OVERVIEW – Information on revolving loans and business credit facilities in Canadian Business Financing
Business credit facilities in Canada increase your firm’s ability to access the cash flow and working capital you need to run and grow your business. At the same time the challenge of accessing these revolving loans has many firms feeling as if they are temporarily ‘ off the grid ‘ when it comes to business financing needs. Let’s dig in.
When firms are ‘ off the grid ‘ they are financing themselves successfully – they are business finance ‘ self sufficient ‘. What then are the qualifications your company needs to access business credit lines, and are there choices?
Revolving loans always come down to borrower assets. This type of loan is either offered by a Canadian chartered bank, as well as independent commercial finance companies.
The two asset categories primarily driving your ability to access a business credit line are accounts receivable and inventories. While these two ‘ current assets’ on your balance sheet can be financed separately they are best combined in either a bank credit line or commercial asset based line of credit.
Companies can in a way almost pre-determine their qualified credit line borrowing amount. That’s because both the banks and commercial finance firms lend between 75-90% against receivables and specific per cent ages against inventory. While not all companies carry inventory these days it’s important to note for those that do the actual quality and marketability of the inventory plays a key role in assigning a borrowing per cent age .
Companies who do best in accessing business credit lines from banks or finance companies typically demonstrate that they can ‘ turn over’ assets – specifically collect their receivables and generate inventory turns. That type of positive operating performance distinguishes many firms who successfully can access revolving business credit facilities.
Rates and financing costs associated with revolving loans vary. While the lowest cost and flexibility is associated with banks the non bank commercial asset based financing industry can almost always address the needs of borrowers with assets, albeit at a higher cost.
In today’s competitive financing market many ‘ niche ‘ subsets of business credit facilities exist. These potential alternate solutions include:
P O Financing
Tax Credit Finance
Letters of Credit
If your firm wants to get ‘ back on the grid ‘ when it comes to commercial borrowing needs seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help your firm identify best financing solutions .
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 ‘