Yes, We Do Inventory Financing:
- Advance rates up to 70% of inventory cost and 60% of equipment value
- Credit lines ranging from $100,000 to $4,000,000
What Is The Asset-Based Business Lending Process All About?
Asset-based lending is lending that is secured by a company’s collateral. Things like real estate, equipment, inventory, and accounts receivable are all used as collateral for loans. The lender will take a first priority security interest in the financed assets. It is just one of many ways that a company can secure working capital and term loans. These loans are secured by machinery, equipment, or any other assets the business owns, as well as real estate. Funds can advance based on a percentage of the accounts receivable.
An asset-based loan is usually comprised of a revolving credit line that doesn’t have the common kind of structured repayment plan, and is done an interest-only basis. Funds can be advanced as a percentage of accounts receivable or inventory, usually between 60-85%. There are higher advance rates based upon seasonal fluctuations or appraisal of other kinds of business assets, however; although, not all banks and financial institutions have such flexible lending terms. It is worthwhile pursuing a bank, or department thereof, that specializes in the kind of business you run. You may be able to get a more favorable deal, and you will certainly be working with someone who understands your industry.
What Are The Functions Of Asset-Based Business Loans?
WORKING CAPITAL: The assets that can be applied to a company’s operations are categorized as working capital assets. Sometimes, working capital loans are required to bridge financial gaps throughout the lifecycle of a business. Working capital loans are often divided up and shared by a number of kinds of assets, like accounts receivable, real estate, equipment, and inventory.
CAPITAL EXPENDITURES: Capital expenditures is the cash spent to get, or frequently upgrade, physical assets like machinery and buildings. Capital expenditure is usually referred to as capital expense or capital spending.
BUYOUTS: A buyout is the purchase of a controlling percentage of company stock. With a leveraged buyout, the company who is doing the acquiring uses the least amount of equity possible to buy the other company. The other company’s assets function as collateral for the debt, and its cash flow is then used to retire the debt that is accrued by the purchaser to buy the company.
What Are The Benefits Of Asset-Based Business Loans?
VERSATILITY: Asset-based lending offers instant and ongoing cash flow, and it can be used to buy supplies and materials, keep up with seasonal fluctuations, stay on top of operating and payroll expenses, keep payables current, and so on.
NO BURDENSOME REPORTING: Usually, asset-based lenders require a very small amount of reports like a monthly aging or INV & AR. However, each loan is unique so the reporting requirements will be tailored to each unique loan.
What can asset-based business loans do for your business? Are you having trouble growing or expanding your business? Do you feel stuck in the muck with no capital to proceed? If you have assets, you may be able to secure loans to get your business moving again.
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