We’re all familiar with the story – searching the jungles to discover what may not exist – a secret or dream that might deliver on wealth or happiness.
What does this possibly have to do with ABL lending and banking in Canada?! Our point is simply that something you think may not have existed in terms of an all encompassing business loan financing arrangement in fact might exist – you just didn’t know where to find it.
Let’s look at the hard facts – in 2008 and 2009 the Canadian business financing market went ‘ conservative ‘ and boy is that an understatement. Business financing reduced, companies such as yours hunkered down and just tried to exist, let alone expand and grow. Canadian banks emerged as the superstars of the Global financial marketplace – they didn’t go under… they remained profitable, they just did a lot less for many Canadian businesses, and in hindsight it’s hard not to understand why.
Could it have gotten any worse -actually yes, borrowing rates rose, many firms disappeared, and, at the core of our subject here, active lenders exited the Canadian market.
So was it all gloom and doom. You can make the call on that one, but the good news is that one form of business financing, ABL (Asset Based Lending) banking and lending become more valuable and more popular… in a way it become out business fountain of youth.
With the increased flexibility of abl financing in Canada came the financing that your business needed to grow. Essentially this type of financing margins assets at higher value, because abl lenders understand the true value of the asset – and if they don’t understand it they will take the time to understand the value those assets. (You might get a bill for that, but it will be worth it, we can assure you!).
We may have glossed over the true meaning and definition of abl loan financing in Canada. Simply speaking it’s a very clear formula based on the ongoing liquidation values of your receivables, inventory, and equipment, and you borrow everyday against those values. It’s a concept that is very easy to understand for most Canadian firms – especially when benchmarked against Canadian commercial banking facilities for small and medium sized companies in Canada.
So what have we got against banks? Absolutely nothing, in fact Canadian bank reputation is stellar globally. However, if you cant get prime based borrowing and if you are unable to meet covenants and ratios required , or if you are too ‘ small ‘ for such a facility then guess what – the fountain of youth, the secret to business wealth and happiness just might be abl lending and banking facilities .
True asset based facilities aren’t ‘ loans’ per say, you are just monetizing assets to create on going cash flow.
Interested? If your firm is growing rapidly, highly leveraged and unable to meet bank covenants, or is you just have curse of growing too quickly (?!) speak to a trusted, credible and experienced Canadian business financing advisor on ABL banking in Canada .