How to Increase Cash Flow With Asset-Based Lending
Don’t let a slow season or a cash flow issue cripple your business. Otherwise thriving small businesses can be forced to close down due to a simple cash flow issue. Don’t let your business become stunted or fail, but find out how asset-based lending can keep you moving forward and growing successfully.
When you take out an asset-based loan, your loan is guaranteed by some of your assets. Depending on your type of business, there are many assets you can choose from to provide collateral for your loan. From real estate to heavy machinery, costly computer equipment or even inventory, each of these assets has value and can be used as collateral.
This collateral helps reduce the risk of lending your business much-needed capital. When you back your loan with assets, you may be able to access financing that you wouldn’t otherwise be approved for. Typically, a low credit score or lack of financial history prevents you from accessing most financing options. These common issues are part of what makes it so difficult for small businesses to thrive when an emergency expense occurs.
Thankfully, asset-based lending allows you to leverage your current assets and keep your business thriving. Your lender will review your assets and offer a price based on their resale value. If you accept, you’ll receive a loan based on that price. In the event of a default on the loan, you sign over those assets to your lender. While unlikely, defaulting could create a difficult situation for your business. Be sure you choose assets that offer the highest loan value to take full advantage of the generous terms and interest rates available.
Compare rates and terms before you sign up for a loan. Asset-based loans can vary dramatically in their terms, so be sure to choose one that has the best interest rates and offers the maximum loan you need. Some lenders are far more likely to work with you in securing additional sources of financing, so also consider lenders who have excellent customer service and provide a range of loan options for future business growth.
For most asset-based loans, you can still use your equipment, inventory or real estate, even while they provide collateral. This means that you can can still operate your business as normal with an improved working capital account. Take charge of your financing and secure additional working capital today. With asset-based lending, you can balance your cash flow and improve your situation without a perfect credit score or long-standing financial history.