartered bank, and you manage your facility daily, drawing down cash as you need it. Funds are wired into your account as needed, based on... guess what ... assets! That is the one key difference that our clients pick up on, that the total focus of this type of asset financing is the collateral itself.

Key Questions: Capacity and Cost

We already know your next question... because we've heard it a hundred times before. It's 'How much can we get?' ... followed by 'What does it cost?'

Speaking in general terms, your receivables are financed at 90% of their value. Because of the nature and marketability of different types of inventory, this type of collateral is margined anywhere from 25-75%.

Even work in process can be financed for firms with progress billings. We noted that unencumbered equipment can also be drawn against.

You and the asset financing provider typically agree on an appraised current market or liquidation value. That saves the sale-leaseback approach, which, by the way, is also a separate viable option.

Costs vary around this type of financing. On occasion, it is competitive with bank financing—and gives you twice the liquidity—but it's more often than not more expensive. However, you offset those costs by having greater access to credit facilities that will grow your business and profits.

Key Takeaways  

Conclusion: Asset Based Financing  

Call 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor who can walk you through the Canadian landscape of business finance loans in the asset-based lending area. We think you'll quickly find that our prediction is becoming truer every day: asset-based financing is hot! And here to stay.

FAQ: FREQUENTLY ASKED QUESTIONS  / PEOPLE ALSO ASK /  MORE INFORMATION  

How does asset-based financing benefit my business?

Utilizing assets for financing enables companies to leverage existing resources for growth, providing a flexible and efficient capital source.

What assets can be used for asset-based financing?

Receivables, inventory, unencumbered equipment, and real estate are commonly used as collateral in asset-based financing.

How does asset-based financing compare to traditional loans?

Asset-based loans often have more flexible terms and require less emphasis on credit scores, focusing instead on the value of your assets.

Is the application process for asset-based financing complicated?

The process is typically streamlined, focusing on asset valuation rather than extensive credit checks and financial history analysis.

Can startups and SMEs benefit from asset-based financing?

Yes, startups and SMEs find asset-based financing particularly beneficial due to its flexibility and the focus on assets by the financing company rather than the credit history required by banks for unsecured loan approval. Businesses unable to achieve full ABL facilities often utilize factoring financing / receivable financing as a viable alternative for growth and business expansion.

How do interest rates for asset-based financing compare to other loans?

While often higher than traditional bank loans, asset based finance rates reflect the added flexibility and accessibility of asset-based financing.

What happens if the value of my collateral decreases?

Lenders may require additional collateral or adjust the loan terms if the asset values decrease significantly during the loan period.

Are there any industries that particularly benefit from asset-based financing?

Industries with high asset-to-revenue ratios, such as manufacturing and wholesale, often find asset-based financing especially advantageous.

What is the key difference between asset-based financing and traditional lending?

The key difference lies in the primary focus on collateral value rather than creditworthiness or financial performance.

How do lenders determine the value of assets for financing?

Lenders typically conduct appraisals and consider market liquidity to determine a conservative lending value for each asset.

Can asset-based financing improve my company's liquidity?

Yes, by converting illiquid assets into accessible capital, businesses can significantly enhance their liquidity and operational flexibility.