Over the years, there have been different forms of loans, with asset-based lending (ABL) gaining significant popularity. ABL allows the company to secure ongoing funding using its assets. This funding is easy to qualify for and acquire from different lenders. However, not everyone is well-versed with the benefits of ABL. The following are six advantages of acquiring an asset-based loan.
When your company wants to get some form of financing, one of the first things you should consider is how long it will take to be processed. The processing and underwriting processes of asset-based funding are faster than those of a traditional bank loan or a line of credit.
This type of financing is flexible because it goes hand-in-hand with the value of the company’s accounts receivable and its assets. This means that the company can get more funding as its sales rise, eliminating the need to go through the entire underwriting process again.
When you acquire and use this funding appropriately, your enterprise can achieve financial stability and a predictable cash flow. That makes an asset-based loan the best option for organizations with seasonal incomes, rapid growth, or a tight cash flow.
A Stepping Stone to Other Funding
Asset-based lending allows you to build relationships with different lenders while growing your organization. Once the company is well-established and your track record is clean, you can opt for other financial solutions.
All you need to qualify for asset-based lending is to prove that your business has financial control, a clean record track, and valuable assets that the lender can leverage. Accounts receivable and outstanding invoices make up some of the best collateral for asset-based financing.
Unlike conventional loans, you will be required to enter into fewer covenants when it comes to asset-based lending. Additionally, it is incredibly simple to remain in compliance with any agreements you make with your lender.
Asset-based lending has become a popular financial solution in the recent past, especially in fast-growing businesses. If you feel overwhelmed, contact Eagle Bend Capital Financing today to get the best financial help to help your organization take off.