Is Asset Based Financing The Better Way For Business Credit Line Needs
Information on the ABL business credit line . Asset based financing provides a solid alternative to ongoing working capital facility needs
Business credit line needs can often very well leave the Canadian business owner and financial manager feeling ‘ left out ‘. Asset based financing via an ‘ ABL ‘ line of credit can easily be called the ‘ better way ‘Let’s dig in.
Asset based lending, in our case in the form of a working capital facility is the ultimate in ‘ secured lending ‘. A laser like focus on your fixed assets and current asset accounts (receivables / inventory) transforms the true value of those accounts into ongoing cash flow.
It’s that value in your business assets that allows companies in pretty well any industry in Canada to benefit from what we term a ‘ non bank line of credit ‘.
Almost any industry can benefit from Asset based financing, and in fact many industries seem almost perfectly positioned to use this type of borrowing. That includes mfg companies, wholesaling firms, retailers who have inventory financing needs, and even tech companies.
The essential difference in a Canadian chartered bank line of credit and an asset based financing facility is one is asset based (ABL) and one is more cash flow focused (the bank!). Bank facilities typically have ‘caps’, aka limits on the facility. The asset based credit line is more, shall we say ‘ elastic’ in nature and really grows or contracts relative to your sales and working capital accounts.
Many companies, for a variety of reasons simply can’t meet the stringent requirements of bank credit lines – which comes with very low rates, but requirements that are often onerous for firms that are in various stages of their life – that might be a turnaround scenario, or coming off a difficult year, or surviving, but paying the price of a one time incident such as the loss of a contract or key personnel.
It’s those above mentioned typical scenarios that don’t allow firms to meet cash flow and balance sheet ratios required by bank lending. In some cases a lot of companies are subject to seasonality and cash flow ‘ bulge’ requirements. It’s the ability to also incorporate other assets into your credit line that assist in financing those ‘ bulges’ in cash flow needs – seasonal or otherwise.
Because asset based financing for credit lines is almost always more expensive it’s often a bridge to other forms of financing, think of it as a solid business band aid. If you’re focused on getting business credit that meets your cash flow and financing needs seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your asset based financing needs.
Author: Stan Prokop – 7 Park Avenue Financial :
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 FINANCING & CREDIT LINE EXPERTISE
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