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Asset-Based Lending Brokers: A Gateway to Flexible Business Financing
Asset-Based Lending Brokers: Your Partner in Financial Turnarounds
YOU ARE LOOKING FOR INFO ON ASSET FINANCE AND AN ABL FINANCE BUSINESS LOAN STRATEGY THAT WORKS!
Unlocking Financial Solutions: How Asset-Based Lending Brokers Can Help
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Let us help your firm just like our hundreds of other satisfied clients.
Financing & Cash flow are the biggest issues facing businesses today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CONTACT US - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
Or Email us with any questions on Canadian Business Financing
EMAIL - sprokop@7parkavenuefinancial.com
Asset-based lending brokers are pivotal in helping businesses leverage their assets for crucial financing
Struggling with business finance? Unlock funding through your assets!
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer ASSET BASED LENDING solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
BUSINESS LOAN AND ASSET FINANCE SOLUTIONS
INTRODUCTION
Any alternatives are great when you need asset finance and a business loan in the current economic environment.
One of those solid alternatives is an asset-based lending arrangement that focuses on what counts, your assets!
Asset-based lending brokers such as 7 Park Avenue Financial offer a dynamic solution for businesses seeking financial support in a tight credit environment. We specialize in securing loans based on the collateral value of a company’s assets rather than traditional credit assessments by financial institutions such as banks.
By focusing on tangible assets like inventory, equipment, and eligible accounts receivables, as well as commercial real estate and even on occasion intellectual property, we provide funding solutions that are almost always faster and more flexible than conventional loans, providing vital liquidity for businesses in need of more capital.
BUSINESS FINANCING THAT MAKES SENSE!
As a business owner and/or financial manager, you are looking for business financing that makes sense. ABL is the acronym for one of the more exciting business financing alternatives growing in popularity for loaning money every year in Canada.
Are we saying that asset finance via an asset-based line of credit is 'exciting'? We will let you decide that, but if this financing is easier to achieve than bank financing, is cost-effective, and provides you with unlimited capital... well, our clients are excited... you make your thoughts on that! It a line of credit based solely with a focus on sales and balance sheet assets. Some ABL structures can be term loans if that makes sense to the solution.
BUSINESS CREDIT LINE SOLUTIONS VIA ASSET-BASED LENDING
Asset-based lines of credit are simply drawn down by your firm based on the value of ongoing assets. It's a business loan secured by balance sheet assets - The assets that are always there are inventory, A/R, and to some degree, your fixed assets that aren’t already financed. The asset based lender solution provides working capital by collateralizing your assets and, most importantly, leveraging them to the max if you need to.
CREDIT LINES THAT DON'T BRING DEBT TO THE BALANCE SHEET
We are always explaining to clients that this leverage of assets is not taking on debt, you are not borrowing on a long-term basis, and you are simply monetizing current and fixed assets based on current values.
What are those values? Typically they are 90-100% of receivables under 90 days, 40-75% of your inventory, and a liquidation-type value on any equipment you want to monetize temporarily. Clients always ask - 'Do you mean that we can borrow, if we need to, on a temporary but ongoing basis on our fixed assets?". The answer is yes if you are considering this type of financing strategy.
2 KEY POINTS FOR BUSINESS CREDIT FACILITIES
Let’s cover the two key points clients always tend to focus on when investigating this unique business loan strategy: costs and timelines to get the working capital facility in place.
UNDERSTANDING THE COSTS OF BUSINESS CREDIT
Asset finance revolvers can be just as competitive as Canadian chartered bank financing (and less onerous to get approved). Still, prices vary all over the board in Canada because of the fragmented and specialized nature. In some ways, the cost is the most difficult area of explanation and investigation in an asset finance working capital facility.
Putting aside the normal due diligence or commitment fee required to get a facility in place, the reality is that a couple of key drivers affect pricing.
Typically interest rates as low as 9% per annum and as high as 1.5% per month. That’s a big spread, and ultimately it depends on the size of the facility, the mix of your current assets, as well as any perceived industry or business risk associated with your firm. But again, we remind the reader, what price would you pay for unlimited working capital?
Typically it takes 2-4 weeks to close such a facility. As we noted, the market is fragmented in Canada, and these lenders are very focused, specialized, and by nature experienced in what they do, which is value your assets and finance them!
KEY TAKEAWAYS
Types of Collateral for Asset Based Loans: Understand what assets can be leveraged for loans.
