Are you searching for ways to increase your business cash flow? If so, you may want to consider asset-based lending. This is the process of leveraging your business’s assets to acquire working capital. When you use your equipment, real estate, accounts receivable, or inventory as collateral, you can easily secure a loan that will likely have a duration of 12 months or more.
The money you receive can be used for an array of purposes. For example, you can take advantage of business opportunities that have recently come to light or to expand the business. An alternative lender is much more likely to approve a loan for your business when you can back it with hard assets, such as the ones mentioned above.
Reasons to Use Asset-Based Lending
For companies that rely on seasonal sales, asset-based lending is a smart option It’s also a flexible type of financing, which most businesses can use. This lending will provide you with faster access to the capital needed since approvals can be acquired more rapidly than through more traditional lending institutions. If a conventional bank can’t offer you the operating capital that you need fast enough, for example, to improve your cash flow, then choosing asset-based lending may be the answer for you.
How to Qualify for Asset-Based Lending
If you are thinking about applying for asset-based lending, you need a good credit rating and you should have a solid financial report with strong internal controls. Your company should also have a good credit history and a good record in the industry. It’s beneficial to have updated and accurate financial statements, too, with aged summaries of your accounts payable and accounts receivable. The last thing you need is valuable assets that would be considered negotiable in an open market, and that offer value to people besides those in the company.
Would Increased Cash Flow Help Your Business?
If you have a business that could benefit from added cash flow, considering asset-based lending is a smart option. Just remember, not all lenders are created equal, which means you have to put time and effort into finding the right one for your needs.
The fact is, there are few businesses that would not benefit from additional cash flow. Make sure to keep this in mind to ensure the proper lending option is chosen and that it is able to provide the desired benefits, regardless of what they are.