As a small business owner, it can be difficult to find financing from banks when you can’t compete with larger organizations. Asset-based lending can be one option to find funds when you’re facing an immediate need. Before you sign any contract make sure you completely understand it.

What Is Asset-Based Lending? 

Asset based loans are monetary advances based on the value of an asset. Although you may be thinking about equipment, your business may also be able to use your invoices or purchase orders to get asset-based lending. You sell your outstanding invoices to a lender who gives you a portion of the invoice value in cash. When your customer pays the bill, the lender gets repaid.

What Are the Benefits of Asset-Based Lending? 

Asset-based lending has many advantages over traditional loans. Typically, you can get approved in as little as a week. The application is quick and easy, based on your customer’s creditworthiness instead of your own business history. For startups, asset-based lending can be very helpful. In addition, this cash advance doesn’t show up on your books as a loan. You are selling an asset, not actually borrowing money.

Is Asset-Based Lending Good For Your Business? 

Only you can decide if the benefits of asset-based lending fit into your business plan at the moment. You should weigh the fees and costs of this type of lending against the benefits. You may also want to shop around for the best fees. Make sure to understand all the details before signing on.

Asset-based lending can be one way to ward off a cash flow problem that could shut your business down. Although you aren’t limited on how you can use your cash advance, it’s a good idea to have a plan so that you don’t waste any of your money.

Contact DrawBridge Capital for information about financing for your business.