The Advantages of Asset Based Lending for Inventory and Accounts Receivable

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Asset based lending for inventory and accounts receivable is one of the best business solutions today although admittedly, it hasn’t quite gained the popularity it deserves. Securing capital is always among the biggest challenges in running a business, and this is true even from the onset. To establish a business and bring an idea into fruition, you need enough capital. But to keep it running is another story altogether, and you will need working capital to make it even remotely possible. The reality is that some businesses have a problem finding firms that will lend them the money needed to cover incidental and seasonal expenses, especially when you need to expand. Fortunately, you can turn to asset-based lending for additional funding.

 

Understanding Asset-based Lending

Some companies think that banks are the only ones that they can turn to when working capital is scarce, but nothing can be farther from the truth. Traditional funding sources like banks tend to be very limiting and this is why asset-based lending is so much better as an option.

 

What happens with asset-based lending is basically as a company, you use your current assets as collateral when you apply for a loan. For instance, a lender could look at your inventory and offer you a financing option based on how much your asset is worth. Another thing lenders can take a look at is your accounts receivable; ‘buying’ it from you by converting it into cash and actually taking care of collecting it from your customers when it’s due.

 

Maximizing Assets for Liquidity

What asset based lending for inventory and accounts receivable can give you is the ability to maximize your assets for liquidity. Having assets like inventory and accounts receivable is important to any business, but if you need to be as liquid as possible, these assets won’t count for much. This is because of the fact that they’re just sitting there with value that you can’t convert to cash right away. Accounts receivable for instance is an asset, but you won’t get to ‘spend’ it in the same way you spend cash, until your clients pay you, which will depend on your agreement. That could be next week, next month, or next year. If you need liquidity to spend for other important things now, then turning to asset-based lending is the perfect solution.

 

Proving Credit-Worthiness

Another advantage that you can get with asset based lending for inventory and accounts receivable as opposed to traditional financing options is that you don’t have to work so hard to prove your credit-worthiness. In fact, for options like accounts receivable financing, it’s the credit-worthiness and credibility of your customers that proves to be more important, because in the end, the lender will collect from them, not from you.

 

If you are interested in asset-based lending, please check out www.neebocapital.com. Neebo Capital has financial solutions that will help your business get the funding it needs for day to day operations as well as aid in its growth.

The Advantages of Asset Based Lending for Inventory and Accounts Receivable

 

 

Asset based lending for inventory and accounts receivable is one of the best business solutions today although admittedly, it hasn’t quite gained the popularity it deserves. Securing capital is always among the biggest challenges in running a business, and this is true even from the onset. To establish a business and bring an idea into fruition, you need enough capital. But to keep it running is another story altogether, and you will need working capital to make it even remotely possible. The reality is that some businesses have a problem finding firms that will lend them the money needed to cover incidental and seasonal expenses, especially when you need to expand. Fortunately, you can turn to asset-based lending for additional funding.

 

Understanding Asset-based Lending

 

Some companies think that banks are the only ones that they can turn to when working capital is scarce, but nothing can be farther from the truth. Traditional funding sources like banks tend to be very limiting and this is why asset-based lending is so much better as an option.

 

What happens with asset-based lending is basically as a company, you use your current assets as collateral when you apply for a loan. For instance, a lender could look at your inventory and offer you a financing option based on how much your asset is worth. Another thing lenders can take a look at is your accounts receivable; ‘buying’ it from you by converting it into cash and actually taking care of collecting it from your customers when it’s due.

 

Maximizing Assets for Liquidity

 

What asset based lending for inventory and accounts receivable can give you is the ability to maximize your assets for liquidity. Having assets like inventory and accounts receivable is important to any business, but if you need to be as liquid as possible, these assets won’t count for much. This is because of the fact that they’re just sitting there with value that you can’t convert to cash right away. Accounts receivable for instance is an asset, but you won’t get to ‘spend’ it in the same way you spend cash, until your clients pay you, which will depend on your agreement. That could be next week, next month, or next year. If you need liquidity to spend for other important things now, then turning to asset-based lending is the perfect solution.

 

Proving Credit-Worthiness

 

Another advantage that you can get with asset based lending for inventory and accounts receivable as opposed to traditional financing options is that you don’t have to work so hard to prove your credit-worthiness. In fact, for options like accounts receivable financing, it’s the credit-worthiness and credibility of your customers that proves to be more important, because in the end, the lender will collect from them, not from you.

 

If you are interested in asset-based lending, please check out www.neebocapital.com. Neebo Capital has financial solutions that will help your business get the funding it needs for day to day operations as well as aid in its growth.

Published by

Chris Lanchech

Hi everyone, my name is Chris and I am a junior analyst at Neebo Capital and an inspiring blogger. We enjoy speaking with business owners and entrepreneurs who come to Neebo Capital looking for cash flow solutions. Give us a call toll free at 1-888-382-3766 or Visit us online at www.neebocapital.com

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