The Top Benefits of Asset Based Lending
In the past few years, asset-based lending has been growing in popularity. These offer several benefits that are provided by similar items, such as a line of credit. The benefit is that it is much easier to qualify for asset-based loans. Keep reading to learn more about asset-based lending here.
One of the top benefits offered by using asset-based financing is that you will receive improved liquidity. When this is used properly, the funds can provide financial stability along with more predictable cash flow. With this benefit, you can stabilize operations for your business, especially during periods of rapid growth, if you have a tight cash flow or seasonal revenue.
Easier to Acquire
You will find that qualifying for asset-based financing is much easier and faster than qualifying for a line of credit or business loan. At the least, your business should have a record of profitability, along with reasonable financial controls. Besides that, the most important requirement is having some type of asset that you can leverage.
For most businesses, accounts receivables are the easiest asset to leverage. When you receive invoices from a creditworthy commercial client, this is great collateral. This is because these invoices can be turned into cash easily. Most of the finance companies want finance invoices that will pay within 70 days. Also, you can use things like equipment and inventory as collateral.
Usually, asset-based financing offers superior flexibility. In most cases, there are minimal restrictions on how you can spend the money. However, you do have to use the funds for some type of business purpose.
The line of funds will be tied to what your accounts receivable are worth, along with your other collateral. This means the funds you have access to may increase as your sales go up. These increases will usually be set up and approved quickly. Your business doesn’t go through the entire underwriting process once again. This is an important benefit for companies experiencing fast growth and that need more funding.
Understanding what asset-based lending offers is the best way to ensure it is right for your business. Be sure to keep the tips and information here in mind, which will help ensure you get the funding needed from a qualified, reputable lender. Be sure to keep this in mind, which will minimize issues and ensure you receive the financing that is needed.