You’ve worked hard to get this far with your business, from renting out office space and hiring employees to narrowing down your market and getting your name out there. However, even if you are growing and successful, you may not always have the working capital you need to cover your expenses and grow your business from day to day – especially when you have a lot tied up in your accounts receivable.

While traditional loans work for some businesses, asset-based loans may be a better solution for companies that need financial flexibility.  Some companies do not qualify for a bank loan or have a unique situation that does not work well with the bank financing be offered.  They just need an influx of cash to keep everyday operations running.

Before diving into a “cash advance” or “fast cash” high-interest loan or invasive factoring deal, it is important to understand all your options, so you can make the most informed decision for your business.

What is an asset-based loan?

An asset-based loan is a type of commercial finance that uses accounts receivable, inventory, or equipment as collateral for a working capital line of credit.

How is a working capital line of credit different than a bank loan?

As opposed to a bank loan that relies on your credit and past borrowing history, asset-based financing works by using your collateral as the foundation for a loan.

Bank loans are based on cash flow and other formulas which will help determine the likelihood of whether or not the bank believes you will be able to pay back the amount they loaned the company.  In addition, they will also look at your credit history and your ability to pay bills and manage your finances in the past. Asset-based lending looks at the present and future to give you a loan based on the funds we know are coming your way from your customers but currently tied up in accounts receivable.

This makes it an excellent financing solution for a company that has had past financial struggles or is growing quickly and has a voracious need for additional financing. Even if you have less-than-perfect finances on paper, we can see if you are moving in the right direction and help you – even when the bank will not.

What types of companies can benefit from an asset-based loan?

Asset-based loans are great for companies who need to balance their cash flow and need an influx of cash to pay regular business expenses such as payroll.

Because asset-based lending works off of assets you already have, these types of loans are also great for businesses that have seasonality and present drastically different high and low revenue generating periods.  Asset-based lending provides an influx of cash to help balance out the time period between starting the service/project and receiving payment on your accounts.

Asset-based loans are revolving lines of credit so they continue to have an ongoing repayment process as opposed to taking out long term debt which requires monthly payments, which can be difficult to handle in an off or down month.

Discover More About Asset-Based Loans from Allied Financial

To learn more about how an asset-based loan can help transform your business, contact us at 770-730-0101 or fill out our online contact form.