Business finance in Canada often requires asset based financing in the form of a credit line. One alternative to the traditional Canadian chartered bank solution is the ABL credit facility. Let’s dig in.

The other day one of Canada major business newspapers had an interesting article around the need to treat certain aspects of business needs as a ‘ SPECIAL OPS’ assignment – focusing on issues such as understanding the mission, the value of success, the training and info needed so things don’t go wrong … Is it just us but that’s a solid analogy to addressing the need for business credit lines.

The ‘ ABL ‘(asset based lending) solution is a fundamental game changer in Canadian business financing. It’s specialized lending 101, allowing any business that has two key assets (Sales and business assets) to monetize that into a revolving line of credit.

The even better news is that depending in your circumstances other asset categories such as equipment and your business commercial real estate ( if the latter is applicable ) can be easily combined together to give you tremendous borrowing power relative to the ongoing value of your sales and business assets . Its one time when ‘ growth is good ‘, giving you the ability to remove the concern around running out of ongoing cash flow needs.

It’s important to review ABL financing in the context of short term borrowing power and not the dreaded ‘ debt ‘ word. Yes, its true cash flow could be alleviated in some form by a working capital term loan or mezzanine/cash flow financing – yet these solutions involved fixed payments, longer amortizations, etc. In the case of a bank credit line, or in our situation, ‘ ABL ‘ you will be repaying the facility constantly as your sales and receivables come to maturity. Naturally that is all part of what the finance folks call you operating cycle – the travel of a dollar through your business from materials purchase to inventory to receivable to… finally… CASH.

Firms of all risk profiles are eligible for ABL asset based finance solutions. Those solutions can be uniquely just inventory, or A/R, or a combo of both. If you have the collateral ABL has the solution. Experienced business owners know that bank financing in the form of credit facilities requires a holy grail of profits, cash flow, and balance sheets/income statements that satisfy bank ratios. Great for some, but not accessible for all.

In many cases this type of Canadian business financing allows you to acquire a competitor through the use of asset finance, and is also used by many firms as an interim ‘ restructuring’ strategy.

If you’re looking for some SPECIAL OP’S assistance in the form of availability in a business credit line via ABL seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can ensure you aren’t missing out on one of the most available solutions that you might have not known even existed.