Asset Based Lending: 4 Major Benefits for Your Business
When you’re looking into means of financing your business, asset based lending is an arrangement which you simply can’t afford to overlook. This financial support system has a great deal in common with a business credit line, but is overall much easier to qualify for. This offers a great deal to your business over the years, but there are 4 main advantages you should be aware of before making the decision to use another type of lending arrangement with your bank or other lender.
This is what makes this the perfect option for business that are growing quickly and are in need of immediate cash flow to keep their business up to speed. This also means that if your business is in a tight spot financially, you’ll be able to do more to dig it out of the dangerous pit and plants strong financial roots in whatever way you see necessary.
Unlike with bank loans, you don’t need much of a financial track record for banks and lenders to review when it comes to asset based lending. You only need to have assets that can be leveraged by the lender in order to get the cash your business needs. While this can include a huge range of assets, the easiest and most common assets are your company’s accounts receivable, ideally for creditworthy commercial customers that pay within seventy days of their invoice being received.
Because the value of your financing line is tied directly to your assets, you’re able to receive more money as your company grows and creates more business. Because no further underwriting is needed when requesting an increase, they can be approved quickly, which, again, makes this the perfect solution for companies undergoing extreme growth in a short period of time. Furthermore, there are practically no limits to what this money can be spent for, as long as it’s used to promote the business and help it grow and develop.
Also unlike traditional bank loans, asset based lending is a relatively quick process. Because there’s little paperwork to worry about and few requirements, the underwriting process goes quickly, as long as your business is profitable. Other, more complex financial situations may require a little more time to evaluate, but generally this process takes around a week or two.
These 4 benefits make asset based lending practical and desirable for practically any business owner. Speaking to a professional can help you to better understand how the options will impact your finances and how to get started.