ABL Credit Facility

ABL Facility Will Simplify Your Business Needs for Cash Flow

 

Asset based lines of credit are Financing Facilities that provide alternative funding to typical banking type arrangements. They almost always give your more capital, you do not incur debt, and in many cases can help your firm either regain its financial footing or grow more quickly. As owners we meet have challenges such as inability to secure the operating cash they need, the requirement to acquire additional assets, or even a full acquisition of a competitor. An ABL facility focuses more on assets than operational performance. These types of asset financing can double your access to business credit and working capital.

Uninterrupted cash flow is vital to a business for its expansion and growth and the business may require funding quicker with a more flexible structure than a traditional lending institution can provide. ABL Credit Facility has proved to be a greatly workable option for businesses over the last few years and the industry has grown manifold. This also proves to be a great choice for companies that do not have the credit rating to apply for a more traditional type of financing.

Asset Based Lending can come from a variety of sources. There are commercial sources which have entire divisions devoted to just asset based lending. ABL Financing continues to evolve as the most widely accepted form of obtaining working capital for businesses. In the economic challenges of recent times, when businesses find the lending standards tightened and being rejected for loans, asset based lending has become a popular choice and this option of quick acquisition of a working capital and management of a steady cash flow, is here to stay.

An ABL Loan can be broadly defined as a loan taken by a business against the physical assets owned such as accounts receivable and inventory. Although accounts receivable are the most common collateral, inventory of the business or any other asset can be used to secure an asset based loan. Another huge advantage is that an asset based loan can be availed of quickly unlike some other borrowing options. An extremely flexible approach to borrowing, asset based lending provides a fast and reliable source of working capital for a business.

The concept of ABL Loans is relative straightforward: It's simply a business loan or line of credit secured by some type of collateral. The collateral can be any asset the borrower uses in the conduct of his or her business. If the loan or credit line isn't repayed, the asset is taken. Also called commercial finance, asset-based lending is typically secured by accounts receivables and, less often, inventory. Lenders favor receivables because they are among the most liquid assets, and they're less susceptible to "shrinkage", physical damage and other problems faced by tangible assets.

There are many misperceptions when it comes to asset-based lending (ABL). The biggest is that ABL is a financing option of last resort - one that only "desperate" companies that can't qualify for a traditional bank loan or line of credit would consider. With the economic downturn and resulting credit crunch of the past few years, though, many companies that might have qualified for more traditional forms of bank financing in the past have instead turned to ABL Loans. And to their surprise, many have found ABL Loans to be a flexible and cost-effective financing tool.

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