When looking to raise finance, businesses have two options: equity financing and debt financing. The former can result in loss of business ownership and add controlling interests in the business, which can lead to reduced profits and increases the risk of conflicts arising.
Therefore, most businesses opt for debt financing, which requires making interest payments during the term of the loan and doesn’t have any impact on ownership. To be more specific, businesses favor asset-backed loans these days.
Let’s find out more!
What Is Asset-Based Lending?
Asset-based lending is a type of financial arrangement that allows a business to raise quick finance using its liquid assets—which usually include accounts receivables, inventory, or machinery and equipment as collateral.
Here are three key reasons why you should choose asset-backed loans to obtain financing for your business:
Why Choose an Asset-Backed Loan?
It doesn’t require good business credit history
Unlike traditional lenders, who are particular about financial projections and credit history, asset-based lenders aren’t concerned about the business’s credit rating and financial performance, as it’s a secure form of financing.
Hence, asset-backed loans are great for entrepreneurs who don’t have established business credit to secure a loan using conventional financing methods.
Meet growing business needs
Businesses that want to grow—either by entering new markets or introducing new product lines—stand to benefit immensely from asset-based loans. That applies to both small businesses that are looking for faster growth, as well as larger companies that are looking to maintain their competitive edge.
Moreover, an asset-based loan can help in the effective management of cash flow and working capital, ensuring that money isn’t a bottleneck that’s restricting the business from achieving its full potential.
Utilize the company’s assets
Asset-backed loans allow businesses to utilize their existing liquid assets, such as accounts receivables, inventory, and equipment to secure an easier, cheaper option for financing, without selling them or providing personal guarantees—often the case with traditional lending.
This means you can use the investments that you’ve already made to fund your business assets and get the maximum value out of your assets.
Global Capital Partners Fund LLC is among the top private lending firms in NY that provide asset-backed lending to clients at competitive rates.
The company also offers a wide range of commercial real estate financing solutions, including bridge financing, mezzanine financing, and more. For more details, call at +1-800-514-7350 today!