An asset-based loan allows you to leverage company-owned assets to obtain needed funding. The assets that your business can use to secure financing may include equipment, machinery, real estate, inventory, or unpaid accounts receivable. Here are some of the benefits of taking advantage of the opportunity of asset-based lending.
Obtain Funding Quickly and Easily
Small and mid-sized businesses often have difficulties when attempting to obtain conventional loans or lines of credit from banks. On the other hand, asset-based lending is easier to qualify for because the lender’s main consideration is the value of the assets you have available for collateral. Among the best assets for loans are unpaid invoices from clients who are creditworthy. If you are in urgent need of financing, the process of application and underwriting of an asset-based loan is much speedier than for a business loan from a traditional bank.
Improve Cash Flow
Fast-growing or seasonal companies often face unstable cash flows. Asset-based lending can mitigate this by quickly supplying you with the funding you need to keep your finances steady, your cash flow predictable, and your business thriving.
Save on Costs
With asset-based lending, your financing costs remain reasonable. Getting an asset-based loan is less expensive than factoring in invoices or other funding alternatives.
When you obtain an asset-based loan you are generally free to spend it as you like as long as the expenses are related to your business. This gives you great financial flexibility. Additionally, if the assets you are leveraging are your unpaid accounts receivable, your financing can grow as your sales increase.
Become Eligible for Other Financing
As your company successfully qualifies for, obtains, and makes payments on an asset-based loan, your credit history improves. This may make you eligible for other, even less costly forms of funding in the future.
For more advice on using asset-based funding as a financial solution for your business, get in touch with Achieve Capital Advisors.