YOUR COMPANY IS LOOKING FOR BUSINESS CREDIT LINES!
HAVE YOU CONSIDERED ASSET BASED LENDING?
You've arrived at the right address! Welcome to 7 Park Avenue Financial
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 - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Navigating the path to obtaining a business credit line requires careful preparation, strategic planning, and a clear understanding of lender expectations.
Unlock your business's potential with a flexible credit line – your key to seizing opportunities and overcoming financial hurdles.
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer CREDIT LINES FOR BUSINESS & solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”
BUSINESS CREDIT LINE CHOICES IN CANADA
A Credit Line for Business. Occasionally, a client will say,' Holy Cow, ' I didn’t know that!
It turns out ' that ' refers to the fact that many business owners and financial managers don't know they have choices in revolving credit facilities for their daily operations.
One is the Canadian chartered bank solution; the other is the Asset-Based Credit solution, known simply by the term ' ABL' line of credit. Let's dig in.
HOW TO GET A CREDIT LINE FOR BUSINESS - UNLOCK FINANCIAL FLEXIBILITY FOR YOUR BUSINESS
Securing a credit line for your business can be a game-changer. It gives your business the financial flexibility needed to manage cash flow and increase sales and profits without working capital and cash flow constraints. It's also a good solution for unexpected challenges.
Let the 7 Park Avenue Financial team show you your choices and the steps and requirements to getting approved to secure your needed funding.
How to Get a Credit Line for Business: Why Business Credit Lines?
Business credit lines are business loans used for working capital and cash flow.
It is important to have a business bank account linked to the credit line for receiving funds and managing disbursements. Canadian businesses use these lines for working capital and cash flow. This type of borrowing funds your ‘current assets’, typically A/R and inventory.
Because no business in Canada runs on a straight line regarding the ups and downs of sales, collections, etc., credit lines address those ‘bulges’ in our businesses. It’s short-term borrowing via assets as collateral.
THERE ARE 2 SOLUTIONS FOR A BUSINESS CREDIT FACILITY
Two solutions, as we have noted, have become your ‘ choice’ for the business credit line.
The first is the Canadian chartered bank offering unsecured lines, and the other is a non-bank commercial financing facility known as ‘ asset-based credit ‘. Both have no minimum monthly payments if appropriately managed.
Credit unions are another option for obtaining business credit lines, often offering more flexible qualification requirements and competitive rates. ‘ ABL ‘ as it is known, grew out of the tremendous popularity of this type of financing in the United States, offering terms and conditions on the funding that every business with sales and assets can meet!
HOW TO YOU COMPARE BANK AND ABL ASSET BASED LOANS
How do these business loans compare prices, which most clients focus on immediately?
The reality is that if your company is established, growing, has profits and a clean balance sheet, and is of a decent size, the costs of these two facilities are, in effect, ‘neck in neck’. At this point, everyone wants your banking business, and you’re in charge of who gets it. It's not a bad situation to be in.
FINANCING THE SMALL AND MEDIUM-SIZED ECONOMY IN CANADA
Unfortunately, we rarely meet clients in the Canadian business financing landscape who can' drive the bus’ when addressing financing needs.
Small business loans are a crucial option for many companies, providing the necessary funding to meet their unique needs.
Of course, large private corporations, public companies, and multinational subsidiaries have the option to demand the most facilities at the lowest cost from traditional banks.
It just turns out that in Canada that seems to only cover 5% of the companies who need financing. That is where asset-based financing becomes a logical solution.
THE COST OF ABL FINANCING
Because of that ‘ size’ breakdown ABL asset-based credit facilities tend to cost more.
The reason couldn’t be simpler - the commercial finance firms offering this credit borrow from banks… to lend to your firm! Interest rates are at all-time lows, and ABLs are more competitively priced than ever. The credit limit is a key factor in determining the cost and accessibility of ABL financing.
WHAT SIZE OF FACILITY QUALIFIES?
While any business can theoretically (keyword = theoretically!) obtain a bank business credit line, secured or unsecured, the ABL credit line typically works best for facilities exceeding at least 250k.
An unsecured business line does not require collateral but may have higher interest rates and specific terms. Upper limits can, of course, range into the millions and tens of millions.
ABL OFFERS HIGHER BORROWING POWER!
One key point in choosing which facility makes sense for your firm is that asset-based loan facilities tend to create more borrowing power for your firm 99.9% of the time.
Simply speaking, receivables and inventory are margined higher, and you can throw your fixed assets into the mix, borrowing against their value when you need it. A small business line of credit can provide similar benefits, offering flexible access to funds based on receivables and inventory.
CAN YOUR FIRM MEET BANK BUSINESS LINE OF CREDIT QUALIFICATIONS
When a Canadian chartered bank banks your firm, there is a strong element of trust between your company and the bank.
