The ‘times they are a changing; Bob Dylan we’re thinking probably wasn’t considering an asset based line of credit finance solution when he wrote his famous song .
Somehow though those words signify a ‘ restart ‘ and that’s what Canadian business owners get when they consider asset based finance via revolving credit facilities as a solution for cash flow and working capital needs .
So how does something that seemingly seems the same actually benefit your company so significantly? It’s partly related to the external environment out there: traditional forms of business financing in Canada are challenging to say the least, venture capital seems somewhat non existent, and private equity deals take forever to complete if you can find a suitable partner.
Enter the asset based line of credit finance solution! ABL is the acronym for this these revolving lines of credit. They are multi tasking to say the least. Hers some of the things that ABL lines can do : pay out secured existing creditors who have term loans or business lines of credit in place with your firm, eliminate CRA arrears, ( if any ) on the initial advance, and , quite importantly, help you get caught up with valued supplier and vendor related payables.
Oh, and by the way, if you had limited or perhaps no inventory financing in place before as a part of your business line of credit… well, you do now!
The Canadian asset based line of credit marketplace is significantly different from that of the U.S. First of all, we’re a smaller country business wise, no surprise there. So there are fewer true ABL type lenders to meet your overall needs. We also logically think that the limited number of players in this market might be one of the reasons you simply have never heard of this solution?!
We keep talking about differences when we compare the asset based loan facility to traditional commercial banking facilities available from our chartered banking system here in Canada. Those differences are quite frankly what make these revolving lines of credit so great.
First of all there is a lot of emphasis on collateral and assets, and less or extremely limited emphasis on outside collateral, personal guarantees, and ratios and covenants.
Additionally, it’s apparently not a perfect world out there, and your firm may be experiencing fluctuations in sales, profits, and balance sheet strength. The reality is that ABL finance is still the solution for your firm if you are in any of the above scenarios.
ABL finance is specialized lending. Firms that offer this service tend to be seasoned companies with significant experience in loaning against your assets. That’s of course not to say the banks are not, but it’s a case of almost micro managing your assets with you, which gives you more borrowing power. These capabilities translate into more working capital and cash flow for your firm, as you benefit from higher advance rates on receivables, inventory margining that actually finally makes sense, and access to unlimited business credit as long as your business is growing .
Investigate ABL. Speak to a trusted, credible and experienced Canadian business financing advisor who can help you determine whether your firm is due for a ‘ restart ‘ in Canadian business financing.