Sometimes you need a bit of help to keep your business running or to help it grow effectively. When traditional financing isn’t available, though, your business still has options for financial help. Many companies turn to asset based lending because of the many benefits it offers. Consider five reasons why this may be a good route for your business.
You Can Get Them Easily
Many businesses opt for asset based lending because virtually any company can qualify. Instead of a credit history, business owners may show lenders that their company is profitable and that their financial statements are in good order. After this, they may use almost anything from their business as collateral. Many business owners choose to use their invoices but you can also use your equipment and inventory as well. Even your real estate may be used to help you secure financing.
You Can Get Them Quickly
If your business needs money to take advantage of a new opportunity or if you need to pay your staff for a large, upcoming job, this kind of financing is ideal. Once your company has determined that this type of loan is right for your business and that you fit the criteria, the process generally moves quickly. You may apply for financing and complete the underwriting in a matter of weeks.
Your Cash Flow Will Improve
One major benefit of asset based lending is that can help your cash flow get better. A loan usually helps your business find financial stability during slow periods or when your company is growing faster than you anticipated. The money to hire more employees or buy supplies to fill outgoing orders will be readily available when you need it, allowing you to focus on your daily business operations.
You Will Have Fewer Requirements
Some business loans come with conditions attached which can often be restrictive. Asset based loans, however, usually come with fewer requirements. This allows you to maintain some freedom in your business dealings while still complying with the terms of your loan.
You Will Spend Less Money
Another large reason to consider asset based loans is the price. While traditional financing options may charge lower fees, you ultimately save money when you choose a loan based on your assets over other similar types of loans, such as factoring. An asset based loan comes with an annual percentage rate that varies depending on the kind of risk your business is and how much credit you’re being offered. Factoring, on the other hand, tends to be pricier because it takes a percentage from each invoice.
Asset based lending offers your business many benefits if you need financial assistance. It can bring peace of mind as you weather your company’s ups and downs.