Asset-Based Lending in North Carolina: A Complete Guide On What It Is

Numerous businesses benefit from traditional business finance options, in which lenders largely look at a company’s cash flow. However, this form of lending depends on how strong and stable the company’s cash flow statement is. That’s why some businesses choose to get a loan based on the company’s assets. This is known as ABL or Asset-Based Lending.

What Is Asset-Based Lending?

Asset-based lending is a form of loan in which a company or a business obtains financing by putting their assets as collateral. The company’s assets could include properties, vehicles, intellectual property, and even office equipment. These are some assets that companies and businesses can put down as collateral to get the funds they need.

However, it is important to note that asset-based lending is a loan only for businesses and organizations, not for the general consumer. In addition, there are many types of financing options that a company can choose from. This decision depends on the organization’s needs, the business model, future plans of the company, and the company’s current circumstances.

Evaluating assets

How Does Asset-Based Lending Work?

The cash flow needs of many firms necessitate borrowing money or obtaining lines of credit. In the event of a short-term delay in the money it expects to receive, a company can use a line of credit to ensure it can pay its workers wages. A business with a weak cash flow statement might face difficulty getting a loan which is why the lender might suggest ABL.

Field audits will be conducted to assess your organization’s assets as a part of this process. Field and inventory inspections establish which collateral can be used to get an advance, as well as the interest rates that can be applied to it.

Asset-based lending is also considered a less risky option than other borrowing methods. This is because assets secure the loan and result in a lower interest rate than traditional lending options. Also, the liquidity of the asset plays an important role as well.

An asset that can be easily liquated makes the loan less risky, resulting in a lower interest rate. For example, putting your accounts receivable as collateral to obtain a loan is a much safer option than putting down property as collateral. This is because liquidating property is quite difficult and time-consuming, making the lender reluctant to give you a loan.

Are You In Need Of Asset-Based Lending?

If you’re a business owner that requires financing or a loan, get in touch with Global Capital Partners. They are one of the best commercial lender companies in New York, providing a wide range of financing solutions. These include Commercial Real Estate Financing, Private Lending, Bridge Financing, and many more.

Contact them now and get the loan you need to get your company up and running.

Categories: Asset Based Lending

Leave A Reply

Your email address will not be published.