Revolver Credit Facility : Solution To Working Capital Needs | 7 Park Avenue Financial

 

Introduction

 

Some Canadian business owners and financial managers aren't familiar with the term 'revolver line of credit'.

 

So, for clarity purposes, it’s simply terminology for a business operating line of credit. It revolves, or goes up and down daily, as your firm collects receivables, pays bills, buys inventory, makes loan payments, etc.

 

A revolver line of credit facility gives businesses the flexibility and liquidity needed to navigate the ups and downs of cash demands. Businesses pay interest on only funds that are drawn down.

 

The revolving credit facility is designed to meet companies' short-term borrowing needs and allows borrowers to draw down, repay, and redraw funds according to their cash flow requirements. By providing an adaptable line of credit, revolver credit facilities allow businesses to manage operational costs and fund growth opportunities.

 

 

Exploring Revolving Credit line  Asset Based Lending Solutions

 

 

Naturally, clients can be forgiven for asking, "What is the difference then for asking why asset-based lenders offer  unique (and we think better) revolving credit facilities than perhaps their Canadian chartered bank can offer?"

 

 

The Shift Towards Asset Based Lenders 

 

We're going to cover the basics of a revolver line of credit via an asset-based lending solution with a

  

 

 

  

Advantages of Asset-Based Line of Credit  

 

You should consider an asset-based line of credit because the firms that provide this type of financing specialize in exactly what you need—maximum financing for receivables, inventory, and equipment.

 

  

Maximizing Financing Opportunities  

 

The typical margining of these current assets in an asset-based line of credit with a non-bank is 90% receivables, 50% or more for inventory, and the full appraised value of equipment and other fixed assets. We have seen real examples where a revolver line of credit has tripled a firm's borrowing power, even at better rates on occasion.

 

 Choosing the Right Financing Partner 

 

So clients start seeing very quickly why they should utilize this type of financing; they don’t know 'who.'

 

Here’s where it does get a little tricky, as firms offering this facility are less known than the banks and are often independent finance firms of subsidiaries of U.S. banks that operate here in Canada. It is best to seek the services of a trusted, credible, and experienced business financing advisor who can match your needs with the right asset-based financing solution.

First of all, size doesn’t matter in asset-based finance. Facilities from 100k to many millions of dollars are available. We'll quickly add that some of Canada's largest corporations are financed by this method—we just don’t hear about it!

 

Size & Flexibility in Financing

 

Suppose you are in a turnaround situation and can’t get the equipment and inventory financing you need to generate sales and profit. In that case, you should consider this type of Canadian business financing. Other reasons include your growth—in some bank environments, you are punished for growing too quickly, but asset-based lenders raise your facility as you grow, with their only concern being the assets you have to cover the facility.

 

 

Key Takeaways

 

 

 

  

Conclusion  

 

Does it make sense? We think it does! Call 7 Park Avenue Financial,  a trusted, credible and experienced business financing advisor, about the merits of a revolver line of credit and discover why asset-based lenders may be your business finance saviour in the current business financing environment.