When a business needs capital, it usually chooses between asset-based lending and a conventional business loan. Here is how they differ and when each makes sense.
Traditional business loans
Conventional term loans and lines of credit are underwritten mainly on cash flow, profitability and credit. They are cost-effective for stable, profitable businesses but can be hard to access during growth spurts, turnarounds or uneven earnings.
Asset-based lending
ABL is secured by and sized to your assets — receivables, inventory, equipment, real estate — so capacity grows with your asset base. It is more flexible for businesses that are asset-rich but do not fit tidy cash-flow metrics, at the cost of more monitoring.
Cost and flexibility trade-off
Traditional loans are usually cheaper when you qualify; ABL offers more flexibility and capacity when you do not, or when you need funding to scale quickly.
Choosing the right fit
The right answer depends on your balance sheet, growth stage and goals. A broker who understands both can structure the facility — or combination — that fits your business.
How Gurpinder Gaheer can help: Asset-Based Lending in Ontario · Book a free 30-minute consultation