A good personal credit score is often essential for qualifying for a bank business line of credit under the bank credit application process. You’ve passed with flying colours the essential requisites of a good commercial bank facility - profits, clean financials, healthy accounts receivable, good cash flow, and the ability to meet ratios and covenants required by our regulated bank system in Canada.
MONITORING ASSETS AND SALES
Many clients for whom we originate bank financing simply have to report on their borrowing needs and financial results annually or, in some cases, monthly.
Unlike a business credit card, a business line of credit may require more frequent reporting on asset values. The ABL lender is more generous and, no surprise, more cautious. So, while your borrowing ability increases, you tend to be reporting more often on the asset values of your firm.
In our experience, this makes your firm a better ‘ manager of assets ‘, so that’s hardly a bad thing. Note also that real estate and the equity your company has in that real estate can be used to margin even more borrowing power in your line of credit.
KEY TAKEAWAYS
Lenders assess creditworthiness through various factors, including business and personal credit scores.
Preparing financial documents proves crucial in demonstrating your company’s stability.
Researching different types of credit lines helps identify the most suitable option for your needs.
Comparing lenders allows you to find competitive rates and terms. Developing a clear plan for utilizing the credit line strengthens your application and ensures responsible use of funds.
CONCLUSION
Whether you are a small business or a larger corporation - If you're uncertain about which business credit line works for your company, call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you with a credit line for business that makes sense for your company's borrowing needs.
FAQ
How does a business credit line differ from a traditional loan?
A business credit line offers flexible access to funds up to a predetermined limit, allowing you to borrow and repay as needed. Unlike a traditional loan, you only pay interest on the amount you use, providing greater financial flexibility.
What are the typical requirements for obtaining a business credit line?
Requirements often include a strong business credit score, steady revenue, and at least one year in operation. Lenders may also consider personal credit history, collateral, business bank, and financial statements. Businesses should be able to demonstrate they are properly managing cash flow.
Can startups qualify for a business credit line?
While more challenging, startups can qualify for credit lines. Lenders may require a personal guarantee, strong business plan, and evidence of revenue potential. Alternative options like secured credit lines may be more accessible.
How quickly can I access funds once approved for a business credit line?
Access to funds varies by lender but can range from immediate to a few business days. Once approved, you can typically draw from your credit line as needed, subject to your approved limit.
What are the potential drawbacks of using a business credit line?
Potential drawbacks include variable interest rates, fees for unused credit, and the temptation to overextend financially. Responsible management is crucial to avoid negatively impacting your credit score or cash flow.
How does the application process for a business credit line work?
The application process typically involves submitting financial documents, business plans, and credit history. Lenders review this information to assess creditworthiness and determine terms. The process can take anywhere from a few days to several weeks.
What factors influence the interest rate on a business credit line?
Interest rates are influenced by factors such as your credit score, business financials, market conditions, and the type of credit line. Secured credit lines often offer lower rates compared to unsecured options.
How can I improve my chances of approval for a business credit line?
To improve approval chances, focus on building a strong credit history, maintaining accurate financial records, and developing a solid business plan. Consider starting with a smaller credit line and gradually increasing it as you build trust with lenders.
Are there alternatives to traditional bank-issued business credit lines?
Yes, alternatives include online lenders /business credit lenders, peer-to-peer lending platforms, business credit cards, and invoice financing. These options may offer more flexible terms or easier approval processes, especially for newer businesses or those with less established credit. Some online lenders offer 'bad credit business loans ', which come at very high rates and have an installment structure with a monthly payment under a 12 -24 month repayment period - and may include a payment processing fee.
How do I choose the right lender for my business credit line?
Research multiple lenders for any business loan, comparing interest rates, fees, and terms for business lines of credit solutions. Consider factors such as the lender's reputation, customer service, and specialization in your industry. Don't hesitate to ask questions and negotiate terms before committing and proceeding to a final credit approval process.
What are the key benefits of obtaining a credit line for business?
Business credit lines offer financial flexibility, allowing you to manage cash flow fluctuations, seize growth opportunities, and handle unexpected expenses. They provide a safety net and can be more cost-effective than traditional loans for short-term financing needs.
How does a business credit line impact my company's credit score?
Responsible use of a business credit line can positively impact your company's credit score. Timely payments and maintaining a low credit utilization ratio demonstrate financial responsibility. However, late payments or maxing out your credit line can negatively affect your score.
What strategies can help maximize the benefits of a business credit line?
Use your credit line strategically for short-term needs or investments with clear returns to maximize benefits. Avoid using it for long-term financing or non-essential expenses. Regularly monitor your credit usage and make timely payments to maintain good standing with your lender.
