5 Top Advantages of Asset Based Lending
Many companies frequently need to take out loans in order to stay afloat or to purchase essential supplies. Small businesses are more likely to require loans, and they face greater disadvantages in trying to get them. If your company has faced problems in the past trying to get the money you need, then you should seriously look into asset based lending for the variety of benefits it offers.
The first advantage is that asset based loans are generally much easier to obtain than other types. Generally, all you need are assets that can be leveraged, and you are good to go. Anything can be used as collateral, including real estate or business equipment. As long as you have some of those items, you can be approved.
Another great benefit is that getting approved for these loans takes far less time than other forms of lending. Other loans can take months for you to get approved, which is not good if you need money right now. For asset based lending, it is not unusual for a business to be approved within two weeks.
Improved liquidity is a big reason why small business owners seek out these loans. Acquiring loans based on the assets your business owns means that you get a predictable cash flow. This is crucial for companies that are currently experiencing tight cash flows or are growing rapidly and need a steady stream of money coming in.
Speaking of advantage to companies that are growing at a rapid pace, these loans provide another perk because fewer restrictions are placed on them. As long as you are seeking a loan for a business purpose, you can get more money from this lending quickly. If you acquire more assets that can be leveraged, then you can get additional funds without having to go through the rigmarole of the underwriting process again.
The last benefit to be aware of is that this type of lending is ideal for businesses that are looking to grow their credit history. If your business is just starting out, then you may not qualify for other types of loans. This lending can be used as a stepping stone so that you can build your reputation with a lender. This means in the future, there are other loans you are acquire once your company has gotten bigger.
When your company needs financing, all your options need to be weighed. Do not overlook asset based lending as it has proven to be a huge benefit to numerous companies.