How to Use Asset-Based Lending for Heavy Equipment

How to Use Asset-Based Lending for Heavy Equipment

When you need financing for your organization, there are a wide variety of avenues to obtain it. While most people think about traditional loans through a bank or financial institution, this is only one way to secure financing for your company. If you do not meet financial requirements for a traditional loan but you have assets in your organization, such as equipment, you may qualify for asset-based financing.

Asset-Based Financing

Asset-based financing, also called asset-based lending, uses the assets in an organization as collateral for a loan. This works differently from traditional lending, which relies more heavily on financial considerations and available capital. Instead, asset-based lending recognizes the value assets have in an organization and uses those in place of some financial considerations to serve as loan collateral for the organization.

Getting Asset-Based Financing

Getting asset-based financing depends on what you want to use the financing for. For example, if you want to get a loan in order to purchase new equipment, you should work with a financing company that has experience in helping organizations get new equipment. Conversely, if you want to refinance or work toward debt restructuring, you should work with a financing company that has this kind of experience. The right financing company will work closely with you to help you get what you need and ensure you understand every aspect of the process.

Benefits of Asset-Based Lending

There are numerous benefits of asset-based financing, including:

• Flexibility for company owners in using financing 

• Increased variety of purchase options 

• May be easier to obtain compared to traditional loans  

Asset-based financing can be a valuable avenue of securing financing for a company. By understanding what it is and how it benefits your company, you can narrow your financing options and determine if asset-based lending is the best for you.