Unlocking Working Capital with Asset-Based Lending

Growing businesses these days are faced with a common problem. They spend more money than they make. This indicates weak cash flow. A study reports that 82% of businesses fail due to cash management problems. Asset-based lending is an efficient solution to these problems. Here’s how an asset-based lending service can help you unlock working capital.

Is Asset-Based Lending Suitable for Your Company?

Asset-based lending is ideal for growing companies that need working capital to operate or is asset-rich but facing disruptions with cash flow. This makes it optimal for retailers, manufacturers, wholesalers, and fast-moving consumer goods businesses.

Some of the assets your company can put up for collateral can include account receivables, inventory, machinery and equipment, and even intellectual property like trademarks.

Man driving a forklift

What is Your Company’s Cash Conversion Cycle Like?

The Cash Conversion Cycle (CCC) tells you the time it will take for your inventory purchases to turn into cash, indicating your cash flow. If it takes quite a bit of time, your cash flow is weak. But if your cash conversion process is quick, that means your company’s cash flow is doing great.

The Cash Conversion Cycle can be calculated using a simple formula. You simply add Days of Sales Outstanding (DSO) and Days of Inventory Outstanding (DIO), after which you subtract Days of Payables Outstanding (DPO). This gives you your company’s cash conversion cycle, which you can use to deduce the strength of its cash flow.

How Can Asset-Based Lending Benefit Your Company?

Asset-based lending provides option-rich financing, which helps your company unlock working capital. Since financing is based on your assets, the more you put up for collateral, the more capital you unlock.

This helps stabilize your company and improve its cash flow. It speeds up the cash conversion cycle and helps facilitate growth. There are very few limits attached to asset-based lending, and it is a relatively quick and flexible process.

Your company can reap plenty of benefits from asset-based lending in place of taking traditional term loans.

If you think asset-based lending is optimal for your growing business and you’re searching for a reliable asset-based lender in New Jersey, we have the people for you. Global Capital Partners Fund LLC offers hard money loans, private money loans, asset based lending, bridge financing and commercial loans in 18 cities from 6 different states in the United States. You can request a quote on their website or contact them here.

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