Are you looking for ways to generate working capital for your company to continue its operation during COVID-19? Consider using asset-based lending. In 2018, U.S. lenders made nearly $465 billion ABL commitments.
Not only can it help you secure the financing you need, but you can also access a revolving line of credit. Assets are used as collateral to obtain funding. They can include property, plant, and equipment (PP&E), inventory, and accounts receivables. Here are some advantages of asset-based lending (ABL).
Easier to Access
While maintaining a good credit score is very important, it can take a long time and pose several challenges. If you’re struggling to revert from bad credit history, asset-based lending might be able to help you secure funding for your commercial property.
ABL is dependent on your assets rather than your profile. This makes the process much easier than qualifying for a line of credit or business loan. Since you can obtain financing quickly, it can help you capitalize on a profitable business opportunity or meet an important deadline.
You can enjoy greater liquidity from a stable cash position by using asset-based lending. Since the assets are available when you need a working capital loan, it can also help you bridge a financial gap in your business cycle.
The more your organization expands, its financial needs will develop simultaneously, and liquidity will become more relevant. Even if your economic condition isn’t sound, you’ll have access to the loan.
Lower Interest Rates
Other unsecured loans, like factoring, tend to have higher interest rates compared to asset-based lending. ABL has lower interest rates because the lender’s money is secure with the collateral in place.
It can create a mutually beneficial relationship for you and your lender by charging you less interest and giving them security if you can’t repay the loan.
Asset-based lending is more accommodating than conventional bank loans. While the loan should be used for a business purpose, the loan is bound to your collateral or accounts receivables’ value.
If your sales grow, the financing line might increase, which can be approved without delay. You don’t need to go through the entire underwriting process, which can help you quickly expand when you need extra funding. It’s also easier to manage and adhere to asset-based loans as fewer covenants exist compared to traditional lines of credit.
Ready to meet your financial goals that are outside the realm of a traditional bank? GCP Fund offers private lending, bridge loans, commercial financing for development, multi-family properties finance, mezzanine loans, and much more, with a reputation for quick closings and dependable financing! Consult our expert commercial mortgage lenders today to achieve financial stability for your business!