Why Businesses Prefer Asset Based Loans

The first rule of establishing and running a business is ensuring that you have sufficient working capital to keep the business operations afloat. However, many companies these days face extraordinary challenges to remain successful and competitive in this ever-changing economy.

Thanks to asset-based lending, companies can acquire fast cash. Asset-based lending involves loans received in exchange for a pledged asset. Here’s how businesses can benefit from asset-based financing.

Enhanced Liquidity

One of the best financing options for most businesses is asset-based lending, especially if they want to improve their enterprise’s liquidity. It’s a flexible loan that companies can resort to when trying to achieve instant financial stability. Once approved, these loans generate a predictable cash flow for a business, making organizational tasks and company operations easier.

In other words, businesses with tight cash flow no longer have to compromise their services and can get an excellent opportunity to expand when they receive asset-based loans. Inconsistent revenues are not massive trouble for businesses anymore, thanks to these loans.

a person counting money

Excellent for Seasonal Funding Needs

Asset-based lending involves unique and dependable loans, all relying on a borrower’s pre-existing assets. As a result, businesses and manufacturers can significantly benefit from these loans when undergoing seasonal changes with drastically varying revenue generation.

Many businesses struggle to continue operations during the periods between starting a project or manufacturing foods and receiving complete customer payments. Asset-based loans play an excellent role in providing cash influx to balance out these differences and seasonal transitions.

Short-Term Contracts

Most conventional lines of credit or financing options require one big contract and a comprehensive application process to provide businesses with commercial loans. Many companies then require additional funding that most lenders can’t accommodate, increasing the need to wait for at least two months for loan approval.

On the other hand, asset-based loans have short-term contracts that provide businesses with the exact loan amount that matches their collateral’s overall value. As a result, a borrower doesn’t have to pay additional fees to increase their credit line.

people exchanging money

Looking for an asset-based lender in Grand Rapids, MI? Let the Global Capital Partners Fund experts help you acquire easy asset-based loans to grow your business with immediate working capital. They’re a leading hard money lending company offering asset-based financing to assist your business with situations like mergers, recapitalization, seasonal sales assistance, and more. Contact them to learn more today!




Categories: Asset Based Lending

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