One of the most powerful financial vehicle to which the small business has access is asset-based lending; when money becomes tight – which it often does for entrepreneurs – then the right lender can help you with a loan that’s predicated on your pre-existing company assets. Basically, the in-office equipment, any manufacturing equipment, automobiles used for transport, etc, can be accounted for towards securing a viable loan.
In fact, asset-based lending is capable of covering even more than the above listed properties. Look for a lender that also takes accounts receivables and similar; it will help you secure a larger-sized loan with which to rectify high-interest debt or simply pay bills that are due shortly.
Primary Differences Between Asset-Based Loans and Others
The question now is, why would you opt for asset-based lending over any other type of loan? The primary reason is to make a distinction between business debts and personal debts. For example, with non-recourse loans, if you default, then the lending company can not only come after the collateral that you put up, but if they still do not recoup the balance, they can infiltrate your personal assets. The enticement to such a loan is the very low interest rate, which reduces their risk.
With asset-based lending, you do not need to dip into your personal accounts. The ability to only employ business properties is imperative for separating your personal life from your company.
Entrepreneurs Should Consider This Before Any Other Loan
Unlike the corporation or large-cap company, entrepreneurs are always running up against financial caps. Another of the many advantages of an asset-based loan is the relative lack of emphasis on credit rating. Because your business properties are being put up as collateral, the importance of creditworthiness (as denoted by a credit score) is minimized. Lastly, by not having to put up actual funds to guarantee a business loan, you now have that cash on hand to use towards other important business operations.
To learn more about asset-based lending opportunities, as well as general business financing options, contact the experts at OneClick Commercial Funding today.
