2013 Asset Based Lending | Inventory Finance + Accounts Receivable Finance

When you a combine a high advance rate on A/R (85%-90%) with an aggressive advance rate on inventory (65%) the results are the ideal line of credit for maximizing our client’s access to growth capital.
When you a combine a high advance rate on A/R (85%-90%) with an aggressive advance rate on inventory (65%) the results are the ideal line of credit for maximizing our client’s access to growth capital.

65% inventory advances for our clients along with a high advance rate on A/R (85%-90%)


Let’s delve into the basics of asset-based lending. Asset-based lenders, as the name suggests, make loans based on assets, usually inventory and accounts receivable. You are sticking the revenue that you are going to make in the future out there, and putting it at risk, to get some access to quick cash.


Asset-based lenders will give you their funds in correspondence with an agreed percentage amount of the value of the secured assets. Asset-based loans are sometimes called secured loans, because they are secured by collateral. The percentage of the value is usually between 70-80% of the receivables that are eligible and 50% of the finished inventory that is eligible.


How do you get asset-based loans though? The number of financial service businesses that give asset-backed loans is significant. There are a number of banks and independent financial businesses that offer it.


For a little business, the solution is to locate the lending companies that are fine with giving credit lines to smaller companies. This can be a little difficult, and it could involve a lot of questioning on your part. Asset-based lenders usually want to make bigger loans because the price of upkeep of an asset-based loan is going to be the same – whether the loan is small or big.


Still, getting any kind of asset-based loan ought to be pretty simple if your business has sound financial statements, great reporting programs, frequently transacted inventory, and, furthermore, clients who have a great history of paying bills on time.


To get an asset-based loan, you are going to need to have a lot of financial information that is accurate and detailed. The most important thing is to get the lender feeling good with a real case for long-term viability, as well as some financial statements that are professionally-prepared that will show proof that you have a great grip on the business.


What is the advantage of an asset-based loan? Asset-based loans can be a vital capital source for companies that are growing really quickly. Companies that are leveraged highly, in the middle of a turnaround, or have too little capital, can all benefit from asset-based loans. Sometimes, a company just needs a cash infusion to handle a financial problem, or something that would cause it to stall out and quit.


What is the disadvantage of an asset-based loan? The possibilities of getting a line of credit are just as good as the receivables quality that your company has. Commercial lenders will at your clients to pick the ones that pay in under two months or have a great credit rating. They may not look as sales to small businesses or individuals as receivables that are eligible.


Asset-based loans can also cost more than classic loans. Interest rates will fluctuate widely, and banks will often include further due diligence and “audit” fees to the final cost of the loan. Bigger banks may also necessitate that you make a personal promise, as well as the assumption of more banking relationships.


Thinking about asset-based loans for your company? Click Here


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