Asset Based Lending - What you wanted to know and were afraid to ask!

Asset Based Lending - Canadian business owners and financial managers continue not to take advantage or investigate one of the most powerful business financing strategies available to Canadian firms today.

While asset based lending, or ABL lending as it is sometimes called is a very common U.S. and European financing tool Canadian business has been slow to catch on and investigate this option.

ABL lending is coming into popularity on a slowly but increasing basis in Canada because it provides your firm with increased liquidity - i.e. more working capital and cash flow! Asset based lending is certainly not the only choice - your firm can be financed by a Canadian Chartered bank line of credit, a single factoring or invoice discounting facility, or possibly by some other mix financing strategies .

When we meet with business owners and talk about why asset based lending is coming into vogue it is our opinion that this is not a fad, but a financing solution and reality brought about by the 2008 and 2009 liquidity crisis in Canada which affected every aspect of Canadian business financing. New, start up, and even established corporations found it more difficult to get business financing that suited their needs, so, necessity being the mother of invention, Canadian business owners looked to see what was working where! ABL, or asset based lending in Canada is a huge industry, with many market participants. The Canadian market place, similar to other aspects of Canadian and U.S. business comparison is smaller, more fragmented geographically, and a bit less robust.

We strong recommend that business owner's work with a trusted, experienced and credible advisor in this area to map out an asset based lending solution that works best for your firm, as each industry differs with respect to asset based and capital requirements.

We have all heard the term 'perception versus reality 'and asset based lending is a great example of that phrase. By that we mean that many perceptions exist about asset based lending that simply aren't true, or if they were perhaps true once they certainly are not now . As and example your firm might not be willing to entertain asset based financing because 'ABL 'is simply unknown to many of your business peers. The reality is that many of the largest and most successful organization in Canada, some of them public entities utilize ABL solutions.

Asset based lending is clearly an 'alternative financing 'form for your business liquidity. Many customers view the word 'alternative 'as a negative statement, which might infer financial problems etc. ABL should simply not be viewed in such a negative way. If your Canadian firm had an asset based financing facility that gave you more working capital, greater cash flow turnover, less restrictive covenants, and competitive pricing would you view that as a negative? We clearly don't think so!

In summary, investigate asset based lending for your firm as an alternative long term source of working capital and cash flow. Work with a dependable and experienced advisor to structure a facility that meets your working capital needs. You might quickly find that other firms in your industry and your competitors start to realize that your firm differentiates itself in a very positive manner based on your new financing facility - i.e. access to more working capital, better relations with suppliers, ability to finance more inventory and receivables and grow your business. ABL - investigate and inform yourself of the possibilities.
Stan Prokop is founder of 7 Park Avenue Financial - www.7parkavenuefinancial.com
Originating financing for Canadian companies,specializing in working capital, cash flow, and asset based financing , the 6 year old firm has completed in excess of 45 Million $ of financing for companies of all size . For info and free consultation on Canadian business financing and contact details see : http://www.7parkavenuefinancial.com/asset_based_lending_2.html