If your business requires improved cash flow, then asset-based lending has several advantages over traditional loans. In addition to eschewing the often formidable qualification requirements of traditional lending, the asset-based variation can confer some of the same benefits as a business line of credit. Let’s outline some of the other advantages in greater detail below.
Asset-Based Lending: The Ease of Application
One of the tops reported benefits is how much easier is to apply for and secure an asset-based loan than a business line of credit or business loan. Of course, as you might have surmised from the name, you need to display assets that you can leverage to increase or supplant the traditional markers of creditworthiness. One such asset could be your accounts receivable, for example – which can be viably used as collateral.
Greater Liquidity With Asset-Based Lending
One of the chief balancing acts that most businesses face is cash-flow management; you have to try and keep this metric in the positive, as it is a measure of business health and partially denotes the loans for which you are eligible. Asset-based lending, once you qualify, will aid you with improved seasonal revenues and cash flow.
Flexibility and Manageable Requirements
This indelible aspect of asset-based lending is part-and-parcel of the means of qualification. All that means is that you used assets/collateral such as receivables or property to acquire the loan. The process was much smoother since credit checks were largely unnecessary (in most cases). As such, you can use the loan however you see fit as long as it is business-related. There’s no lengthy underwriting process needed, and you can usually obtain an increase in the business line of credit.
Contact Achieve Capital Advisors. We offer financing solutions for your business.