It’s still extremely difficult to get approval for a traditional bank loan for most small businesses, and that means that other forms of funding must be considered. For many small businesses, the most convenient and viable form of financing might come from using hard assets they already own, as collateral to secure a business loan. Any small business which has hard assets of value on the open market might be just the right type to secure an asset-based loan.
Qualifications for an Asset-Based Loan
Having assets that can be used as collateral is not the only qualification necessary for securing an asset-based loan. Any small business which hopes to secure this type of loan should be safely beyond its startup phase and should have reached the point where it is considered a mid-size company. You will, of course, need assets that are marketable, you will need to have Accounts Receivable and lien-free equipment, you’ll need to have solid financial statements, and you must practice good invoice collection tactics.
How Asset-Based Loans Might Be Used
Companies that are eligible for asset-based loans will have a number of different ways that these loans might be used. First of all, cash flow can be improved so that any gaps can be smoothed over. You might use it as working capital to cover everyday expenses or to make major improvements or enhancements to your business. You might want to purchase more assets or invest some of the money for future returns. Some small business owners use an asset-based loan for restructuring, to purchase equipment, or even to carry out a leveraged buyout of a small business they want to absorb.
Is Your Small Business the Right Type for an Asset-Based Loan?
Contact us at Commercial Capital Finance to find out if your small business is the right type to secure an asset-based loan. This kind of loan can keep your business operating smoothly, or pay for new growth, or whatever other expenses need to be covered, so it can be a real value to you.