Which Of These Business Credit Lines Would Your Company Choose

OVERVIEW – Information on the business credit line knows as the ‘ abl revolver credit facility . Asset based lending is a solid alternative for these reasons provided

 

Business credit line solutions in Canada actually, believe it or not, come with choices. One choice is the ‘ ABL ‘ revolver credit facility; it’s the cornerstone of Asset Based Lending ‘ in Canada. What then are the reasons that Canadian business owners / financial managers choose this finance solution? Let’s dig in.

The crux of the matter in ‘ ABL ‘ credit is really understanding the differences between other financing options and how it’s used in a variety of circumstances. While the majority of companies seeking this method of credit line asset financing do in fact qualify it’s important to understand how the facility is structured.

One of the main good news pieces in ABL revolving credit lines is that they are ‘ covenant light ‘ ; business isn’t always good news though and some aspects of this type of borrowing includes typically higher borrowing costs as well as the need to provide more ongoing reporting information around ‘ assets ‘ .

A good way to define the difference between asset based credit lines and traditional Canadian chartered bank solutions is simply understanding one is very ‘ asset based’ , while the other is very ‘ cash flow ‘ based, the latter being of course the bank offering . It’s that ongoing focus on borrowing on all your assets under one facility that distinguishes the asset based revolver. Rightly or wrongly the banks our banks don’t really look at it that way.

In almost all cases asset backed lenders have a lot more ‘ asset ‘ expertise, which one top expert calls ‘ predictable ‘ financing. Where banks look at historical, present and future cash flows the asset backed credit lender it’s your A/R, inventory and fixed assets that form the substance of your credit line.

Probably the best example we can provide to clients around why an ABL credit line revolver makes sense is the fact that growing sales places huge pressures on working capital investment, The result? Just when you need credit line financing the most is when bank ratios and operating cash flow ratios limit your company borrowing! Talk about a double whammy of bad news.

So who uses Asset backed financing solutions? Some of the largest companies in the world actually, its just not generally advertised. For the larger facilities for companies that have good credit ABL solutions pricing is often even better than bank financing, but that certainly doesnt apply to SME Commercial finance borrowers.

So which credit line solution makes sense for your firm, a traditional bank facility or an asset backed ABL revolving credit line? Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you in making the right choice.

Author: Stan Prokop 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 – Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :


7 PARK AVENUE FINANCIAL = CANADIAN ASSET BASED ABL CREDIT LINE EXPERTISE

 

Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?
CONTACT:
7 Park Avenue FinancialABL Revolver Credit Facility
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Office = 905 829 2653

 

Email = greg@7parkavenuefinancial.com

‘ Canadian Business Financing With The Intelligent Use Of Experience ‘

ABL Revolver Credit Facility


7 Park Avenue Financial
Canadian Business Financing