Asset-based lending has grown in popularity, often adopted by businesses that require working capital to operate and grow. In this article, we’ll explore the ins and outs of asset-based loans so you can determine if this type of financing is the right fit for your business’s needs.
What are Asset-Based Loans?
Asset-based loan (ABL) is a financing process that involves the company’s real estate assets to obtain the loan. For the most part, the company’s tangible real estate assets and property act as the collateral and are used to help you increase your cash flow in the short term.
Who Uses Asset-Based Loans?
Companies typically use asset-based loans when they require working capital to keep their regular business activities running. The company opts to use its own hard assets to get financial assistance from lenders by keeping them as collateral.
What Financial Documents Are Required To Secure This Loan?
Before applying for the loan, check the following documents for completeness and accuracy.
- Banking Statements: The lender will request to see a minimum of four months’ worth of banking statements for an asset loan.
- Balance Sheet: Your balance sheet will determine whether your business is eligible for asset-based lending. It offers lenders a direct look into your assets.
- Sales Forecast: Lenders are more concerned with the future success of your business instead of its history. If the sales forecast tracks a growth trajectory, it might tip the scales in your favor.
While most financial institutions require these documents, NYC-based commercial financing company, Global Capital Partners Fund, waives off this requirement. Without having to submit any of these financial documents, you can obtain an asset based loan through them with ease.
What Are the Benefits?
There are several benefits of asset-based loans that make this type of borrowing an excellent funding solution for many businesses.
1. Easily Obtainable
Qualifying for an ABL is easier compared to other means of boosting your cash flow. This is primarily because the process isn’t as extensive as conventional loans, with the latter requiring considerable documentation. Conversely, ABLs usually involve the consideration of only two factors: the value of the collateral and the company’s financial position.
2. Financial Stability
These loans can bolster a company’s finances while it goes through dire economic times and helps restore it to a stable financial state. The short-term financial stability is possible because asset-based loans are given within a short period to increase the company’s cash flow.
3. More Flexible
Unlike conventional loans that come with several strings attached, asset-based loans are flexible in terms of how the money can be spent. Usually, there are only a few restrictions, as long as the company uses the money for business purposes.
Need Asset-based Financing?
Global Capital Partners Fund is a leading commercial financing company in NYC. They assist businesses in financing all phases of real estate development. Whether it’s asset-based loans, construction loans, bridge financing, mezzanine financing,—they have it all covered. In addition, they don’t require any financial documents like your banking statements, balance sheet or sales forecast; it truly doesn’t get better than this!
For all your commercial real estate funding needs, speak to their expert consultants and get a quick quote now.