Tweet

Seriously , Can An Asset Based Line Of Credit Loan Facility Meet Your Canadian Financing Needs ? Yes , ABL Finance Works !

Guest post by: Stan Prokop

Article Overview: Information on how an asset based line of credit loan facility provides financing and capital for Canadian business lending needs and requirements .

Seriously , Can An Asset Based Line Of Credit Loan Facility Meet Your Canadian Financing Needs ? Yes , ABL Finance Works !

We've often said that no one type of business financing in Canada has the ability to meet pretty well all of your growth and survival needs. That might not be true all the time in the context of an asset based line of credit loan facility.



ABL facilities are somewhat of a hybrid type of facility, and for that reason this type of commercial business finance lending actually does, in many cases, suit all of your financing needs. Let's examine how.



Part of the appeal of ABL based lines of credit']);"> asset based lines of credit is simply that unlike many forms of commercial business financing it is accessible by smaller firms, large corporations, start ups, and firms who sometimes find themselves in serious financial difficulties. We think we've covered the bases on that one!



Typical considerations for entering into an ABL facility revolve around being unable to qualify for what many dub as ' traditional lending ‘... In Canada that traditional lending comes via our chartered banking system.



So just exactly how does your firm move forward in considering an asset based line of credit loan financing? And, ready for a positive surprise? Asset based lending has total flexibi8lity around structure, term, pricing, and 99% of the time comes with less covenants and ratio restrictions required by our chartered banking system.



Is there a typical profile of a Canadian business looking for an alternative to a business line of credit? The immediate thought that comes to mind is simply your firm’s current inability to achieve the financing you need from a bank. Typically this means your profits and losses have fluctuated, or there are some balance sheet issues that simply have for firm temporarily under water, so to speak, re: the ability to qualify for a commercial bank business line of credit.



We also meet with many clients who have secured favorable credit facilities from a bank or commercial credit union, but they are unable to tap into, or leverage assets anymore than current limits prescribed by the bank. Typical working capital advances for receivables by a bank are 75% ...while ABL lending more often than not comes in at 90%... so right away you are up 15% in over all liquidity.



And we haven’t even started, because many firms who find the inventory component of their business difficult to finance are often surprised that inventory advances in an ABL facility can run from 30-70%... sometimes more, sometimes less.



So why can an ABL lender offer this type of financing when bank sometimes cannot? It's a good question many clients ask right out of the gate. ABL lenders tend to be unregulated institutions; therefore simply speaking heir capital comes from different places and different pricing. They re not bound by capital and conservative lending practices that our Canadian banks are so well known form.



While our banks are some of the strongest and well run on the planet the other side of the coin in this statement suggest a more prudent lending to commercial borrowers. That’s where the ABL advantage comes in. Asset lender turns your day to day assets, i.e. A/R, equpment, and inventory into a revolving line of credit that significantly leverages up your ability to borrow.



Simply speaking, it’s all about the assets, not the ratios! Another way we explain it to clients is simply that the bank in general is looking more at your financials... an based line of credit']);"> asset based line of credit loan financing is looking more at your assets .



Pricing for this type of financing varies significantly. The simple explanation on pricing is that the size of your facility, the quality of your assets, and the type of firm you are dealing with dictate ultimate pricing. In many cases pricing is equivalent to the bank, however more often than not its more expensive, but, and its a key point... you have more liquidity and working capital on an ongoing basis, growing lock step with your needs.



Speak to a trusted credible and experienced Canadian business financing advisor who, seriously! can demonstrate to you the benefits of an ABL facility for your Canadian company.

Related Articles
  Why You Should Utilize Asset Based Lenders for a Revolver line of credit facility
  Why An Asset Based Loan Might Be Your Best Business Line of Credit Solution in Canada
  Trusted And Versatile – Canadian ABL Financing – Why Asset Based Finance Lending Is A Class By Itself
  Canadian Asset Based Finance Has All The Best Ingredients For A Business Line Of Credit – Business Receivables Financing
  Take Charge Of Your Business Asset Finance Today Via A Revolving ABL Credit Facility
  Looking for Business Financing methods? Tap into asset based lending in Canada Today – 1 2 3 You’re Saved!
  Worth Considering – Why A Canadian ABL Lending Facility & Asset Based Loan Is Unique
  Stop Me If You Have Heard This But Isn't Business Credit Still Challenging and what is Asset Based Finance?
  Does An ABL Loan Deserve A Full Chapter In ‘ The Book Of Awesome’? Asset Revolving Line Of Credit Facts For Canada !
  Asset based Line of Credit – Canada
  A Tale Of Two Business Credit Facilities – ABL Asset Financing And Bank Revolving Secured Facility
  Suffering From Bank Lines of Credit Amnesia ? Canadian ABL Asset Finance Business Lines Facilities Could Be Your Cure !
  What’s Your ABL Finance IQ? Info On Canadian Financing By Asset Backed Lenders !
  Asset Based Line Of Credit and Working Capital
  Asset Finance – Asset Based Lines of Credit in Canada
  How Asset Based Lending Loans Competes With A Bank Business Line Of Credit Loan – Do You Understand ABL Finance?
  Asset based Lines of Credit – All the business financing you need!
  Is There A Better Way To Finance A Business Loan ? Consider An Asset finance strategy.
  Canadian Business Line Of Credit News - Must Know Info on Non - Bank ABL Financing and A Credit Revolver Loan
  Asset Based Lending Canada - Why An ABL Working Capital Loan is Your 2011 Finance Solution

Article Tags: asset based line of credit loan, financing, lending



Related Forum Posts
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).
$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!"
Research & Dev Tax Credit - at No Cost (Canada) - Brian, I have a colleague that can provide you guidance and even assist in maximizing a R&D Tax Credit from the Government of Canada (If you are Canadian). All this at No Cost to You. I know her well and have referred other people to her. She's got plenty of experience in the field. If you're interested (anyone else on this forum too) just send me a PM and I will share her details with you.
Re: Finance is the primary requirement of business - [quote="rauljoseph":36x8dadn]Finance is very important in a business. It is all about managing the business' money and other assets. Finance includes the study and analysis of processes, financial institutions, markets and instruments that are involved in the transfer of money or anything that has a monetary value among consumers, businesses and government.[/quote:36x8dadn] Good point. I'll just add that if I was going into business for myself and could only have one skill it would be Sales & Marketing. You need to be able to create customers first and foremost. Finance is more of a support function for entrepreneurs.
Finance is the primary requirement of business - Finance is very important in a business. It is all about managing the business' money and other assets. Finance includes the study and analysis of processes, financial institutions, markets and instruments that are involved in the transfer of money or anything that has a monetary value among consumers, businesses and government.


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

THE “SECRET RECIPES” OF LEADERSHIP

ROSI Return on SUNK Investment

E Mail Marketing Campaigns

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.