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Asset-Based Lending - Asset Finance
Are you thinking about taking out asset-based lending for your business? Read on for an explanation of what it is and why it could benefit your business.
What is asset-based lending?
The term asset-based loans may sound complex but it is really quite simple to understand. An ABL is simply a financial loan secured by assets or collateral. That means if you own something of high value, you can take out the equity using an asset-based loan. In particular, the assets that can secure this type of loan is inventory, equipment, property owned by the borrower or accounts receivable. Often asset-based lending is secured on a combination of these.
Often business loans are based on proof of cash flow, but if you have had an issue that has prevented cash flow but still need money then asset-based loans are ideal. Instead of basing the loan on cash flow that may have dried up through no fault of your own, it can be based on assets instead.
For example, a restaurant that has been closed for a few months because of fire damage from a business next door may need funds. Cash flow will have been limited, so the loan can be based on expensive equipment instead. In this scenario, the business gets to reopen quicker, start turning a profit and can pay back the loan.
Of course, there are many other reasons for taking out an ABL. The best way to find out if you would be eligible is to fill out a quick application for a speedy answer. Asset-based lending could be the solution to all your business finance problems, but you won’t know this until you take action.
Benefits of an asset-based loan
- Cash flow not necessary
- You do not need to show cash flow for asset-based lending. All you need is assets or collateral to secure the loan on.
- Can be used for many purposes
Asset finance is not limited to one purpose the way ordinary business loans can be. This means that no matter what the problem, whether it be your business having to close from damage, refurbishment or any other purpose, an ABL can be used.
Flexible amounts and repayment terms
Asset-based lending gives you the option to choose from varying amounts and lengths of repayment terms. When you are taking out one of these loans, go for a company that gives you up to 60 months to repay and will tailor your ABL and collateral it is based on to suit your needs.
Cash flow problems? Asset-based lending is ideal to get you back on your feet. If your cash flow stops for any reason it can be hard catching up again, so stop your business going bust with an asset-based loan. As this loan is secured on assets, not cash flow, it’s may be your best option for moving ahead.
Taking out Asset-Based Finance can be quite confusing, to ensure you have as much clarity as possible, we have compiled a handy FAQ guide below.
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Have Asset-Based Lending Questions?
If you are looking for a large loan, then asset-based lending may be right for you. These type of loans allow you to utilise more funds than your average business loan as it is secured on assets. As fewer people apply for these loans than personal loans because of the amounts, lending firms are more likely to tailor their product to your needs.
The amount of time you have to pay the loan back will obviously depend on how much you borrow, but with these types of loans lenders will be fairly flexible. You will generally have between 0 and 60 months to pay back an asset based loan, but you are best to fill out a quick application form to find out for definite.
The most obvious benefit of asset-based finance is that it can provide your company with a way to acquire new machinery and equipment that may not have been possible to afford if repayments were not spread out, meaning it is a manageable way to help your business grow and manage demand.
Asset-based lending couldn’t be simpler to apply for. All you need to do is fill out our 4-step online application form. Choose how much you want and how long you need to pay it back, enter your personal information and one of our trusted lenders will give you an answer. The sooner you do this, the sooner you can find out if your business can benefit from asset finance.