A Quick Guide To Asset Based Lending Solutions
It is never easy to predict the whims of your industry. While you might have put a lot of thought into all of your financial decisions, one sudden expense might cause your entire budget to fall apart. Luckily, there are a number of different ways to keep your business afloat when you experience a disruption in your cash flow. Alternative financing solutions like asset-based lending can provide a number of benefits to business owners looking for a boost. Take a look at these points to learn more about this option and how it works.
The Basics of ABL
Lending based on your assets is as straightforward as it sounds. You will use assets your company possesses as collateral on financing services like loans and advancements. In most cases, the assets these third-party lenders look for are based around your future earnings. These organizations will look at unpaid invoices, predictions on credit card sales, and assets that help to guarantee the funds will be repaid in a timely and efficient manner. While not as dependent on credit scores as other loan options, these services will still have requirements for what assets will qualify.
Factoring Invoices
One of the more popular options for business owners in need of asset-based lending is factoring. Also known as accounts receivable financing, this is a service that uses your unpaid invoices as an asset. A company will evaluate your invoices and provide you with a portion of the value in cash on those that qualify. Instead of being conflated with the debt of taking out a loan, this type of service provides you with advancement on funds you are already owed. All you have to do is pay a fee to the organization providing the factoring service.
Credit Card Projections
Another way to go about using your assets to get a loan is with your credit card sales. If you maintain decent sales based around customers who make purchases using lines of credit, then you can use this data to take out a loan. Alternative lenders look at previous sales and project your earnings for the future based on these numbers. The company then will offer you a loan or line of credit based on these possible earnings. While the terms and interest rates might be a bit less appealing, this can be an easy way to stimulate your budget.
There are many alternative financing solutions available to business owners looking for a financial boost. Take a moment to consider asset-based lending options and see if this is the right fit for your future.
