Business Line of Credit: Flexible Financial Solutions

Unlock financial flexibility: A Business Line of Credit can be your business's lifeline!"

7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer BUSINESS LINE OF CREDIT solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities

THE CREDIT LINE SOLUTION YOU HAVE BEEN LOOKING FOR!

INTRODUCTION

Business line of credit needs are often challenging when owners/financial managers are trying to run...and, oh yes, 'grow' their company.

WHO OFFERS BUSINESS LINES OF CREDIT

That’s why ABL, the acronym for asset-based lending operating facilities, can deliver a solution for almost every business - with only 1 prerequisite - assets such as receivables, inventories, equipment, or even real estate. Let's dig in.

FLEXIBLE FINANCING OPTIONS

So why is ABL becoming one of the fastest ways to get your business financing going? The answer a valuable tool known as a line of credit for business.

It's a working capital facility, similar to a bank facility that provides working capital regularly against inventory, receivables, and in many cases, equipment and real estate if that is applicable.

One can argue the case forever on whether Canadian banks are providing the right amount of financing and support for small business, and yes, even large businesses in Canada - We don’t think we’ll get full closure on that discussion, although bank interest rates have never been more attractive for those that qualify.

Most top experts and studies say that SME COMMERCIAL FINANCE needs are certainly not fully delivered by traditional banking institutions as it relates to new firms, high-growth firms, or businesses with any kind of financial challenge on their balance sheets and income statements.

While smaller businesses might rely on credit cards or short-term working capital loans the best solution is access to a revolving credit solution.

So assume you either can’t qualify for a chartered bank business line of credit or unsecured loans from banks, or, on the other hand, perhaps do, but the facility doesn’t meet your needs - in some cases, the preset credit limit may not be enough for your growth needs. That’s where an ABL or asset-based line of credit comes in.

SUPPORTING CASH FLOW NEEDS AND BUSINESS GROWTH GOALS

How does ABL work then? It’s a simple, no-nonsense form of financing provided by non-bank-type firms - typically commercial finance companies. Many call it 'alternative financing,' but we can assure you this form of ‘business financing' is becoming more mainstream and popular every day.

DOES YOUR COMPANY QUALIFY FOR A BUSINESS LINE OF CREDIT?

How to qualify for a small business loan or revolving line of credit is information that every business owner must know.

Because the chartered banks focus on traditional metrics such as your overall financial performance, outside collateral, credit score and credit history of owners, personal guarantees, etc., you will find the overall business credit line requirements under the ABL process much simpler and common sense. It’s simply a case of borrowing against your real assets, with little or no reliance on the issues we outlined above relative to a bank-type facility.

PAY INTEREST ON ONLY WHAT YOU BORROW UNDER YOUR CREDIT FACILITY

The specialty of an asset-based line of credit provider is simply their strong knowledge of your industry and assets, so because of that, your ability to generate almost unlimited working capital becomes very obvious very early on in the picture. As with any business credit facility you pay interest on the credit line loan only on the amount outstanding that is utilized in your facility and you still use your regular business bank account as funds are deposited there for your use. Business loan rate of interest and charges are based on overall credit quality.

BANK CREDIT LINES VERSUS OVERDRAFTS

Traditional bank business lines of credit provide ongoing access to funds for your day-to-day operations, sometimes through an overdraft limit.

Key benefits are the liquidity available for business needs and the ability to manage cash flow as needed.

Access to bank credit requires solid proof of your company's business financial performance. Typical supporting documents include company financial statements, business tax returns and personal financial information and credit history of the owner/owners. A business plan is typically always required - 7 Park Avenue Financial prepares business plans for clients that meet and exceed bank and commercial lender requirements.

Banks will, on approval set a credit limit and interest rates associated with the credit line

WHAT AMOUNT OF LINE OF CREDIT DOES YOUR FIRM QUALIFY FOR?

How does a line of credit work? What do we mean by that? Simply that if you have receivables, assets and equipment you can always borrow against them on an ongoing basis so typically you can draw down on 90% of receivables, 40-70% of your inventory values, and pre-agreed upon amounts on the appraised value of unencumbered equipment.

When It comes to how to increase credit limit needs commercial lending asset-based financing solutions increase automatically as your sales and other assets grow - a ' borrowing base certificate' is prepared every month with new limits.

Typically companies that are the best prospects for this type of financing are firms with fast growth and in some cases a limited track record i.e. a start-up, etc. who can benefit from a revolving line of credit.

In some cases, this type of business operating line of credit could be complementary to your existing bank facility, but more often than not, it replaces it.

WHAT YOU NEED TO KNOW ABOUT LINES OF CREDIT AND THE COST OF FINANCING

How are 'ABLs' priced? While there are a number of key advantages to an asset-based line of credit they do normally cost more than bank facilities. Depending on the size of the facility and the overall nature of your firm, its industry, and other challenges you might be facing, the final pricing will reflect a realization of those issues.

So yes, it will cost more, but those costs can be significantly offset by increased cash flows via inventory turns, the ability to purchase smarter with that cash and to convert receivables immediately into cash for additional sales efforts.

WHO QUALIFIES FOR BUSINESS CREDIT LINES

Don't forget though that you have in effect just negotiated unlimited working capital, and have those credit line benefits and the ability to turn assets more quickly and generate increased cash flow, revenues and profits. That’s a true business financing triple threat! If you're looking for more good news, understand also that asset-based operating credit lines are suitable for pretty well every industry in Canada - Again, it's always about the assets.

KEY TAKEAWAYS

CONCLUSION- BUSINESS LINE OF CREDIT CANADA

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

What is a business line of credit?

Business lines of credit are revolving loans that give businesses access to funds based on specific assets , most commonly accounts receivable and inventories. Commercial line of credit interest rates are based on an assessment of the overall company credit score

A Business Line of Credit provides businesses with access to funds up to a certain limit, offering flexibility to draw as needed for various purposes, enhancing cash flow management.

Yes, it serves as a safety net for unexpected expenses, allowing businesses to access funds quickly without the need for a new loan application each time.

It offers the opportunity to invest in growth initiatives by providing readily available financing, supporting expansion or improvement projects.

How does a Business Line of Credit compare to traditional loans in terms of accessibility?

Typically, it offers more flexible access to funds and repayment terms, making it a more adaptable option for businesses with fluctuating financial needs.

Yes, responsible use and repayment can help build a positive credit history, potentially improving the business's good credit score while at the same time managing cash flow.

The interest rate will vary widely based on the lender and the borrower's creditworthiness, often ranging from competitive to higher rates for riskier applicants similar to business credit cards. Banks offer an unsecured business line of credit.

The timeline can vary from a few days to weeks, depending on the lender's requirements and the completeness of the application submitted. Small business L O C's will require a good personal credit score and a personal guarantee as well as info on personal financial investments.

Are there any industries that particularly benefit from a Business Line of Credit?

Industries with seasonal fluctuations or irregular cash flow patterns, such as retail and construction, often benefit the most from such flexible financial solutions.

Credit limits via business credit lenders such as banks, credit unions, and asset-based lenders are determined based on several factors including the business's revenue, credit history, and the lender's risk assessment policies.

Funds can be drawn as often as needed within the credit limit, providing a continuous source of finance without repeated applications.

' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil

Business Line of Credit: Unlocking Flexible Business Financing | 7 Park Avenue Financial

YOUR COMPANY IS LOOKING FOR A BUSINESS LINE OF CREDIT OR ABL FINANCING!

THE OPERATING LINE OF BUSINESS CREDIT IN CANADA