Advance rates up to 70% of inventory cost and 60% of equipment value. Credit lines ranging from $100,000 to $4,000,000.
What Are ABL Credit Lines?
ABL stands for asset-based lending. What is asset-based lending, you might ask? In the simplest sense, it is any type of lending secured by an asset. What that means is that if the loan is never repaid, then the asset is seized. That seems fair, right? A mortgage is one of the most common asset-backed loans.
But, Wait A Minute. What Is An ABL Credit Line?
In its simplest sense, an ABL credit line is a credit line secured by assets.
Most major banks offer some form of asset-based lending. Almost all major banks offer a number of asset-based solutions for a wide variety of highly advanced financing needs. Flexible asset-based lending solutions are essential to the expansion of business. Credit lines can range from $5,000 to more than $1 billion, and asset-based credit lines can be extensively higher than ordinary credit lines because hard assets provide collateral security for the line of credit. However, many small businesses are recipients of asset-based credit lines, even though their assets are less valuable than those of mid-range and multinational corporations.
What Are Some Of The Advantages Of Asset-Based Lending Solutions?
MEET SEASONAL CASH NEEDS: You may have a healthy business with a positive cash flow, but your business may be prone to slumps during certain seasons. An asset-based credit line can extend you credit to maintain and grow your business even during those slumps.
INCREASE WORKING CAPITAL: Whether it is your task to grow or expand your business, need to meet short-term cash flow needs, purchase finished goods or raw materials, cover work-in-process, or begin financing extended payment terms to overseas buyers, an asset-based credit line can get you the capital to do that.
MERGER & ACUISITION: Asset-based lending is frequently used as a smart way to get funding for new business acquisitions. Sometimes, a business has to buy out a partner or a competitor to get ahead. Businesses sometimes need to grow by going after mergers & acquisitions, and, sometimes, the only way that those kinds of big deals are possible is through an asset-based credit line.
GROWTH: Usually, as a business grows, so does its need for financing. Furthermore, as a company’s collateral increases, its assets further its ability to borrow more cash. A creative and experienced asset-based lender can put together a credit line that will scale with any kind of company.
TURNAROUNDS: Turnaround financing is usually pursued by businesses that are under-performing and not seeing all their potential for income. Asset-based lenders are familiar with this kind of situation, and asset-based financing is perfect for turnarounds since they are tremendously versastile.
These are just some of the things that an asset-based credit line can do for businesses. What can it do for your small business? Don’t be afraid to put your assets on the line if you believe it will help your business grow. Get a trusted financial advisor to take you through the process of procuring a credit line today.
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