The Benefits of Asset-Based Lending
If you’re the owner of a small business that holds a considerable number of company assets, such as pieces of equipment or inventory, for instance, and you need to raise money to cover upcoming expenses, you may be wondering what you can do. Thankfully, there’s a system called asset-based lending that could get you the funds you need right away. While it may sound complicated, it’s actually a fairly straightforward process that provides a good alternative to traditional loans. It simply refers to using the value of your assets to get needed funds right away. To learn more about some of the benefits of this type of lending, read on.
It’s Not Quite a Loan
As opposed to other fundraising methods, getting an asset-based loan isn’t actually a loan. In spite of its name, what it means is that you can use your business’s assets as a sort of collateral. This collateral gets you a monetary advance that you can use to cover your expenses now, and then you eventually repay it through your future invoices or sales. The exact repayment plan depends on the type of agreement you make with the lender of your choice.
It’s a Non-Traditional Alternative
If you’ve had trouble qualifying for a more traditional loan, this type of lending could be an easily accessible way to get your business a good financing plan. There are a few advantages to it over traditional plans, including the fact that you usually won’t have to have your credit history checked or pay a down payment. Even if you’ve only been in business for a short period of time, you may still be able to leverage your assets!
Costs Can Vary
The costs and fees associated with asset-based lending can vary depending on which lender you decide to go with. Some charge lower rates than others, and some that usually charge higher fees may be willing to lower them for your business if you can demonstrate you’ve handled credit responsibly and paid bills on time in the past.
When your business needs to raise funds for pressing expenses, asset-based lending could be the right solution. If your company is rich in assets, you can use them to your advantage and secure an advance that could make a big impact on your business today. With these facts under your belt, you can feel confident about making the right decision for your company.