Loan Structures: Different formats of asset-based loans via asset based lenders and their implications around solving cash flow problems.
Risk Assessment: How brokers evaluate the risk based on the borrower's assets.
Broker's Role: Key responsibilities and how they add value to the lending process to ensure the maximum loan amount is available.
Market Conditions: How economic factors influence asset-based lending strategies.
CONCLUSION
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor around asset finance as a business loan strategy if your working capital needs 'aren't working now!
Whether you are looking for a small business loan under the Government of Canada Guaranteed Loan Program or a business credit line, we've got the solutions you need to run and grow your business and sell more of your products and services. If you want to understand ' how does asset based lending work? ' call our team today for a commercial lending partner you can count on.
FAQ: FREQUENTLY ASKED QUESTIONS / PEOPLE ALSO ASK / MORE INFORMATION
How does asset-based lending differ from traditional loans?
Asset-based lending focuses on using your company’s assets as collateral, rather than solely assessing credit history.
What types of assets can be used as collateral in asset-based lending?
Typically, inventory, accounts receivable, equipment, and real estate qualify as collateral.
Why choose an asset-based lending broker?
These brokers can navigate complex financial landscapes to secure tailored loans that meet specific business needs.
What are the main advantages of asset-based lending?
This financing allows for flexibility, quick access to capital, and can be easier to qualify for than traditional loans.
How do asset-based lending rates compare to other types of loans?
Generally, interest rates may be higher due to the increased risk to lenders, but terms are more flexible.
What is the usual term length for an asset-based loan?
Terms can range widely but typically last from one to five years, depending on the asset type and loan agreement.
Can Small businesses access asset-based lending solutions?
A recent analysis revealed that only about 15% of small businesses are aware that they can use their existing assets to secure financing, indicating a significant gap in knowledge and an underutilization of asset-based lending solutions. This low awareness level shows the need for increased education and outreach by lenders and commercial finance brokers to help businesses better leverage their assets and sales for growth.
Are there specific industries that benefit most from asset-based lending?
Yes, industries with high amounts of inventory or receivables, like manufacturing and wholesale, trucking companies, staffing agencies, distributors, etc often benefit most.
What happens if I default on an asset-based loan?
Defaulting on asset-backed financing can lead to the seizure of the collateral assets by the lender to recover the loan amount.
Is asset-based lending regulated?
Yes, it is subject to financial regulations, which vary by region, ensuring fair practices between lenders and borrowers.
What criteria do brokers use to appraise assets?
Brokers evaluate the market value, condition, and potential resale value of secured collateral assets during the asset based financing loan process. Appraisals in asset-based lending are critical as they determine the fair market value of the collateral that will secure the loan. Accurate appraisals ensure lenders and borrowers have a clear understanding of the asset’s value, which affects the loan amount, terms, and risk assessment. Typical advance rates from ABL lenders are significantly larger than bank margins.
What are the benefits of using an asset-based lending broker?
Using an asset-based lending business loan broker provides several advantages, including access to their expertise in valuing collateral, their relationships with various lenders to secure the best terms, and their ability to navigate the complexities of the loan process, ultimately saving time and improving loan outcomes. Loan structuring and risk assessment are key focuses of a commercial loan broker.
Is asset-based lending appropriate for small businesses?
Yes, asset-based lending can be highly appropriate for small businesses, especially those with significant physical assets but less established credit histories. It offers them an opportunity to secure collateral loans funding based on the value of their assets rather than relying solely on financial performance indicators.
How big is the asset-based lending market ?
Research firm " RESEARCHANDMARKETS.COM " advises as follows:
- The asset-based lending (ABL) market grew from $697.75 billion in 2023 to an estimated $787.28 billion in 2024, with a CAGR of 12.8%.
- Growth drivers include economic downturns, increasing demand for working capital, and corporate restructuring.
- ABL has become essential for businesses with significant assets but limited cash flow.
- Projections indicate the market will reach $1262.76 billion by 2028, with a CAGR of 12.5%.
- Future growth is anticipated from global economic changes, rising demand for non-traditional financing, and tech advancements like AI in credit decisions.
- Higher interest rates associated with ABL, relative to traditional loans, may limit market growth by reducing its attractiveness to potential borrowers.
' Canadian Business Financing With The Intelligent Use Of Experience '
STAN PROKOP
7 Park Avenue Financial/Copyright/2024
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
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