Understanding Asset-Based Loans for Local Businesses
Asset-based loans make small business financing seem like an attainable feat for the business owner who’s spent the last few years building their empire. Other alternatives are available like invoice factoring whereby invoices can be purchased for cash flow purposes. However, asset-based lending uses invoices, equipment, inventory and real estate as loan collateral. These alternative lending options are available for those that don’t qualify for traditional financing from a bank. offers is asset-based lending. Find out what this lending option is and if you qualify, today!
What Are Asset-Based Loans?
Your assets are valuable to your business, and that’s where the beauty of asset-based lending comes into play. This financing process works by owners putting their accounts receivable, balance sheets, equipment and inventories up for collateral in order to gain advance funds.
Lenders who participate in asset-based lending base advances on a percentage of the asset’s value. For AR, this advance can be up to 90 percent of the eligible invoices, and around 50 percent for inventory.
Is There Any Risk Involved?
As with all lending opportunities, there is risk involved. If your business fails to repay the loan, you could lose your assets pledged as collateral. We’re not trying to bring you down from the idea, but this is simply a risk that every business owner should consider before putting their assets up for financing.
Why Are Asset-Based Loans Great for Small Business?
Now that the red tape has been crossed, we can get into the nitty-gritty of why a small business should think about asset-based lending to get themselves ahead in their market.
It’s Fast!
While the standard bank loan can take weeks to hit your business accounts, asset-based lending is quick! Business owners can apply for financing and have cash in hand within the week!
No Credit Scores to Worry About
Many lenders focus on a business owner’s credit score when making a lending decision. We get it! In many lending situations, a credit score matters. However, many new business services may not have the creditworthiness needed for substantial loans that lead to growth. That’s what makes asset-based lending a great option since it’s main focus is the worth of your assets, not your FICO score.
about signing a personal guarantee! Your home and personal property are left out of the equation since the only collateral we’d focus on is based on your business.
Expansion Opportunities
As long as you’re a business that’s been in operation for at least one year, you can apply for asset-based lending and expand your business to great heights. Finding the right expansion opportunities can be difficult for businesses, but lending companies that offer this service help turn expansion from a dream into a reality.
Get the Funding Your Business Needs from Goodman Capital Finance
If asset-based lending seems like the most viable financing opportunity for your business, Goodman Capital Finance is ready to help! We are a financing company that has experience with businesses of all sizes and industries. Contact us today to find out more about how to get financed!
