Asset-based lending is a perfect option for entities that have demands beyond the range of what conventional banks would provide.
Whether it’s more collateral, stronger leverages or more flexibility, an asset-based loan can meet the needs of each particular business. Asset-based lending offers a line of credit based on the eligibility of the company such as:
Asset-based lending provides greater flexibility than other ways of borrowing or financing and is a swift and cost-effective way of obtaining capital.
Unlike some forms of structured finance solutions, with asset-based lending, you do not have to give up equity in your business.
This type of lending, gives the business the flexibility it needs to:
- Expand
- Recapitalize
- Take advantage of discounts from vendors
- Buy-out shareholders or even finance payrolls
It may increase or decrease on the basis of your current company size and needs, and you will have regular and weekly access to your credit line when you request it.
Pros of Asset based lending:
- Relaxed requirements to qualify: since the loans are protected with equity and there is less exposure to the lender, the qualification requirements are often less stringent than those on an unsecured loan.
- No restrictions on the use of funds: in general, there are no limitations on how the funds from the asset-based loans are used, apart from being used for business purposes.
- Lower cost of capital: since the funding is backed with collateral, the interest rates paid would be cheaper than equivalent unsecured loans, giving the borrower a cheaper average cost of capital.