Tweet

The Choice is Yours '" a Canadian Bank Line of Credit '" or Alternatives to a Business Operating Line

Guest post by: Stan Prokop

Article Overview: Information on a bank line of credit in Canada and why there is an alternative to a business operating line to suit your financing needs.

The Choice is Yours '" a Canadian Bank Line of Credit '" or Alternatives to a Business Operating Line

Lawyers, Guns and Money - You need neither of these to ensure you have access to a Canadian bank line of credit. We simply love that term, it's actually the title of a great song by Warren Zevon.

But you do need to ensure you understand the difference between a business line of credit in Canada, what you need to qualify, and how these facilities work. More importantly, are there alternatives to this type of operating line financing. There are!

Naturally Canadian chartered banks are the first stop in a business owners or financial managers mind when determining a source of operating financing and working capital.

From a banks perspective it's a very strong focus on your ability to achieve the amount of operating credit you need - secondary to that of course comes your overall collateral.

It's sometime easy to forget why bank credit is sometimes difficult to obtain - we sometime forget to focus on the fact that our banks in Canada have to obtain the right capital base relative to what they lend - they have their own issues relative to profits and maintaining liquidity. That then affects your business, because your collateral, cash flow, collateral and guarantees directly impact your ability to access their credit facilities.

Unfortunately many clients often find themselves placed into a ' non performing' loan status because your financials don't fit into what the bank considers a performing well loan. The reality is that if your business is growing you are using cash, not generating it, and that becomes a prime challenge in getting the amount of business credit you need.

It's a bit of a balance act at all times of course, the irony is that bank interest rates on a business operating line of credit are absolutely the lowest cost of financing in Canada .

We have often thought that the actual ratios and financial covenants that come with bank credit are much more important than the Canadian business owners need to get the absolutely lowest rate in bank financing - typically that is 1-2% over prime. You never want to be caught in the trap of managing your business because of what your bank covenants say.

For small and medium sized businesses in Canada the issue of personal and even spousal guarantees becomes a large one. Canadian chartered banks want to ensure you maintain that repayment responsibility - unfortunately the guarantee is one way of doing that. Many Canadian business owners therefore take great care to separate their business and personal lives when it comes to assets.

So, if a bank is the absolute low cost financing for a business operating line of credit is there any better alternative? There definitely is and it's called an ABL (asset based line) revolver .Its specialty business financing, focusing on your firm's assets, not your cash flow or personal guarantees or outside external collateral.

ABL lending facilities can give you all the financing a bank line of credit then. Rates are often competitive, but in many cases more costly. But at the same time you're managing and growing your business, not reacting to ratios and loan covenants.

Want clarity on a bank line of credit, or its alternative, an ABL facility? Seek out and speak to a trusted, credible an experienced Canadian business financing advisor who can assist you in the completion of either facility.

Related Articles
  Asset based Lines of Credit – All the business financing you need!
  Canadian Business Capital – Bank Business Lines of Credit & Alternatives
  Need a Bank Line of Credit Use a Bank Guarantee BG Program
  Important First Step - Understanding Why An ABL ( asset based lending) Business Line Of Credit Is Different
  Is there an Alternative Solution to Factoring for Canadian firms with working capital Challenges ?
  Without an ABL Lending And Loan Facility Financing Where Will You Be Tomorrow ? A Canadian Non - Bank Alternative !
  Why You Should Utilize Asset Based Lenders for a Revolver line of credit facility
  A Tale Of Two Business Credit Facilities – ABL Asset Financing And Bank Revolving Secured Facility
  Looking for Business Financing methods? Tap into asset based lending in Canada Today – 1 2 3 You’re Saved!
  Back By Popular Demand ! Canadian Working Capital Cash Flow Financing And Loan Alternatives
  Asset Based Line Of Credit – Canada – A Working Capital Alternative
  The Dirty Little Secret Your Banker Won’t Tell You About Asset Based Lending and Asset Finance
  Asset Based Lines Of Credit – Canadian Solutions
  Canadian Business Line Of Credit News - Must Know Info on Non - Bank ABL Financing and A Credit Revolver Loan
  Commercial Bank Financing In Canada – Solutions and Maybe An Alternative Via Business Banking Competitors!
  6 Ways To Compare And Analyze Asset Based Lending Revolving Credit Facilities . ABL Financing Works
  Understanding ABL Backed Loans & Asset Based Financing In Canada – Not What You Think!
  Business Working Capital Financing
  One Real Way To Solve business financing challenges - Asset Backed Lending
  Why Asset backed business loans And Asset Lending Make Your Business Financeable For Growth

Article Tags: bank line of credit, Business, operating line



Related Forum Posts
Happy Worker as of Dec 31 2007 - Here's mine... I'm now off to make an offering to the business planning gods for their help in getting to these goals & beyond. To the combined success of Prophets 2 Profits! ----------------------------------------- 1) Corporate a) Retail - Sales reps covering all major markets (1M or more) - Retail product launch plan - 1 more retail release (TBD) b) The Toy Agency - Systems for: o Creative process o Pricing o Manufacturing o Logistics - Marketing agency strategy in place - 1 new customer every 2nd month (5 new customers); 1 of which will be rev of >= 500K/year c) Business - Creative talent pool management strategy & process - Outsourced and/or weekly bookkeeping - Monthly budgeting & forecasting - Better banking organization (Line of Credit, CCs, automate billing for appropriate vendors) - Team total of 5 - Larger office d) Web site - Daily updates - Start of separation of Blog/TTA/Retail 2) Personal - Most weekends “off”! - Entirely separate personal finances; basic personal financing plan - Family….?
Site after-posting problems? - Don't know if this is happening to me alone, or to everyone, but every time I post a message, instead of my message coming up after a few seconds, I get this error message: Failed sending email :: PHP :: DEBUG MODE Line : 235 File : emailer.php
You can see my Bank statement......... - Hi there, Today we are bombarded with 'Business Opportunities' by the multitude. I believe it is possible to earn a lot through the internet, but it is hard work. Nobody gets it very easy on a long term basis. [b][b]How much notice do people take[/b], [/b]when the Bank Statements are shown as means of 'how credible' their business idea is? Are they always totally true? They look authentic. The whole industry is growing rapidly. What is your experience? Is there any regulation in presenting the 'Bank Statement' or other statements from 'Click Bank' etc ? Kindest Regards Beat "Unlock People's Potentials!"
profit line - I recommended Profit Line to one of my clients and they were not 100% satisfied with the service. Apparently one of the profit line people got a parking ticket while serving my client and then charged them for it. I haven't heard the other side of the story yet but the fact that I recommended them and it didn't work out makes me reluctant to recommend them again.
Cold Calling - Hey Guys, I was wondering if anyone had any experience with hiring someone on straight commission cold calling. I am offering a co-worker 15% of my gross sales to cold call for one month (Line provided by myself) to set up meetings for me in Vancouver. I will be providing him with basic training, he seems pretty eager to try it out, but everyone usually is. Any tips or stories would be great! Thanks, Pete


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 Difference Between Management And Leadership

Ten Reasons to take Notes during Sales Meetings

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.