Tweet

Asset Based Lending (‘ABL ‘) - A Canadian Financing Solution

Guest post by: Stan Prokop

Article Overview: The article focuses on the recent growth in Canada of asset based lending, ie asset based lines of credit - as an alternative to traditional bank financing .

Asset Based Lending (‘ABL ‘) - A Canadian Financing Solution

Asset Based Lending, very commonly referred to as 'ABL 'in the Canadian business marketplace is slowly becoming a popular options for Canadian business owners and financial managers.

We would also point out that the term has many different meanings depending on the context that it is used - we are specifically talking about asset based lines of operating credit for Canadian companies, as an alternative to a traditional Canadian banking arrangement - i.e. Revolving lines of credit, term loans, etc .

So what is 'ABL 'in our context? In it purest form it is assets secured by hard collateral. For the Canadian business owner it is a 'one stop 'financing solutions based on receivables, inventory, equipment, and also, on occasion real estate. Financing for all of these above noted assets is under one facility, which operates on a day to day basis, just like your bank line of credit.

So when does a Canadian company consider such a financing arrangement? It is normally under consideration when it is either difficult or impossible to retain traditional standard Canadian chartered bank financing. In more extreme cases the company may have received a notice from its bank that it is terminating the relationship, and taking that 'extreme case 'scenario to another level your company may have been placed in 'Special Loans' with the bank which is considering liquidating its security - i.e. your company!

Business owners and financial personnel in Canadian firms may not be aware of the Canadian landscape when it comes to Asset Based Lending facilities. This alternative financing solution evolved out of the large U.S. industry of the same name. The industry participants are only a relatively small handful of firms , all of which have different deal size criteria, different asset and credit criteria, and in some cases geographical constraints .Therefore when you are considering such a facility, or would simply like to know more about this type of ' alternative financing ' then you should enlist the services of a trusted financing advisor who understands the Canadian landscape and can assist in maximizing the optimal ABL solution for your firm in terms of rate, term , and structure .

The interesting think about based lending']);"> asset based lending in Canada is that , unlike Canadian operating lines of credit with tier 1 banks, it covers companies of all size and all sorts of financial health. Some of the largest corporations in Canada utilize s this type of facility, as well as firms who are actually in bankruptcy protection, have assets, are operating, and are looking to emerge again as viable companies. Naturally it is rare that a Canadian chartered bank would consider such a facility for a company in bankruptcy! We can somewhat joking say that the Asset based lending solution covers firms from 'blue chip 'to 'black chip'!

More often than not based lending']);"> asset based lending facilities come with higher rates, that would be obvious to any rational financial person, as the ABL lender is taking more risk and not relying at all on the traditional metrics of Canadian chartered banks, such as debt to equity, cash flow coverage, operating ratios that are satisfactory, etc . We make the point that although ABL lending is not there to support your firm when it is in a death spiral, it clearly is there to support your firm when you are in a challenging environment, your industry may be in a downturn, you have had financial losses, etc .

In the current interest rate environment we have often wondered, as do the banks, as to how profitable they in fact are on their commercial lines of credit and loans, given that rates are so low and the time and infrastructure required supporting Canadian chartered banking in the commercial area. Think about it!

In summary, it's a new ball game out there in commercial business financing with respect to revolving lines of credit, liquidity in the marketplace, and general economic conditions. Asset based lending is a form of alternative business financing that will provide your firm with the cash to grow your business and prosper. Investigate the Canadian marketplace thoroughly with the help of a trusted business financing advisor!

Related Articles
  Asset Based Lending - What you wanted to know and were afraid to ask!
  Asset Based Lines of Credit – Canadian Financing Solutions
  Reinventing Your Business Funding with Asset Based Lending Companies
  Asset based Lines of Credit – Canada’s newest business financing option!
  The Dirty Little Secret Your Banker Won’t Tell You About Asset Based Lending and Asset Finance
  Asset Based Lending - Canada's 'New' secret financing strategy
  We Predict You’ll Love asset financing credit facilities when seeking business finance loans
  Asset Based Lines Of Credit – Canadian Solutions
  Asset Based Line Of Credit and Working Capital
  Asset Based Lines of Credit - Canada – The ‘ ABL ‘ Solution for Business Financing
  Why an Asset Based Lender Is Your Working Capital Solution
  Canadian ABL Lending - True Success In Banking and An Asset Financing Loan
  Why Asset Based Lending is the Business Credit You Will Ever Need
  Asset Based Lending Facilities for Canadian Firms
  Keep Your Company Moving With An Asset Based Lending Operating Line Of Credit - Your Competitors Do !
  Without an ABL Lending And Loan Facility Financing Where Will You Be Tomorrow ? A Canadian Non - Bank Alternative !
  Power Your Business Financing with Canadian ABL Services – Why Asset Based Lending Works
  Worth Considering – Why A Canadian ABL Lending Facility & Asset Based Loan Is Unique
  Asset Based Lending & Financing Canada
  Stop Me If You Have Heard This But Isn't Business Credit Still Challenging and what is Asset Based Finance?

Article Tags: abl, alternative financing, asset based lending, bank financing, operating lines of credit



Related Forum Posts
$1,000,000 - Hi Evan, Are you talking about US Dollars? If so, that would be approx £500,000 in the UK. The Canadian Dollars differs also from the Australian Dollar. In any case, one needs to solve problems to help people to get money. The more solutions are given to people's needs to solve their problems, the closer one gets. Finally, are we talking about 'Income' or can we talk about 'Asset'? Kindest Regards Beat "Unlock People's Potentials!"
Re: Google's April 2012 Update - As far as I understand, Google's main search mission is to deliver The Best Solution Possible, when you type in a query. This means that they kind of _cant_ teach people how to "game the system" and rank themselves. The way I see it, by the time Google's done evolving their algorithm, the only way to get to the top is going to be "Be A Fantastic Solution Provider... across the board... for your niche/keyword."
re: restaurant start-up - I'm not sure about government grants for restaurants, but my recommendation would be to approach a lender that offers loans under the Canadian Small Business Financing Loan program where the government will guarantee 85% of the loan. You can borrow up to $250,000 to finance equipment and renovations under this program. Restaurants are very risky business, however some of the Chartered Banks will look at restaurants if there is enough of an initial equity investment and you have a solid business plan (experienced management team, good concept and strategic location).
Securities - Lending guru: I assume your securities offering has been registered - since you appear to making a general public solication
Canadian Entrepreneurs...let's chat.... - I thought it would be nice to gather up all the Canadian entrepreneurs on one topic to discuss how everyone is getting along. I just realized Evan is Canadian as well! Hope he's able to join the conversation. Look forward to the chat. By the way, I'm in BC. Phil


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Starting A Set of Books

Selling with Humor (and a Sorry Butt)

Why Small Businesses Don't Survive

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.