Having a business’ financing solution at the ready will contribute a great deal to the future success and longevity of your business. As a business owner, the last thing you don’t want to contend with is a financial burden such as the repayment of a loan you couldn’t afford in the first place. This kind of financial dead-end can quickly sink your credit rating and destroy your payment history. However, there are other more accommodating solutions at asset-based lending Detroit.
Instead of applying for unsecured loans, you may benefit more by using your existing business assets to secure the funding you need. Here are four common myths surrounding asset-based lending that are debunked.
Myth 1: Asset-based lenders only consider collateral value, nothing else.
While the value of your collateral is a major factor in determining your eligibility, lenders also consider other factors as well. Most asset-based lenders are also concerned with your business’ financial performance when evaluating your application.
Myth 2: Asset-based loans are more expensive than other types of loans.
There are certain asset-based loans that charge high interest rates, which is why you need to compare your options when you shop for loans. However, asset-based financing is generally affordable and offers a flexibility that are equal to an unsecured business loan. Keep in mind though, that the terms and rates set by lenders may vary depending on the current condition of your business.
Myth 3: Asset-based loans hamper the growth of your business.
Many business owners are of the view that asset-based loans restrict the growth of your business, but this is far from the truth. The whole point of asset-based financing and small business loans, in general, is to help your business grow and expand. It also helps remedy cash flow issues that are common among small businesses. This means you can use the funds from an asset-based loan to add to your working capital, purchase inventory, cover daily business operations, and pay for unexpected expenses.
Myth 4: Asset-based loans don’t offer flexibility of use.
It’s a fact that asset-based loans offer far more flexibility than most traditional loans in the market. With an asset-based loan, the amount of your loan is based on and adjusted to match the value of your collateral. As previously mentioned, business owners can utilize the funds in any way they like, as long as it benefits your business.
It’s a challenge for a small business owner to use funds from a loan for one specific purpose, especially when unforeseen expenses arise. Unless you’re applying for a loan for a specific purpose, (such as equipment or real estate), you need flexibility in the use of your funds to pay for marketing, advertising, making payroll, hiring employees, expanding your customer base and more. Fortunately, the funds from an asset-based loan allow you to do all that and more.
Asset-Based Lending Detroit: Loans for Your Business
If your business has the right type of assets, you can apply for asset-based lending Detroit with complete confidence. The finance experts at SMB Compass have all the details and all the answers to your specific needs.