The Top Benefits of Asset-Based Lending
Asset-based lending has grown in popularity in recent years. They provide several benefits that are offered with other products, including a line of credit. However, being able to qualify for an asset-based loan is an easier process. Keep reading to learn about the top benefits offered by asset-based loans here.
One of the main benefits offered by asset-based lending is more liquidity. When this is used properly, the lender will offer your business financial stability along with predictable cash flow. This benefit will help stabilize company operations that are growing, have seasonal revenues, or tight cash flows.
Easy to Acquire
Qualifying for asset-based financing is much easier than qualifying for lines of credit or business loans. Your business needs at least some track record of profitability and some type of financial control. Besides that, the most important requirement of this is an asset that you can leverage.
One of the easiest assets you can leverage is your current accounts receivable. The invoices you have in place from your creditworthy commercial clients are perfect collateral because it is possible to turn them into cash easily. Most of the finance companies that offer this type of loan prefer to finance your invoices if they will be paid within 70 days. Some assets that you can use include equipment, inventory, and other items as collateral.
Most facilities that offer asset-based financing provide loans that give your business more flexibility. In most cases, there are minimal restrictions on the way you can spend the money; however, it needs to be for business purposes.
The financing you receive will be based on your accounts receivable and the other collateral that you have. As your sales grow, the amount you have available will grow, too. Increases are usually approved pretty quickly, and you don’t have to go through the entire underwriting process again. This is nice, especially if you need funds quickly for growth or another purpose.
Receive Funding Quickly
If your business meets the qualification criteria, you can receive funds from an asset-based loan quickly. The application and underwriting process is faster than trying to apply for and qualify for a line of credit or conventional loan.
As you can see, asset-based lending offers an array of benefits. You have to consider if this is right for your business’s financing needs and then find a quality lender that provides this service.