When Asset-Based Lending is The Best Option

Not all small business loans are created equal, and asset-based loans are no exception. Although Fast and Easy Funds provides small businesses with a variety of loan options, the asset-based loan has been popular for various reasons.

Funding options for small businesses are as diverse as the American small business landscape itself. For the purposes of time, let’s focus on the asset-based loan as an option for small businesses.

What is Asset-Based Lending?

As the name suggests, asset-based loans are secured through inventory or other forms of collateral; like the name suggests – your assets. That means that the seizure of those assets is contingent upon repaying the loan in the contracted timely manner.

Though the definition may come off as frightening, all small business loans are awarded based on a promise of repayment and stipulations are applied to protect the lender. Therefore, a company using its existing assets to secure the loan will usually increase the likelihood of receiving a loan and the amount requested.

When Should a Business Consider an Asset-Based Loan?

Applying for a small business loan should be a necessity in some shape or form. The reasons to apply for a small business loan are usually split into two opposing categories: growth or stability.

  • Growth – An asset-based loan may be the injection a business needs to expand its work force, inventory or locations. This is the ideal option.
  • Stability – Sometimes a business needs a leg up to avoid harsh market climates, seasonal adjustments, or temporary financial loses.

Asset-based lending can be a great go-to option when cash flow is slow or unstable. Without asset-based loans, some businesses would not survive seasonal or market shifts.

Businesses that can strategically take advantage of the use of an asset-based loan may be able to sustain themselves throughout a slow financial period.

Qualifying for An Asset-Based Loan

Companies that are stable and have assets that can be financed, qualify for asset-based loans. The assets cannot be pledged to another small business lender, although there are exceptions if both lenders can agree on a positon for each asset.

If any other issues prevent the assets from being secured legally, then the loan will likely be denied. Be sure to understand your position and ownership of those assets.

Asset-based lending is often the only option that companies with bad credit have available to them. Lenders are aware of that fact, which is why it is easier to qualify for these types of loans.

How to Apply for An Asset-Based Loan

Businesses may apply for an asset-based loan at Fast and Easy Funds with no obligation or commitment. Though small business loans are popular, asset-based loans range between $500,000 – $35,000,000 with up to 65% advanced.

It’s always a good idea to have your business records in place when you apply for any small business loan. When it comes to asset-based lending, it’s important that the ownership of the equipment can be easily determined to expedite the process and determine if a loan will be awarded, and how much.

Fast and Easy Funds

Fast and Easy Funds works with businesses in all states of growth. What has set us apart from other small business lenders is the speed and efficiency in which we award business loans.

For more information, contact us today.