Making a prediction is often a sometimes risky scenario, potentially damaging in your credibility, but we’re quite confident in proclaiming that Canadian business people will recognize non-bank asset financing as credit facilities for business finance loans to be the best thing they ever been aware of with financing their business.
Quite frankly we don’t think we exactly heading out and building a stretch comment because hundreds or else 1000s of Canadian firms are investigating and utilizing this type of financing.
As the Canadian business economy turns itself around commencing 2011 the majority of our customers are finally dedicated to growth how is that growth to be financing, since lending standards and criteria at institutions, for example, the banks don’t appear to get been liberalized on the same pace that your particular company hopes to cultivate at!
That’s where our trend prediction is available. Asset-based lending targets your assets and growth opportunities – it does not concentrate on rations, tangible equity within your company, rations, covenants, cash flow coverage, etc, etc, etc!
So you might be picking up about the opportunity, let’s examine how things work. Asset-based lenders keep it simple, they lend an incredibly top quality against your ongoing assets. What are the typical assets lent against – you’ll be able to almost guess what happens they may be. They are receivables, inventory, unencumbered equipment, and real estate property.
The big mystery around asset-based lending in Canada, according to conversations with the clients, is the fact that business people don’t fully realize or understand who these firms are. So we’ll let you know.
They are specialized firms, both Canadian and U.S. based, that focus solely on providing credit facilities and business finance loans using your assets as security. They go ahead and take some security being a Canadian chartered bank would, and you also manage your facility over a day by day basis, drawing down cash as you need it. Funds are wired into your account as you need them, determined by… guess what happens… assets! That really may be the one key difference our clients recognize, how the total focus of such an asset financing is the collateral itself.
We may have learned the following question… because we’ve heard it one hundred times before. Its’ simply how much are we able to get ‘… as well as simply what does it cost.
Speaking in general terms your receivables are financed at 90% of these value, and because of the character and marketability of kinds of inventory, this kind of collateral is margined anywhere from 25-75%. Recall we’d noted that unencumbered equipment might be drawn against also. Typically an appraised market or liquidation value is agreed upon along with the asset financing provider.
Costs vary around this sort of financing. On occasion, it can be competitive with bank financing – and supplying you with twice the liquidity – but more often than not it’s costlier. You offset those costs by greater entry to credit facilities that can increase your business and profits.
Speak to a trusted, credible and experienced Canadian business financing advisor who can walk you through the Canadian landscape of business finance loans inside the asset-based lending area. You’ll identify, we believe, our prediction has become more true daily, asset-based financing is hot! And not going away soon.