Leverage the value of your accounts receivable, inventory, equipment, and real estate to return to profitability during transitional periods and take advantage of growth opportunities.
Asset based financing typically takes less time to close than bank loans, with less stringent covenant requirements making qualifying easier.
Asset Based Lenders
Asset-based lenders provide flexible financing solutions. They can be used for acquisitions, expansion, turnarounds and working capital needs; with less restrictive covenants than conventional lines of credit they can also help cash-strapped companies obtain additional liquidity.
Secured loans have lower interest rates than unsecured ones because lenders have something tangible they can rely on if there is default. But these rates can still fluctuate depending on what kind of collateral is pledged and your lender’s individual requirements.
Young startups experiencing rapid expansion may find Asset-Backed Lending more appealing than other forms of funding when additional funds are necessary to keep pace with their expansion plans. An ABL may provide the extra capital required, secured against their accounts receivable and inventory.
Asset Based Lending
Asset-based lending stands out from traditional loans by using the value of your assets as collateral; making it a perfect option for companies with irregular cash flow issues. Furthermore, this flexible form of finance often offers lower fees than traditional lines of credit and less frequent field examinations and appraisals are needed for approval.
ABL financing offers businesses looking to increase leverage or prepare for acquisitions, turnarounds and mergers an ideal solution. ABL funding options can especially prove effective when capital is locked up in inventory, raw materials or unencumbered machinery.
As an additional incentive to remain compliant and reduce risk for lenders while improving borrowing terms for borrowers, using revenue-producing assets as collateral may provide the borrower with additional incentive. This results in better borrowing terms for all parties involved.
Asset Based Loans
Companies often turn to asset based lending when they require working capital, whether to expand their business and meet payroll, or just access money based on physical assets like real estate, inventory or accounts receivable. Should the debtor default, their lender can levy and sell off these assets in order to recover the loan value.
Asset-based lending can also be more quickly and easily obtained than traditional financing, thanks to flexible credit approval processes and less stringent covenants from most lenders. Asset based loans are particularly useful for companies in turnaround mode or those struggling to qualify for traditional lines of credit – rates can depend on what types of assets serve as collateral.
Asset Based Finance
Asset-based financing differs from traditional loans in that approval is determined primarily by collateral value rather than earnings and financial statement ratios, making qualification easier. Furthermore, this form of funding has less restrictive covenant requirements that may help companies with poor credit histories secure financing.
Asset-based financing typically relies on accounts receivable, inventory, real estate and intellectual property as collateral. Lenders will evaluate each asset to ensure its adequate value and liquidity as well as assess a company’s financial performance to minimize risk – this makes the loan-to-value ratio lower than with traditional unsecured business financing but the lending process can be complex; businesses may have to submit monthly reports detailing the state of their borrowing base.
Asset Based Financing
Asset-based loans differ from other forms of financing in that they allow you to use liquid and physical assets as collateral, with lower interest rates than traditional loans and business lines of credit. They also tend to impose fewer restrictions on how funds can be spent – an appealing feature for seasonal cash flow businesses. It is important to remember, though, that collateral could be taken if payments on your loan become delinquent – including perishable inventory or equipment with high depreciation rates that do not qualify.
Asset based financing offers companies with significant accounts receivable, inventory and unencumbered equipment an effective solution to recover or turn around quickly and sustain growth. Asset-based lending also serves as a great aid for those in transition or recovery cycles with short track records or turnaround situations.