Asset Based Lending (ABL) Has Its Advantages

Learn Why ABL May Work For Your Business From Our President, Glen Dalzell
In a business financing climate where access to working capital can be challenging, customized, non-traditional financing solutions are a practical alternative for business owners. Financing options don’t end with the typical lenders you might expect (i.e. banks). Asset Based Lending (ABL), for example, is one financing solution that a business can use to increase its access to working capital. What are the advantages of ABL financing? Asset lending  
  • First, ABL funders are highly specialized experts in this type of lending and will consider all assets on a company’s balance sheet. ABL facilities will finance a company’s accounts receivable (often at higher advance rates than traditional funders) and provide leverage against other assets including inventory,
  • machinery & equipment and real estate. Whether your business has some or all of the above assets, an ABL facility can be structured to fit your needs.
  • Second, even early-stage companies can take advantage of ABL. Asset based lending is possible for most business sizes and at any point in their life cycle. Generally, institutional ABL Lenders operate at the higher end of the spectrum (minimum $10 million facilities) but many other non-traditional lenders offer facilities starting at $1 million.
  • Third, the “true” value of your assets will be considered. Banks do not typically perform a comprehensive valuation of your assets. Generally, bank facilities are driven by ratios, covenants and cash flow considerations. For ABL financing, asset categories will be individually valued. Appraisals are common for inventory, equipment and real estate to determine the realizable value of the assets. This determines the maximum leverage that the lender can provide
ABL financing is simpler than you might expect. The cost of financing, asset margining, appraisals and the day-to-day mechanics of how it works will be explained to you in detail so that you know exactly what you are committing to. ABL is not complicated and will likely result in an increased amount of working capital financing than your business would be entitled to with a conventional bank operating lines At Spergel Corporate Finance, we work with a variety of ABL lenders in both Canada and the US. Depending on your needs and the type of assets on your balance sheet, we will involve the appropriate lender(s). If you are interested in learning more about Asset Based Lending, please contact me directly. I would be pleased to speak with you.