OVERVIEW – Information on how asset based lending delivers on business credit line needs. An ABL loan monetizes your assets into true borrowing power
Asset based lending delivers on the ability of Canadian business to secure the right type and size of business credit line that the company needs. Yet whether it’s a business loan or a revolving credit facility many business owners/ financial mgrs rarely feel that they are the ones who hold all the cards in securing and negotiating such facilities. Looking to change that? Let’s dig in.
The rise of asset based credit lines has dramatically increased over the years, even though most experts agreed this form of financing has been around since the early 1900’s, starting in the U.S.
Asset finance is all about timing – it delivers on cash and working capital needs at a time when you need it most. That time, unfortunately is when traditional lenders such as Canadian chartered banks are, for whatever reason, cautious on your business or industry in general.
Asset based loans and credit facilities work best when owners/mgrs know what’s currently wrong in the business and when failure is not an option.
What then is the essential difference between bank loans and the asset based loan. It’s really quite simple. Banks require positive earnings, decent operating cash flow, and the ability of your company to meet various ‘ tests’, more often than not called ‘ ratios’.
Asset based lending facilities? While costing more it recognizes your business has assets and the ability to move forward – those assets being able to be constantly liquidated and refinanced per your operating cycle.
While the final source of financing for some firms is getting new equity or ownership that’s rarely the desired options for owners, who don’t wish to dilute equity. Also, the facts are that smaller businesses in the SME Commercial area find it impractical, mainly because of their size, to rise outside financing.
When it comes to the business credit line your company needs it’s important to distinguish between two words that might sound the same – ‘ Assets’… and ‘ Collateral’. While assets on the balance sheet might have a lower or higher value the asset lender focuses in on the real collateral value of your business – and then provides financing against that. When it comes to the business credit line those assets tend to be A/R, inventories, and even fixed assets that have no liens against them.
If you’re looking for the ‘ true package’ when it comes to business credit lines seek out and speak to a trusted, credible and experienced Canadian business financing advisor – helping you to get back to holding the cards in business finance negotiation.
Stan Prokop – founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years – Completed in excess of 100 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing. Info & Contact Details :
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Office = 905 829 2653
‘ Canadian Business Financing with the intelligent use of experience ‘
ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.
Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.