Business Credit Lines – Which One Of These Is Right For Your Company?

OVERVIEW – Information on business credit line facilities in Canada. Which Financing options make sense for the Canadian business owner . Two key choices are bank vs. ABL solutions

Business credit line choices in Canada generally come under two categories. Which of these cash flow / working capital options is right for your firm? Does the ‘ relatively ‘ newer ‘ ABL’ option make sense to investigate? It just might, so let’s dig in.

While a corporate credit line is pretty well a must for any growing business (we’ll talk about why later) Canadian business owners feel somewhat stifled when it comes to the creativity and innovation that comes with a flexible business credit facility.

While these types of facilities allow you to operate on a daily basis they can also be used to finance the growth the entrepreneur envisions, including by the way, having the ability to acquire another business.

Management can even use this type of financing to acquire the company they are working for. However this typically necessitates additional financing required to round out the transaction.

As we have noted, two distinct choices are available for revolving credit facilities. It’s essentially a simply choice:

1. Traditional Canadian chartered bank commercial credit lines (Both secured and unsecured)

2. ABL (asset based lending) facilities that focus on the pool of assets you have in the ‘ CURRENT ASSET ‘ part of your balance sheet – namely receivables and inventories. By the way things get really creative when the ABL facility is sometimes structured to allow you to borrow against fixed assets and purchase orders/contracts)

A/R and inventory are any firms ‘ self liquidating ‘ assets. In the course of your business operating cycle they liquidate themselves on an ongoing basis… everyday. The key issue is simply the TIMING around that liquidation, which necessitate the financing options we’re talking about.

We’ve focused on differentiating the traditional bank line of credit from the Asset Based Lender offering. But it’s important to note that some subsets of ABL can provide many firms with the capital they need. Separately they include:

A/R Financing
Inventory financing
PO / Contract financing
Tax Credit Monetization (‘SR&ED”

The above 4 subsets of ABL are often used by start up and high growth firms who cannot meet the stringent criteria of our banks in Canada.

The real purpose of any credit line is to fund the time between production and collection from your clients ABL lending has a higher cost typically, but if your business can turn its assets, and grow revenues its a very realistic and accessible option .

If you’re looking for a business credit line that meets your needs consider discussing ABL or bank financing options with a trusted, credible and experienced Canadian business financing advisor . You’re in a position to get good at choosing finance solutions that meet your requirements.

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:


Greg LaBella
7 Park Avenue Financial
Off.   905 829 2653

Cell   905 302 4171