Asset-Based Lending: Is your Company Qualified to Apply for this Loan? 

Are you looking for an alternative way to secure funding for your business? If so, asset-based lending can be a possible solution. This business financing works by using the assets your business already has like accounts receivable, machinery, equipment, or inventory as collateral for a loan. In this type of loan, the interest of the lender is secured by your business assets which also determines the size of the loan you can get. 

Benefits of Asset-Based Lending

With asset-based lending, the delivery of funds is generally faster than traditional banking tools. Also, Accord Financial asset based lending can help you make your cash flow more predictable, especially if your business is rapidly growing. You can use the funds you get from this loan for almost any purpose as long as it’s a business need. 

How to Get this Loan

Once you apply for an asset-based loan, the lender will evaluate your application to determine the viability of your assets and business. Also, the lender will examine your physical office to observe things like accounting and internal control practices. In certain cases, they may choose an external accounting and book-keeping firm to do this calculation. This lets them see the assets that will be used as collateral. Their assessments will include some appraisals such as that of the inventory, to determine the market value and the net orderly liquidation value. The lender will create an agreement after they complete all reviews ad appraisals. 

Who are the Candidates for Asset-Based Loans?

A range of industries such as manufacturing, retail, wholesale distribution, and service companies are ideal candidates for this type of loan. But, you can be a candidate as long as you have asset-rich balance sheets. This shows that most of your total assets could be liquid like accounts receivables with creditworthy customers and inventory. Click here for reliable online money lender.

Companies that offer asset-based loans look for businesses that have strong credit ratings, deeply-integrated management teams, and a solid history of operational performance. A lot of companies that qualify for these loans have a good amount of sales.

How Much Can You Get from the Loan

Companies that apply for asset-based loans get different amounts of loans. Sometimes, the lender may not give the amount a company has applied for because of some rules that guide the lending process. In general, you can borrow between 75% to 80$% of the value of your account receivables. Meanwhile, when you use inventory as collateral, your company can qualify for a loan equal to 50% of your inventory’s value.