You’re forgiven. For what? Surely Canadian business owners and financial managers can be forgiven for thinking that there is few, (if any?) capital funding asset based business loans for Canadian business.
Between the global credit crunch, a Canadian recession, and the traditional bank retreating on business credit in every owner or CFO must surely dwell on the potential inability to take advantage of growth and sales opportunities via access to the right amount of working capital and cash flow to satisfy both day to day needs, and of course, that growth.
Asset based lending in essence goes ‘ under the covers’ of your balance sheet – and whats under those covers, assets, not rations or covenants!
By financing those assets in a creative manner that leverages there true value your business is on the road to working capital solutions that you never imagined.
When clients talk to us about asset based business s loans their situations vary dramatically. Industries fall in and our of favor – so firms are experiencing a variety of what we can only term unique situations. What are some of those situations – well they might include stratospheric growth via new purchase orders or contracts, restructuring for a variety of reasons , buyouts or acquisitions , and that old catch all ‘ the turnaround ‘.
So is there one solution for all of these major business situations and challenges. We are always hesitant to say that ‘ one size fits all’ but in reality the asset based lending available in Canada is quite frankly the new kid on the block that gains more acceptance everyday .
Why does this solution work better than a traditional one? One of the things we explain to clients is that in effect is a customized solution that takes a hard look at all your assets – those include inventory, A/R, equipment, and in some cases you can actually margin real estate.
So who qualifies and who doesn’t is a typical question asked by business owners. The reality is that larger firms are very closely suited to an asset based line of credit, but a whole second tier of offerings are available for firms who need 250k and up on a monthly basis .
Pricing often becomes a discussion point for this type of working capital and cash flow facility. We quickly point out to clients that although asset based business loans in Canada are more expensive than bank facilities; the reality is that they are custom tailored to your firms ongoing daily cash flow needs. They don’t require ratios and covenants to get the loan facility approved, and guess what, no debt goes on the balance sheet, you are simply monetizing those assets.
Its all about access to capital funding – if the old ways don’t work then clearly you should explore the significant benefits of an asset based line of credit. Speak to a trusted, credible, and experienced business financing advisor who can assist you in navigating the Canadian market.