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Zero To Sixty In Canadian Business Financing . ABL Asset Based Lending Is A Trend You Can’t Not Consider

Guest post by: Stan Prokop

Article Overview: Information on abl asset based lending in Canada . Why this type of business financing credit facility is growing in popularity .

Zero To Sixty In Canadian Business Financing . ABL Asset Based Lending Is A Trend You Can’t Not Consider

Zero to 60... It’s a popular connotation of getting their quickly. So how can a business financing vehicle that was in the ' old days ' considered alternative suddenly be popular and mainstream , and even more so, get your company to your goal .. quickly? That's what we maintain ABL asset based lending does for Canadian business owners and financial managers looking for an alternative business line of credit facility.



One reason you can get to that goal quickly is that there is only one primary requirement for qualification under this type of facility, and that's ' asset ' strength. These assets are monetized, or collateralized if you will, allowing you to turn their total market values into a revolving credit facility.



Even though in the majority of cases ABL financing is more expensive than what we term the ' traditional' bank loan they are of course lower than the cost of equity, which most owners wish to avoid as they grow their business to a higher valuation. Oh, and by the way, on larger higher quality transaction a true based line of credit']);"> asset based line of credit from a bona fide based lending']);"> asset based lending firm can actually be equal to or cheaper than, in financing cost, than your Canadian chartered bank facility .



Valuation of your business assets (receivables, inventory, equipment, real estate, etc) is the key driver in the liquidity solution. Very typical margin rates on assets include 90% of your A/R; anywhere form 30-70% of inventory, and market values of real estate and unencumbered fixed assets.



A couple points quickly emerge around the benefits of this type of financing. One is very simple. A quicker approval, because the focus isn’t necessarily on the financial covenants and ratios or overall credit quality of your business, instead it always comes back to asset availability.



Another point is flexibility. We see this lot. And it all comes down to the fact that there is a good chance that your business is different from many other businesses and in a different type of industry. We quite often see that a tremendous amount of flexibility can be applied, via ABL asset based lending, to your particular circumstances. Some of those circumstances might be seasonality of your revenues and cash flows, etc.



As based lending']);"> asset based lending in Canada matures (in general terms it's relatively new) there is simply going to be more choices, competitive costs, etc from the providers of this service. Surprisingly in some cases Canada's banks in fact recognize this trend and many have ABL solutions that to a certain degree ' compete ' with their more traditional commercial borrowing facilities. In Canada we're even getting back to the point where business liquidity is getting back to normal and we can almost make the statement that there is more capital than transactions. From the borrowers perspective that's a good thing.



It's important to think of this type of business financing as a revolving line of credit, it’s not a loan per se, and adds no debt to your balance sheet. So if you have those assets, and can't obtain traditional credit, use our ' zero to 60' approach for quick access to business credit.



Speak to a trusted, credible and experienced Canadian business financing advisor on a financing alternative that is achievable for your firm, no matter what your particular circumstances are.

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Article Tags: abl, asset based lending, business financing



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