What are Asset Based Loans and Are They a Good Fit for Your Business?

While the global economy has pretty much recovered from the ill-effects of the Great Recession that followed the Lehmann Bankruptcy almost a decade ago, banks and other traditional lenders continue to employ strict criteria for evaluating loan applications.

Business owners, as such, face a daunting task meeting these requirements and are being forced to look elsewhere for financing.

One solution business owners have increasingly been turning to over the last few years to overcome their funding dilemmas is asset-based lending.

Asset-based lending, as the name indicates, is lending based on assets. You use your fixed and current business assets as collateral to secure a loan for your business needs.

You can use an asset-based loan for:

  • Paying your daily business expenses
  • Growing and expanding your business operations
  • Restructuring
  • Purchasing equipment, etc.

These loans are typically offered by commercial lenders and come with many benefits, including but not limited to:

  • Easier qualification criteria
  • Faster processing times
  • Flexible terms of usage

Of course, like any other loan product, asset-based loans also come with a few drawbacks, most notably higher interest rates, and may not always be the right fit for every business.

To determine whether your small business is a good candidate for benefiting from an asset-based loan, consider the following:

  •  The industry you operate in – Businesses operating in industries with a capital intensive nature tend to be great fits for asset-based loans.
  •  The state of your cash flow – Businesses applying for an asset-based loan should have a stable cash flow.
  •  The profile of assets you plan to use as collateral – The assets should be marketable.

What does the asset-based loan approval process look like?

Most commercial lenders today allow you to make a loan application online. This involves filling out a detailed form. After you submit the form, the lender assesses your loan application against their criteria. If your application gets approved, the lender then proceeds with the underwriting process, before sanctioning the loan to you. During the underwriting process, the lender may conduct appraisals on any asset that they may deem necessary for the examination.

Interested in an asset-based loan? Contact GCP Fund today!

About GCP Fund

GCP Fund is a leading national commercial lender serving in Virginia in the cities of Virginia BeachNorfolk, and Arlington. The company provides different loan solutions to businesses and real estate investors for their various capital needs. For more details, call 1-800-514-7350 or email at contact@gcpfund.com.

Categories: Asset Based Lending

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