Worth Considering – Why A Canadian ABL Lending Facility & Asset Based Loan Is Unique

Updated: June 09, 2011

We're the first to forgive clients who either are confused about what an ABL revolver is, or, better yet, haven't even heard of this type of business financing. We'll clear that up for you in short order.

Confusion partly exists because there are some different, let us call them ' versions ' of an asset based loan and abl lending facility. They also go by some different names, such as working capital facility, abl revolver, asset based lending... and on it goes. Could one of these versions be the right type of financing for your firm? We think it could!

So let's get back to defining those different solutions, or ' versions. In its purest form asset based financing is a credit facility which is collateral based line of credit based on underlying assets - those assets typically being receivables and inventory. Typically a true asset based lender will also let that same facility margin equipment and real estate if that fits into your mix.

So whats all the ' hub bub ' about that, clients ask, doesn't Canadian chartered banks offer that same thing? Not really and here's why!

ABL financiers use a borrowing base formula of those assets we just mentioned and use a much higher advance or margining rate. What's the bottom line on all that? ... Simply that you have just achieved a much higher business line of credit.

So how do abl lending and asset based loan granters do it? It's simpler than you think. They simply tend to have a greater expertise in certain industries, but moreso exert strict controls and reporting on you the client.

And don't get us wrong; those ' controls ' aren't all the ratio, covenants, and personal guarantee and outside collateral that are required from those great folks at our chartered banks. In the case of an abl lending facility those controls are a requirement for regular reporting by you of those assets being financed, and occasional operational audits. We advise clients that those two items are well worth the significant increase in working capital and cash flow they will obtain from an asset based loan.

Oh, and by the way, you will note we said the facility is not a loan; it's simply a monetization of those assets that can drive working capital your way much sooner and in a bigger way.

Featured Research
  • The Social Side of Service

    Did you know that 83% of Twitter users who tweeted a complaint said they loved receiving a response from the brand? In order to provide the best possible service to your customers, you MUST provide service on the channels that they are utilizing. Social customer service might seem scary and undefined, but can be much more effective and less expensive than traditional channels. more

  • Video Conferencing

    For many, the mere mention of video conferencing brings about bad memories of conference rooms full of people staring at a screen with dodgy sound, fuzzy images, and broken connections. What if we were to tell you that over the past decade, video conferencing solutions have evolved to where they are affordable to businesses of every size and have evolved beyond just the standard boardroom. Today, 74% of B2C marketers and 94% of B2B marketers use video in their marketing efforts. more

  • EHR Implementation

    More and more medical practices are selecting and implementing electronic health records (EHR) than ever before. In fact, statistics show that the number of practices who have purchased an EHR has doubled in just three years. That being said, many practices fail to prepare for their new EHR and thus do not gain the full benefits that come with implementing a solution. more

  • Selecting the Right EHR for Your Practice

    The purchase and implementation of an electronic health record (EHR) system is no small feat and is a big step for a practice, small or large, to take. Selecting your new EHR is one of the most important decisions that you will make for your practice. more

  • 8 Ways Business Travelers Can Save with VoIP

    Do you or any part of your workforce travel for work, or even telecommute? If that answer is yes, then you should be utilizing mobile VoIP. With VoIP, businesses have been found to save as much as 40% on local calls and a whopping 90% on international calling expenses. more