All Companies Involved In International Flows Of Capital Must Why A Business Asset Based Loan Financing Is The Perfect Solution For Cash Flow In Canada

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Why A Business Asset Based Loan Financing Is The Perfect Solution For Cash Flow In Canada

Are you a Canadian business owner and financial manager looking for information and guidance on business asset based loans? What is asset based debt financing, sometimes called cash flow factoring – how it works and why it may be the best solution for your firm’s working capital challenges.

Let’s cover the basics and explore how you can benefit from this relatively new form of property financing in Canada.

A good start is always to understand and cover some basics about what this type of financing is. Simply put, a facility is a loan arrangement that is regularly repaid based on your receivables, inventory and, if necessary, equipment and real estate that your firm will own.

By collateralizing your assets you create a current loan base for all your assets – this viability fluctuates daily based on what you generate, the inventory you move and what you collect from customers. When you need more working capital, you simply draw down on the initial funds included under your asset base.

You may already see the benefit, which is that if you have assets, you have cash. Your receipts and inventory, as they grow, provide you with unlimited financing.

There is no limit to how a Canadian chartered bank can finance your business’s asset-based loan financing. An alternative facility for this type of working capital financing is of course the Canadian Chartered Bank Line of Credit – this facility is always subject to caps and strict requirements for the quality and ratios of your balance sheet and income statement, as well as performance agreements and personal guarantees. and outside collateral. So there is a huge difference in the non-bank financing we have for your consideration.

Your asset based lender works with you to manage the facility – and requires you to regularly report on your A/R and inventory levels, which are the mainstays of financing.

Smaller companies use a specific subset of this financing, often called factoring or cash flow factoring. This particular type of financing is less transparent to your customers, as the cash flow entity may insist on verifying your invoices with the customer, etc. Real estate based loan financing is usually transparent to your customers, which is exactly what you want. – You bill and collect our own invoices.

If our facility gives you unlimited working capital why haven’t you heard about it and why aren’t your competitors using it. Our clients can always be forgiven for asking such a question. The reality is that in the US this type of financing is a multi-billion dollar industry, in Canada it has grown even more since the 2008 economic recession. Some of the largest corporations in Canada use this form of financing. And you are a candidate if your firm has working capital assets anywhere from 250k and above. Larger facilities are, of course, in the millions of dollars.

The Canadian asset based financing market is highly fragmented and consists of a combo of US, international and Canadian asset finance lenders. They have different preferences regarding deal size, how the facility operates on a day-to-day basis, and pricing, which can be competitive with banks or significantly higher.

Talk to a trusted, reliable and experienced business financing advisor and decide whether the benefits of business asset based loan financing work for your firm. They have the ability to increase cash flow, pay you cash all the time when you need it (assuming you own the property) and liquidate and monetize your current assets to provide constant cash flow, and that’s it.

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