If you’re a new business owner, you may be familiar with the difficulties of securing a loan from banks and other traditional lenders. When seeking funds for additional working capital from these types of lenders, a business owner will often go through a strenuous application process without the guarantee of approval. If you need to financing for your company but you don’t meet the requirements of a traditional lender, you may want to look at asset-based lending.
How to Make Use of Asset-Based Lending
Asset-based financing is a loan backed by the value of your business assets, such as commercial real estate, inventory, equipment, or accounts receivable. While you can put the funds from an asset-based loan towards any business-related expense, here are four ways you can maximize the use of your funds:
1. Seasonal Financing
If your business relies heavily on seasonal sales, a financial cushion is important to keep your business afloat in the off-season(s). An asset-based loan can help you pay for everyday expenses, cover payroll, pay vendors and undertake off-season repairs and renovations while you wait for profit and revenue.
2. Opportunities for Growth and Expansion
Taking advantage of growth and expansion opportunities is one of the best ways to stay ahead of your competitors. That said, growth opportunities require capital. You need funds for advertising and marketing campaigns, as well as hiring more employees while paying the ones you already have in a timely manner. If your business is in need of sustainable growth, asset-based loans can help cover the costs of expanding your business.
3. Restructure Your Business Model
The business world is constantly changing, and it’s important for a small business to keep up and remain competitive. In order to do that, business owners may need to restructure their business model, which can be expensive. An asset-based loan can help you cover the costs of restructuring. You can use the funds to hire more employees, purchase new inventory, offer more services and take on new projects.
4. Acquire Additional Working Capital
If your business is facing cash flow crunches, best to address these issues as soon as you identify them. Cash flow issues can negatively impact your business in the most serious of ways, and in a worse-case scenario, put you out of business. When in need of additional working capital to restructure your business, purchase equipment, pay for daily expenses, acquire inventory, or pay for unexpected business-related expenses, an asset-based loan may be the ideal solution for you.
You can easily repay back your asset-based loan as your business earns a profit, and you can also elect to keep your credit line open for future use.
To get all the details on how asset-based lending can be the funding solution you need, contact the experts at SMB Compass who will help you and answer all of your questions.
As funding experts, we have secured funds for well over 1,000 businesses across the United States and we’d be happy to also learn about your business, and steer you in the right direction.