A Quick Guide to Asset Based Lending.
What is asset based lending?
Quite simply asset based lending is a loan that is secured on the assets that your business holds. This is secured through inventory, machinery, equipment, balance sheets, property and any accounts that are due to be paid to the business applying for the funding. Therefore if the loan is not repaid for any reason then the assets on which the loan had been secured, will be taken.
Who requires asset funding?
Asset based lending is usually considered by a business when other forms of lending are not appropriate or available. It can help to provide immediate capital for a company who may require a project that they are developing to be financed quickly. For example companies that need to increase their stock/inventory. Or if old equipment needs replacing and capital is not freely at hand. Mergers, acquisitions and debt purchasing are also examples. Other companies wish to expand their business without over stretching themselves and causing financial pressure, so therefore asset lending is an extremely useful way of providing a secure capital injection.
Why choose asset lending as a financial option?
Whereas years ago, asset based lending was considered a last resort in terms of financing a business, it is now considered by many companies and business’ a popular choice. For smaller companies and individuals who do not have a good credit rating, or track record, or for those that require capital more quickly, this form of lending is a great resource to have.