Asset Based Lending: An Alternative To Traditional Cost
It is essential for all business to have access to lines of credit. These act as supplemental sources of funding for purchases and regular expenses. However, for new and small business owners, it can often be challenging to get access to unsecured lines of credit through traditional sources because they either do not have a strong financial history, or their business credit ratings are not high enough. Fortunately, asset based lending offer a means for businesses to access a line of credit, without having to go through conventional channels or suffering through a chain of rejections.
What Is Asset Based Lending?
Asset based lending is a revolving line of credit based on the value of things owned by a business. For example, Asset based lending can be structured around the value of property, equipment, and even receivables. This line of credit can be drawn upon at any time, and as the business grows and the value of receivables increases, the maximum limit on the line of credit will also increase.
Asset Based Lending Is Not A Loan
Asset based lending does not put any debt on the balance sheets, which sets this form of financing far apart from traditional bank loans. Additionally, the line of credit is always accessible, which means business owners can draw from it as needed, rather than having to take it all in one lump sum. This gives businesses more flexibility than traditional loans.
How Asset Based Lending Differs From Traditional Credit
For most new and small businesses, the only credit option is to get locked into a secured credit card agreement, which has low spending limits, and is directly tied to the amount of money in the business bank account. If entrepreneurs manage to get access to unsecured credit through a bank, the spending limit is not only low, the but the interest on payments can be prohibitively high. Asset based lending is dependent upon the value of property, equipment, and receivables, which is typically higher than the spending limit of both secured and introductory business credit cards.
Financing That Grows With Your Businesses
Asset based lending is one of the few funding solutions that actually grows with your business. As your business gets new equipment, expands to larger facilities, or experiences a growth in sales, the spending limit on the line of credit will also increase. Many entrepreneurs keep asset based lending handy for the duration, because it is reliable and much more economical than using conventional methods.
If you would like to learn more about asset based lending, or if you would like to see what other financing options are available for your business, contact CounselPro Lending at 1-888-292-3322 today, and speak with our team of financial experts.