Don’t Settle For Business Credit Lines That Don’t Suit Your Needs

OVERVIEW – Information on the benefits and requirement for a business credit facility agreement . A revolving loan from a bank or commercial finance company assists in the financing of A/R and Inventory Business Credit Facility

 

A business credit facility agreement is often a necessity for any emerging and growing company. What are the qualifications for a revolving loan of this type, and are there choices in types of facilities? Or alternatives? Let’s dig in.

In its simplest form a business credit line is a secured arrangement with a bank or commercial finance company to finance cash flow and working capital needs with Accounts Receivable and Inventory as an example. A facility works best for all parties when it constantly ‘ revolves ‘.

Your ability to manage such as facility as a borrower relates directly to your turnover of receivables and inventory. Those are key drivers in the approval for the amount and type of your facility.

In Canada business credit lines are offered both by Canadian chartered banks Business Credit Facilityas well as commercial finance firms, some of whom are called ‘ ABL ‘ lenders. That’s because those firms offer non bank asset based lines of credit.

What determines then your ability to get approved for the type and amount of financing you require? When it comes to a bank facility it’s the various components of what we call your ‘ risk profile ‘. They include quality of financials, size of current assets (A/R / inventory) and management depth and personal credit of business owners.

When you business can’t achieve true bank financing, or, in some cases the amount of bank financing you need commercial finance firms can readily address your needs. Here the total focus and emphasis changes to basically only size and quality of those same busines assets.

While more costly business owners and managers we introduce this type of lending to are happy to hear that borrowing margins are much more generous. Typically that’s 90% of A/R and anywhere from 30-70% of inventory. And want another kicker – your facility can be significantly more increased if you choose to have other unencumbered fixed asset to be including into your borrowing base. That a true cash flow super charger!

You will be typically required to provide regular reporting capability vis a vis financials and aged inventory and a/r reports. For a bank this might only be one a year, sometimes more regularly. But when it comes to reporting on Asset based non bank credit facilities expect to report monthly all the time, and sometimes weekly. Various industries have different risk profiles associated with their inventories and receivables.

As a business owner or financial manager you should never have to settle for less when it comes to what you need for credit facility and loan needs. If your firm is not ‘ bankable ‘ in the amount of cash flow and working capital financing you really need seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success to ensure access to a proper business credit facility agreement.

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 : Business Credit Facility

7 PARK AVENUE FINANCIAL = CANADIAN BUSINESS CREDIT LINE EXPERTISE

 


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Canadian Business Financing