Over the past few years, asset-based lending has become a very popular tool for businesses and investors who need quick financing solutions, mainly due to the fast processing times, less stringent requirements, and flexible terms.
READ: Asset-based Lending
Asset-based lending a secured form of financing that allows raising finance by using business assets as collateral. It came into the spotlight after the credit crunch and became a sought after financing option in the market.
There’s no surprise that the demand for asset-based lending is expected to rise in 2020 and beyond. Let’s talk about what makes asset-based lending a great short-term financing option:
Rising Demand For Asset-Based Loans
There are many factors that contribute to the rising demand of asset-based loans. For starters, traditional loans have become more difficult to secure, especially for small businesses with no history of pristine financial condition or stellar credit score.
Furthermore, conventional loans come with several restrictions and long processing times which often last several months. Asset-based loans, on the other hand, are more accessible, easier to secure, and can be obtained in a matter of days.
Moreover, asset-based lenders don’t put strict conditions on businesses and offer flexible terms. Businesses can leverage their existing assets like inventory, account receivables, and property to raise the higher amount of financing.
Not limited to SMEs
Contrary to popular belief, ABL lending isn’t a financial tool for small and medium companies. Even large corporations find it an attractive and well-structured source of finance, as evident by the more demand for asset-backed loans at the higher end of the market.
Asset-based loans are also a favorable option compared to invoice factoring lines for many businesses as the latter is an expensive arrangement that takes away a significant chunk of the total invoice value.
It’s important to understand that asset-based lenders themselves offer a great structure to companies looking to expand into new markets to capitalize on business opportunities or simply manage their working capital effectively.
Asset-based lending has been around for a long-time and has always been a top source of funding. Due to the added difficulties and problems associated with other sources of financing, it continues to become a more prominent choice and the momentum is likely to carry through 2020 and beyond, even when the credit is easier to source.
About Global Capital Partners Fund
Global Capital Partners Fund is a leading private lending firm that offers hard money loans in Provo UT to help commercial real estate investors raise money to take advantage of lucrative deals available in the market. The company offers clients a variety of financing solutions, including asset-based lending, bridge financing, and more.