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Asset Based Line Of Credit – Canada – A Working Capital Alternative

Guest post by: Stan Prokop

Article Overview: Information on how an asset based line of credit is a formula for higher receivables and inventory financing in Canada and how these lending facilities offer a true working capital alternative financing.

Asset Based Line Of Credit – Canada – A Working Capital Alternative

An based line of credit']);"> asset based line of credit is an emerging financial alternative in Canada for companies of all size who wish to maximize working capital in terms of their growth needs.

More often than not based lending']);"> asset based lending is associated with companies who are unable to arrange or qualify for what most business owner's term as a bank operating line of credit.

Traditional bank financing places a heavy emphasis on the overall financial position of your income statement and balance sheet. Therefore, if that is the focus then firms such as yours with either balance sheet issues, or experiencing temporary financial losses or one of negative circumstances do not quality for margined lines of credit with institutions such as Canadian chartered banks.

Asset based lines of credit take the reverse position, simply that you have the assets, so lets finance your firm on the strength of your assets, with minimal, if any in fact, focus on ratios, covenants, outside collateral , operating metrics, etc .

An based line of credit']);"> asset based line of credit partner will tend to work through with you unique challenges in your industry or your business model. Some of those challenges might be the seasonality of your business or the special 'one of 'situations we referred to. Some of those circumstances might be making an acquisition, restructuring your firm, or being in the receipt of large new contacts or purchase orders that are out of line with your traditional financing arrangements.

Operating capital financing, or rather the lack thereof! can often be the reason your firm is unable to take advantage of strong market opportunities to maintain your competitiveness.

One of the largest parts of an based lending']);"> asset based lending facility is receivables financing. In small firms this is often taken care of by a factoring facility - your invoices are sold to the lender, you receive immediate cash, and you can structure facilities around such issues as credit insurance, non recourse to your firm, etc.

The asset based line of credit, in a true sense, offers all of the advantages of factoring, but operates instead like a true bank facility - your receivables, and inventory, are highly margined to the maximum value, and your access to cash availability is directly commensurate to your sales growth - in other words you have no real cap on your operating facility - you receive cash for receivables and inventory as fast as you can sell and move our product and services!

Your firm will probably find that any one in the asset based financed area has a stronger knowledge of your business model and assets.

We recommend that you seek out and talk to an experienced and credible advisor in Canadian business financing to determine if the advantages of an based line of credit']);"> asset based line of credit work for your firm!

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Article Tags: alternative financing, and working capital alternative in Canada, asset based line of credit



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