OVERVIEW – Information on the ABL loan facility in Canada . How does this business line of credit work an why it is different ?
A proper business line of credit allows your firm to charge ahead when it comes to growing a successful and profitable company. That’s why when sometimes all else fails an ABL LOAN FACILITY is the way to achieve the proper balance of asset monetization and working capital. Let’s dig in.
Much has been written about business being a battle , and when your business at the impasse and stalled when it comes to growing sales and financing assets an asset base line of credit offers one solid solution.
In Canada at both the business and consumer level we’re well known for ‘ bank bashing ‘. (Our solution is simple on that one – invest in our banks!) . But when a business can’t access the low rate and flexible chartered bank revolving credit facilities there’s an alternative finance sector out there picking up all the slack, and then some.
Billions of dollars are loaned in Canada, via this sector of commercial finance companies, to businesses just like yours that want to unwrap and finance their asset and sales potential.
So why is an ABL loan facility, in effect a business ‘ non bank line of credit ‘ unfashionable to some. We’re not quite sure, perhaps it’s the conservatism in us Canadians that only considers ‘ banks’ as the only solution to business financing challenges.
Asset based credit lines monetize assets and sales – simple as that. So under the umbrella of a business credit line they allow you to borrow against receivables ( i.e. your sales ) , inventories, if applicable, and fixed assets that currently have not lines against them from other lenders such as equipment lessors .
We can already here out clients first reaction to hearing about such facilities. Their only question – ‘ Sounds too good to be true, so what is the downside?” Our answer all the time? Simply that business is about balance so while financing costs are often (not always) higher these types of facilities provide you with unlimited business credit if you have the sales revenues and assets to back them up. And that comes without, by the way, those ratios, covenants, and outside personal collateral that is often, if not always demanded by Canadian chartered banks.
So the sad, but changing reality on ABL loan facilities – simply that thousands of Canadian business owners and financial managers have not even heard of ABL credit, much less understand how it works. Getting them over the top in understanding this valuable aspect of business financing is often the role of a trusted, credible and experienced Canadian business Financing Advisor with a track record of success .
At that point the financing becomes ‘ believable’ and the business owner/manager will soon be leading the charge against the competition in their industry, knowing full well they have the financing in place to win those battles in business.
Author: Stan Prokop – founder of 7 Park Avenue Financial
Originating business financing for Canadian companies, specializing in working capital, cash flow, and asset based financing. In business 10 years – has completed in excess of $90 Million of financing for Canadian corporations. Core competencies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details:
7 Park Avenue Financial
Off. 905 829 2653
Cell 905 302 4171
7 Park Avenue Financial
Canadian Business Financing