The best way of securing the capital you need for business growth can be by using your business assets to secure funding. However, there is an inherent danger with this strategy, since it means you could lose your business assets if you’re forced to default on payments. Here are some things to keep in mind when you are considering using business assets as collateral for a loan.
Determine the actual value of your assets
When you are aware of the actual value of your business properties and assets, you’ll be in a much better position to consider which assets might be used as collateral. Don’t accept the valuation assigned by a lending institution on your assets, because that may not be an accurate reflection of their real worth.
Consider risk versus benefit
Whenever you’re thinking of offering business assets as collateral for a loan, you should carefully consider the benefits you would obtain by getting that loan, versus the risks incurred if you should lose the assets. To play it safe, you should try to use assets which are not business-critical, and which you could continue operating without.
Make sure you understand the loan terms
First of all, you need to be make sure that a lending institution will accept the kind of assets you’re offering as collateral, especially since some are very particular in this regard. If you and the lending institution agree on the type of assets which will be offered as collateral, you should then also be sure about conditions which would permit the lender to seize your assets in the event of a payment default.
Does your business need financing?
At OneClick Commercial Funding, we specialize in financing small businesses in need of capital to achieve their goals. Contact us at your convenience, to discuss some options for getting the funding you need to implement your business plans, so as to achieve growth and greater success.