Whether you’re in need of a loan to fund a personal investment plan or are hunting ways to enhance your business’s investment portfolio, an asset based loan is your answer.
But before you dive into the application process with an asset based lender, it’s important to learn about the ins and outs of asset based lending. Although this type of loan is comparatively more secure and flexible than tradition loans, inadequate pre-planning can put you in trouble.
Borrowing an asset based loan from a bank or credit union is never easy. Even if you qualify, they start digging through your credit history and assets’ potential, and there’s always a chance of rejection until the deal is done. Hence, you should only rely on a reliable asset based lender in Indianapolis such as GCP Fund for all kinds of hard money borrowing needs.
Business Asset Collateral and Asset Based Lending in Indianapolis
Collateral credits and asset-based lending are a sort of business bankrolling that’s centered on the worth of a specific asset. ABLs only accept tangible assets as a collateral against the money lent. These collateral may include real estate property, machinery, or equipment with a depreciating life of one or more years.
Collateral loans are usually great for businesses that have enough tangible assets but lower liquidity to support their ABL. The extra money from the collaterals help them stay abreast of market competition, business performance, and capital growth.
A collateral is basically a security provided by a borrower against an asset based loan. It acts as an alternative to traditional, periodic monthly repayments in case you’re unable to pay. While the contextual definition of collaterals is quite wide, the lender decides the worth and value of a collateral before granting an asset based loan.
Typically, a real estate property such as your business office building, a warehouse, or a factory unit are considered highly valuable in terms of collateral.
A business collateral can also consist of heavy machinery or equipment or a storefront used as a selling point.
The Scope of Collateral Business Assets
As discussed, business real estate capital is often considered the best choice for a collateral against an asset based loan in Indianapolis. However, it’s important to note that there are some types of assets that don’t offer security for an ABL. These include unsecured assets, online loans, or cash.
Here are some other types of collateral besides real estate property and machinery that businesses can use against an asset based loan.
Business inventory can act as a collateral against an ABL. This is perfect for business that take out an asset based loan during spike seasons. For example, if your business signs a bulk purchase order, you can borrow an asset based loan to pay for it. Your lender will utilize the purchase order as a collateral against the money lent.
Credit Card Transactions
Many hard money lenders offer asset based loans against future credit card transactions. This is also known as merchant cash advance that allows business owners to borrow funds using a small credit percentage to make repayments.
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