What Is Asset-Based Lending?

What is an asset-based loan?Traditional financing backed by a bank is only one option to meet your business’s lending needs. There’s another way to get the financing you need — It’s called asset-based lending.

Asset-based lending is a means of securing a business loan or line of credit by using the assets of your business as collateral.

These assets can include:

  • Equipment
  • Accounts receivables (must be proven)
  • Inventory (needs a history of turnover)
  • Any other balance sheet assets your business may have

While these assets do provide collateral, they aren’t nearly as secure for the lender as cash or real estate. As a result, asset-based financing typically has interest rates that fall between those of cash or real estate secured loans and those of unsecured, high-risk loans (for which no collateral is offered).

Asset-based loans are often helpful for seasonal businesses, whose cash flow fluctuates, as well as for companies who have leveraged balance sheets due to industry cycles or a proposed acquisition.

Detailed and accurate record-keeping — as well as a history of stable income (even if it ebbs and flows) — is key to painting your business in the best possible light to secure an asset-based loan.

At Spectrum Capital, our Commercial Finance Consultants specialize in securing and structuring asset-based loans for businesses of all sizes and multiple industries.

Call us at 262-456-7613 or email our team of experts today to find out what financing solutions we can provide to help you meet your lending needs.

And be sure to keep yourself up to speed on the latest news in the world of finance by subscribing to our blog: Spectrum News.

 


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