Fund Your Company — 3 Uses of Asset-Based Loans

Without enough funds, you can neither hire the right employees nor reach out to your target market. Every business activity needs money to get started—bar none.

You need money to advertise your business and spread the word. You need it to keep growing and explore new avenues. A business also needs funds to improvise and innovate as market conditions change.

While there are plenty of financing options, the one under discussion today is asset-based loans. Let’s take a look at some of their uses:

Contingencies

No matter what a company’s scale of operations, every business needs to have a contingency plan in order to get through unforeseen circumstances.

A contingency is any negative event that may cause losses. It could be a natural disaster, an unexpected negative bottom line, an economic recession, or fraudulent activity carried out by a stakeholder.

What makes these events tricky is that both their nature and scope are difficult to predict. Ideally, every business should have a disaster recovery plan that clarifies how to tackle such situations when they happen.

In times like these, banks and other financial institutions usually bail on you due to the uncertainty of the situation. On the other hand, asset-based loans will always be viable options, since asset-based lenders only require you to deposit some sort of collateral.

Even if the financial health of your company isn’t great, and its credit score is deteriorating, you might still be able to qualify.

Company restructuring

Company restructuring is important if you wish to avoid unnecessary losses and remain competitive.

Making any kind of changes in a business’s hierarchal structure requires money, however. Whether you’re hiring more employees, initiating a couple of new projects, or opening up new positions—you’ll probably need loans.

You also need loans if you’re getting new inventory or equipment onboard or relocating. In cases like these, conventional bank loans are not only pricey but are also difficult to pay back—given the tricky terms and conditions of bank loans.

Asset-based loans work great because they’re quicker to obtain. Since there are fewer regulations to adhere to, the loans are processed and approved quicker.

Seasonal financing

Certain industries are able to close more deals in specific seasons; their revenue relies on seasonal sales.

These sales are not just expected to off-set losses that take place off-season, but also cashflow steady all year-long. If your business is still far away from the busy season and you’re strapped for cash, you can always seek help from an asset-based loan to keep things going.

In off-season, you can use an asset-based loan to pay everyday utilities, generate and distribute payroll, and pay vendors. You can also use the cash to make off-season improvements and invest in repairs.

Most companies also spend this time to seize growth opportunities, repurchase stock, and venture into new markets. Once the busy season is back in full swing, you can pay back the loans immediately to keep your credit score up.

Now that you know the benefits of asset-based loans, head over to Global Capital Partners Fund LLC’s website. They offer several commercial real estate financing solutions, including asset-based lending and hard money loans.

Feel free to contact them via their website. You can also call them at +1-800-514-7350.

Categories: Finance

Leave A Reply

Your email address will not be published.