Asset Based Lending Loans: Transform Your Business Assets into Growth Capital
Stan Prokop
Canadian Business Financing | Cash Flow Financing | Asset Based Lending | Equipment Finance | Lender Financing | Purchase Order Financing | Acquisition Financing | SAAS Financing | Acquisition Financing
Maximize Working Capital with Asset Based Lending Solutions
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YOUR COMPANY IS LOOKING FOR ?BUSINESS FINANCE SOLUTIONS!
Asset Based? Lending? - Working Capital That Grows With You
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT? BUSINESS ?FINANCING OPTIONS?
CONTACT:
7 Park Avenue Financial South Sheridan Executive Centre 2910 South Sheridan Way Oakville, Ontario L6J 7J8
Direct Line = 416 319 5769
Email = [email protected]
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"The art of Asset Based Lending is not just about lending against assets, but understanding how those assets drive business success." - Author Unknown.
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7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer Asset based lending loans? and working capital solutions ?– Save time, and focus on profits and business opportunities
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7 Park Avenue Financial: “Canadian Business Financing with the intelligent use of experience”
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Asset-Based Lending Loan: A Game-Changer for Canadian Businesses
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Asset-based lending delivers on Canadian businesses’ ability to secure the right type and size of business credit line that the company needs.
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Asset-based lending allows businesses to obtain loans by leveraging their tangible assets, such as inventory, accounts receivable, and equipment.
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This type of financing is efficient for businesses seeking to grow, especially small and medium enterprises with limited credit history.
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Yet, whether it’s a business loan or a revolving credit facility, many business owners and financial managers rarely feel they have all the cards to secure and negotiate such facilities. Looking to change that? Let’s dig in.
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Breaking Free from Cash Flow Constraints: The Asset Based Lending Solution
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Cash flow gaps can strangle even profitable businesses, leaving owners struggling to meet payroll or pursue growth opportunities. Traditional lenders often focus solely on credit scores and financial statements, overlooking your company's valuable assets.
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Let the? 7 ParkAvenue Financial team demonstrate how Asset-Based Lending Loans offer a practical solution by unlocking the value in your inventory, equipment, and receivables. They provide flexible funding that grows with your business.
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Uncommon Takes On 'ABL' Financing
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DID YOU KNOW?
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What is Asset-Based Lending?
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Asset-based financing involves loaning money secured by collateral, typically the borrower’s assets.
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This form of lending, also known as asset-based financing, is primarily utilized by businesses rather than consumers for growth? financing? funding.
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The asset-based lending industry caters to many companies, from small and mid-sized businesses to large corporations.
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In an asset-based lending arrangement, the lender provides a loan or line of credit to the borrower, secured by the borrower’s assets, such as inventory, accounts receivable, equipment, or real estate.
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The loan amount is typically based on the value of the collateral / pledged asset, with lenders often offering a loan-to-value ratio of up to 80% or more, depending on the type and quality of the assets.? Fixed assets facility limits vary based on asset lending values and custom-tailored solutions determined by the lender with asset lending values based on potential liquidity.
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Asset-based lending can meet routine cash flow demands, such as payroll expenses, finance growth, or acquisitions.
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It can also be used to restructure operations or provide working capital. The terms and conditions of an asset-based loan depend on the type and value of the assets offered as security, as well as the borrower’s credit history and cash flow.
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One key benefit of asset-based lending is that it allows businesses to leverage their assets to access capital, even if they have limited cash flow or a poor credit history.
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This can be particularly useful for companies with significant inventory or accounts receivable, as these assets can be used to secure a loan.
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However, asset-based lending also carries risks, such as asset depreciation or market fluctuations.
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Additionally, if the borrower defaults on the loan, the lender may seize the collateral assets and sell them to recover the outstanding loan amount.
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Overall, asset-based lending can be a valuable financing option for businesses that need access to capital and have assets to pledge as collateral. It provides flexibility and liquidity, supports a wide range of business activities, and helps companies navigate financial challenges.
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The Rise of Asset-Based Credit Lines
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Asset-based credit lines have dramatically increased over the years, even though most experts agree this financing has existed since the early 1900s, starting in the U.S.
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How quickly can I access funding through Asset-Based Lending Loans?
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What assets qualify as collateral for Asset Based Lending?
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The value of the borrower's assets is crucial in determining the loan amount and eligibility, as these assets serve as collateral to secure the loan.
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What are the minimum requirements for qualification?
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Timing Is Everything in Asset-Based Finance
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Asset finance is all about timing - it delivers on cash, and working capital needs at a time when you need it most. That time, unfortunately, is when traditional lenders such as Canadian chartered banks are, for whatever reason, cautious about your business or industry in general.
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Why Asset-Based Loans Work for Businesses
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Asset-based loans and credit facilities work best when owners and managers know what’s currently wrong in the business and when failure is not an option.
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A company seeking a loan must demonstrate its financial stability. If it cannot show sufficient cash flow, it may need to use physical assets as collateral to secure funding.
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Key Differences Between Bank Loans and Asset-Based Loans
How Traditional Bank Loans Work
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What is the essential difference between bank loans and asset-based loans? It's quite simple. Banks require positive earnings, decent operating cash flow, and your company's ability to meet various 'tests,' more often than not called 'ratios.'
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The Advantage of Asset-Based Lending
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Asset-based lending facilities? While costing more, they recognize that your business has assets and the ability to move forward—those assets can be constantly liquidated and refinanced per your operating cycle.
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Both small and mid-sized companies and large corporations can leverage their physical assets, such as equipment and machinery, to secure loans when cash flow alone may not be sufficient.
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Why Equity Financing Isn't Always the Solution
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While the final financing source for some firms is getting new equity or ownership, that's rarely the desired option for owners who don't wish to dilute equity.
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Also, the facts are that smaller businesses in the SME Commercial area find it impractical, mainly because of their size, to raise outside financing.
Understanding Collateral in Asset-Based Lending
Assets vs. Collateral: What's the Difference?
Regarding the business credit line your company needs, it's important to distinguish between two words that might sound the same - 'Assets’ and 'Collateral.'
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While assets on the balance sheet might have a lower or higher value, the asset lender focuses on your business's real collateral value - and then provides financing against that.? ABL? also has a? ' covenant light structure ' that appeals to borrowers. Facilities can also be used to refinance existing debt. Traditional operating facility advances tend to be lower than? ABL loan-to-value funding.
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Typical Collateral in Asset-Based Loans
Regarding the business credit line, those assets tend to be accounts receivable (A/R), inventories, and even fixed assets that have no liens against them. Asset-based lending can also support commercial real estate investments by providing capital through leveraging real estate assets.
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Key Takeaways
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Conclusion
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If you're looking for the 'true package' for business credit lines, call 7 Park Avenue Financial, a trusted, credible, and experienced Canadian business financing advisor, helping you get back to holding the cards in business finance negotiation? via executing? ABL transactions to assist your company.
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FAQ
How does Asset-Based Lending improve cash flow management?
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What advantages does Asset-Based Lending offer over traditional loans?
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How can Asset-Based Lending support business expansion?
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What documentation is required for Asset Based Lending?
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How long does the approval process typically take?
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What determines the borrowing base in Asset Based Lending?
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How do unsecured loans compare to asset-based loans?
' Canadian Business Financing With The Intelligent Use Of Experience '
?STAN PROKOP 7 Park Avenue Financial/Copyright/2024
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Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil