Managing the working capital and cash flow needs of your business can be hard at times. Seasonal demand, change in supply chain operations, market factors, cost of materials, pending invoices – There are several factors that may influence the existing resources. For many small businesses, traditional bank loans are not an option. That’s precisely where something like asset-based lending can be handy. Lenders like Accord USA asset based lending have been working with small businesses for the longest time, offering them easy and flexible loans, by relying on balance sheet assets. Here’s an overview on why companies are keen on using asset-based financing.
Leverage your balance sheet assets
One of the key reasons why asset-based loans make sense is flexibility. With asset-based financing, you are basically using existing assets of the balance sheet – accounts receivables, equipment, machinery, inventory and real estate – to get an advance. You can procure the whole of asset value, or a part of it, through the loan, and it depends on the lender and risks involved. For instance, some lenders may be keen on working with appraisers to know what your company’s assets are worth, and based on the evaluations, the terms & conditions of the asset-based loan are decided.
Things to know
When it comes to asset-based financing, interest rates may vary between lenders. It is also important to understand that this is a secured loan, which means if you do not repay the loan on time, you may have to lose your assets. While asset-based loans are great for small businesses, having a clear plan for repayment is also critical. The term of the loan may vary anywhere between three months to eighteen months, although in some cases, lenders may have more flexible options.
Getting approved is easy
A stellar credit record is not compulsory to get an asset-based loan, although some lenders may be interested in the performance of your business. Secondly, it is best to consider the terms & conditions of the loan in depth. Getting approval for the loan is also easy, and it doesn’t take more than a few days to get money from the lender.
Overall, asset-based financing is a flexible and scalable solution for small businesses, which is evident from the current trend of availing these loans. Just ensure that your company is capable of repaying the money as agreed, or else, the financial burden will only pile up over a period of time.