Is your business struggling with cash flow? Do you have business assets at your disposal? If you’re facing cash flow problems, your assets could be the source of an ideal solution. An asset-based loan Long Island is a form of financing that uses assets – inventory, commercial real estate, accounts receivable, etc. – to secure the funding.
Businesses often turn to banks to fund their operations, but banks make it almost impossible to qualify for loans unless you have perfect credit and an outstanding business history. However, asset-based loans can help remedy this problem.
How Does an Asset-Based Loan Work?
As mentioned, an asset-based loan can be secured by the following assets:
- Accounts Receivable (A/R)
- Purchase Orders
- Machinery and Equipment
- Commercial Real Estate
- Marketable Securities
- Intellectual Property
Bear in mind that a number of these assets hold more value over that of other types. There are lenders who accept only one kind of asset, while others use a combination of them. Unlike factoring, you don’t ‘sell’ your assets, but rather you borrow money against them. However, if you’re unable to make the regular monthly payments, lenders have the right to repossess your assets.
The downside of asset-based loans is that the interest rates are higher compared to traditional loans. However, it’s lower than unsecured loans like a merchant cash advance. Depending on the lender, you may also pay for accounting fees since lenders usually conduct audits to monitor the business. Some lenders won’t charge fees for accounting but offset it with higher interest rates.
As you look for the best deal, make sure to compare the terms and conditions as rates may vary among different lenders. Factor in the interest rates, fees, and the advance amount offered when shopping for an asset-based loan.
Does Your Business Benefit from Asset-Based Loans?
If your business needs cash, but you’re unqualified to obtain financing with traditional lenders, you should apply for an asset-based lending loan. Here are some of the reasons why you should consider applying for without delay:
- You need more employees for your business but you don’t have the working capital to make extra payroll.
- You won’t be able to pay your suppliers since you’re short on cash.
- Your business is ready for expansion but you don’t have the funds to do so.
- Banks and/or other traditional lenders have denied your loan because of poor credit.
- You need to purchase additional inventory or supplies to fulfill orders from customers.
- You need cash as soon as possible, but you don’t have the time to wait for the traditional loan approval and funding process.
Asset-Based Loan Long Island is a Viable Solution
Before you apply for an asset-based loan, make sure you understand the process and weigh the pros and cons. If you need cash to keep your business afloat, an asset-based loan Long Island may be the solution to your cash flow needs. The finance experts at SMB Compass can help you and provide you with the direction you need, as well as the answers to your questions.
Remember, time is money and money is time.
Give us your time and we’ll help you get the money!