Asset Based Lending Can Get You the Funding You Need
Small business owners can enjoy a wide range of financial options to grow their business successfully. However, many funding options come with lengthy applications, high-interest rates, and other challenges. Discover why many business owners are choosing asset-based lending to improve their cash flow, obtain equipment and invest in the future of their business.
Securing Flexible Funding
Unlike typical bank loans or unsecured lines of credit, an asset-based loan uses collateral to secure the funding. This means that, should you be unable to pay back the loan amount and enter default, you’ll use a predetermined piece of real estate or other commercial assets to pay your debt.
This safety net allows lenders to not only offer more flexible financing, but asset-based lending is also typically easier to receive. Whether your credit is low from a recent business loan or you haven’t built up enough credit with your new business venture, asset-based loans can provide you with the financing you need without a high credit score.
Factoring Your Invoices
If a traditional asset-based loan doesn’t provide the flexibility you need, consider using invoice factoring. This lending solution works by selling your accounts receivables to a lender. This third-party lender agrees to wait the 30 or more days required to collect the payment while giving you a quick cash payment. You’ll typically only receive about 70 to 90% of the total invoice. However, this solution helps boost your cash flow and pay bills on time without going into debt.
A major benefit of invoice factoring is that you don’t have to put up any assets as security. This means that, whether you have unexpected payments or not, you’ll know where your finances are going. Of course, this process has some limitations as well. Unlike traditional asset-based lending, factoring is only suitable for financing as large as one or more of your invoices. If you need a loan option during a season of slow growth or little accounts receivable, factoring may not be for you.
Whether you choose to use asset-based lending to pay your bills on time, purchase inventory for a large order or secure a great deal on a piece of machinery or real estate for your growing business, you’ll enjoy the freedom and versatility to spend your funding how you need. Choose a loan option that keeps your business moving forward and staying flexible with the ups and downs of current market trends.