Ontario Asset Based Lenders

“There Is A Broad Cross Section Of Ontario Asset Based Lenders Available To Businesses Operating In Ontario And Other Parts Of Canada”

Ontario asset based lenders lead the Canadian market in terms of coverage of the market place.

Because of the size of the Ontario market compared to other areas of the country, asset based lending in Ontario can function in a relatively small geographic area which is very appealing to asset based lenders who typically require regular monitoring of accounts.

The term asset based lending can mean a number of different things, but for the most part its about lending against the market value of assets that a specific lender knows how to liquidate in the even of default.

Asset based financing is by definition higher risk lending because more of the lending decision is based on the security value of the asset as compared to bank or institutional lenders that require lower levels of overall balance sheet leverage in order to justify a loan request.

With an asset based lender, the lending decision is more about the difference between the immediate liquidation value of assets and the amount of financing they provide.  As a result, it is much more formulaic than conventional bank lending.

That being said, a growing area of larger Ontario Asset Based Lending is in the bank’s own specialized niche for asset based loans.

In this particular space in the market, larger banks are providing higher amounts of leverage to clients that are in the lower risk range of the asset based lending world.  These are typically asset based loans for $5.0 M plus, so are only available to a small percentage of the market.

For the majority of small business and medium sized businesses in Toronto and the Greater Toronto Area, there are a considerable number of different asset based financing options where either one type of asset is the focus such as a pure accounts receivable factoring house, or a number of assets can be considered collectively.

Each model typically has its own unique fit into the market and financing costs and structure.

The challenge for a business owner, especially for one that has a variety of assets that can be financed through asset based lending, is picking the right model.

In some situations, using more than one asset based lender can be preferred in order to obtain both maximum leverage and a lower cost of financing.

But more lenders involved can also lead to more deal complexity and greater administration requirements to meet the needs of all parties involved.

The best way to approach this area of the market is to work with a business financing specialist that works in the market and has direct experience with a variety of Ontario Asset Based Lenders

Click Here To Speak Directly To Business Financing Specialist Brent Finlay

Institutional Asset Based Lending

“The continual Evolution of Institutional Business Financing Programs Towards Asset Based Lending”

While asset based lending models have been well entrenched in the U.S. landscape for decades, they are still evolving in the Canadian market place.

This is largely because corporate lending criteria doesn’t work in recessionary periods and post recessionary periods where the economy as a whole is operating at a lower level of performance resulting in poor or suboptimal financial statements in many industries.

Corporate finance lends off of financial statements that show strong cash flow and low debt to equity ratios. During and immediate after a recession, especially one as severe as the current one, hardly any money is being provided from these sources for businesses to operate and in many cases, the money supply is contracted due to risk and perceived risk.

Enter the world of the asset based lender where there is a stronger link between lender and borrower with more established rules for managing cash flow and risk that allows the lender to participate in situations where they would otherwise have to pass.

In the last few years in Canada, all the major banks and several U.S. entrants into the market have jumped into the asset based lending world with some being fairly aggressive with their programs for lending money.

While most of these programs are only focused on loan requirements of $5,000,000 or higher, the advancement of the industry in general is good news for small and medium sized business owners who are scratching their head trying to find a source of capital they can cash flow within the profits available in their business.

Institutional asset based lending can have considerable pricing variations off of prime, but this is still considerably cheaper than what I will all traditional asset based boutiques that start at 18% and go up from there.

The key to getting the money and making it work for you is to take on or evolve your financial discipline so you can make all the rules and regulations with this type of money work. In the end, the discipline that any asset based lending facility injects into a business is almost always a good thing that will help not only with short term survival but also long term growth and prosperity.

From a commercial lenders point of view, the evolution to asset based lending makes a great deal of sense in terms of not only managing risk but being more comfortable putting money out into the market.

I believe asset based lending will continue to evolve in all lending categories and become a more prominent form of business financing for many business owners now and in the future.

Click Here To Speak Directly With Business Financing Specialist Brent Finlay