Commercial Lending In Canada. Discomfort With Bank Financing. The Asset Lender Is Your Alternative

Commercial Lending In Canada. Discomfort With Bank Financing. The Asset Lender Is Your Alternative

Commercial lending by banks in Canada is not the only way in which Canadian business finances itself. When we talk to clients about non bank solutions there sometimes exists a certain level of ' discomfort'.

Where it comes from we don't know, as thousands of firms in Canada are financing by non bank methods. That's the role of what we call the ' Asset lender ' - who comes in all shapes and sizes! Let's dig in.

Generally speaking asset based lending is simply a broad term for non bank commercial finance firms that provide a variety of business lending solutions to the Canadian business owner/manager. These companies have carved out their own ' niche' when it comes to specialty lending in areas of equipment, current assets, tax credits, etc.

Why then are commercial asset lenders successful in Canada, and growing in size and scope of solution? The reality is that they aren't regulated like the Canadian banking system requires of our banks. So like your teenagers they (try to) do what they want! And pretty well all of them do that well.

Commercial lending solutions for the asset lender come in a variety of solutions - they include term loans, leases, and asset monetization for working capital and cash flow. The loans are almost always focused on... you guessed it... assets! Asset based financing often has less of a regard for the overall credit quality of your company or its past or current situation - however don't think that because your company is in a death spiral you will still qualify. The patient must show signs of life!

Certain types of asset finance focus on particular industries. Non bank asset based lines of credit offer revolving credit facilities for al most every type of company in Canada that can offer up some for of collateral in inventory, receivables, fixed assets, tax credits, etc.

Many solutions offered by the ' ABL' (ASEET BASED LENDING) lender can be of a ' hybrid ' nature- financing different assets of your firm in a similar manner, all under the same credit facility.

Many Canadian business owners and financial managers in Canada seek asset finance solutions because they are an alternative to equity financing. In certain larger transactions an asset or mezzanine lender might in fact though ask for a small equity ownership or option in your firm - but this is generally very rare. The appeal of asset lenders is that as your business and assets grow so does your financing capability with your chosen lender.

We mentioned previously here that if your firm is in a death spiral your hopes should not be high for asset financing success. But if you are in legitimate turnaround mode you are absolutely a candidate for this financing which otherwise could not be achieved through a bank.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in structuring an asset lender solutions that meets your needs when it come to commercial lending in Canada.

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Author: Regular Articles

Stan Prokop - founder of 7 Park Avenue Financial
Originating business financing for Canadian companies, specializing in working capital, cash flow, asset based financing. In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations. Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.

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