Hard hit. That's how many businesses, small, medium, and yes, large... feel about being caught in the downdraft of the difficulty to obtain the proper amount o fbusiness financing they need. The 2008 - 2009 recessions didn't help, and even our world wide admired Canadian banks had to hunker down, which in your case meant less access to capital as if you didn't know already. The bottom line, it was simply business credit was, and to some extent is, tougher to obtain.
The above conditions and the ever changing Canadian business financing landscape has made it a ' perfect storm ' for ABL lines of credit and asset based lending . Businesses who have been forced, or who finally realize they had non-bank business financing options are exploring ABL (the acronym for asset based lending) every day in Canada these days, with thousands of companies having ' signed up for the program '.
Canadian businesses of all types are investigating ABL. It's very simple really, they either have no access to traditional funding, or if they do, it's not for the amount of capital they need. Others simply adopt the Boy Scout motto - BE PREPARED ‘! and are proactively seeking alternative operating line of credit solutions. The bottom line - working capital and cash flow has become ' job #1' for Canadian business.
Want a simple, basic reason why companies are looking for a financing alternative. It's just that firms have more debt, accounts payable days have risen, and, no surprise, clients are waiting much longer to get paid by their own customers.
Many Canadian business owners and financial managers haven't even heard of ABL, much less embrace it. A lot of the new interest is in the SME marketplace, but many of Canada's largest corporations utilize this financing also.
It is no longer ' financing of last resort '... in fact it's become an unbeleivable tool to grow your business. expand into new markets, acquire a competitor, or even just survive after some challenging years or special circumstances your company may have encountered.
ABL lines of revolving credit, just a basic term for asst based lending is simply a business revolving line of credit that allows you to borrow against all your assets - those being receivables, inventory, and fixed assets and real estate, if that comes into play. The difference? You can borrow significantly more, because the total focus is on assets.
In Canada ABL lines go from 250k and up, with really no upper limit on the amount of your facility, we're talking millions of course. Your credit availability increases very significantly based on the elimination of the traditional Canadian chartered bank issues of rations, covenants, outside collateral, personal net worth, etc, etc. The bottom line, you are borrowing on your assets!
There are some different, lets call them ' flavors ' in the Canadian ABL asset based lending marketplace. The facilities come in different shapes and sizes; can be just receivable based, or a full service solution delivering extra capital against all your assets.
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