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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 - INFO@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Email = sprokop@7parkavenuefinancial.com
When it comes to a line of credit, business loans provide owners/financial managers with the challenge of financing working capital needs. While most SME sectors want to rely on Canadian chartered banks for these needs, ' Asset Lending' has emerged as an alternate - and quite often easier to achieve. We're ' unboxing ‘ABL (asset-based lending) for your consideration. Let's dig in.
The easiest way to think of an asset-based credit line is to look at your balance sheet. The total assets you have in receivables, inventory, and equipment are essentially your' box' of assets margined under a new separate non-bank line of credit facility. ( While banks also offer this type of lending more often than not, it's for transactions in the 5-10 Million dollar range and up, obviously eliminating many firms in the SME sector which typically have revenues in that range, not assets!)
So while our banks focus on what they do best - addressing cash flow and risk and outside collateral and guarantees, the asset lending model looks to the main source of fluctuating repayment - your sales and your assets. (Sales create receivables) The majority of asset loans tend to reflect a higher risk as companies in the SME sector ( Most define this as firms with under 25 Million $ in sales ) typically present a higher risk rating for overall credit quality.
While asset-based lending solves high growth and erratic profits and balance sheet structures, it can also address financial distress problems. Notably, it is also used in many acquisition financing situations, as it allows you to monetize the target firm's assets.
How does the asset lender offering these types of business lines of credit manage the overall risk - allowing them at the same time to offer higher levels of financing than you typically could achieve from a bank? The answer - specialized knowledge of your assets' true value and placing a higher value on more regular reporting of asset categories such as a/r, inventory, and equipment values.
Equipment becomes a component of your credit facility and is almost always subject to an appraisal. Rarely will a bank lend against fixed assets as a part of your revolving credit line - the asset-based lender will.
Successful business owners/managers will always be open to checking out newer forms of financing that might assist in growth and profits if you're looking to ' unbox’ new types of business credit alternatives, seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your needs.
Stan Prokop
