How can Canadian business owners and financial managers secure financing for working capital and cash flow financing for their business at the moment when it seems that access to financing presents a significant challenge?
The answer is that there is a potential solid solution with the name of an 'asset-based lines of credit' instead of what we call 'working capital'. What type of financing are new to Canada, and more importantly – how it works, and what the benefits and risks? You can visit this link to know about the working capital loan.
The most active assets of these companies tend to finance the on-going receivables and inventory, but in many cases, take advantage of expert advisors or your partner can structure a facility that also includes components of equipment and real estate.
In general, a good way to think of an asset-based line of credit is one that is for a temporary period, usually a year or so in our experience, allowing you to get a margin and higher advances on receivables and inventories. That translates into more cash flow and working capital.
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One of the main attractions of the asset-based loan facility is that your company's overall credit quality does not play the largest role in determining whether you can get approved for this type of financing. As its name suggests, the financing is on the 'assets' you!
Most lawyers and accountants will tell you that every type of business loan should in fact be entertained only by the respected business financing advisor, reliable and credible who can guide you through the roadblocks and pitfalls of each commercial financing arrangement.
One step in business financing may cause long-term negative effects on the surrounding tissues such as being locked in the facility, giving too much collateral, or enclosed in the price that is not commensurate with the overall assets and the quality of your credit.