Asset Based Loans

Use your business

assets for working capital!

How much are you looking for?

price

Loan Amounts

$25,000 – $10,000,000

Terms

1 – 5 Years

Rates

7% – 12%

Speed

10 – 14 Days

What is an Asset Based Loan?

When cashflow alone isn’t enough for a business to qualify for a loan, a lender will look to the business assets to gain extra comfort and security. An Asset Based Loan can be structured as either a line of credit or a term loan, but the focal point will be the collateral that’s available to secure the loan.

The terms and conditions of an Asset Based Loan will also depend on the type of collateral that is available. Some of the collateral that a lender will consider for an Asset Based Loan is the following; accounts receivable, inventory, equipment, real estate, intellectual property, and marketable securities. It’s important to note that the most crucial collateral to a lender is going to be the accounts receivable and inventory.Other collateral, while important, is not needed for an Asset Based Loan, but will be considered if there is a need for additional capital.

Why would a business use an Asset Based Loan?

There are a variety of reasons why a business would use an Asset Based Loan. Some of those reasons include;

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Refinancing existing debt to improve cashflow

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Raising capital to expand the business and purchase inventory

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Business cashflow alone won’t support a loan and the bank needs additional comfort

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Raising capital for business acquisitions

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Pledging collateral can replace the need for a personal guarantee

The 5 reasons above are just a few of the reasons why a business would use an Asset Based Loan Overall the purpose of an Asset Based Loan is to turn the assets on your balance sheet into cash to use in other areas of the business.

What are the best industries for Asset Based Loans?

Asset Based Loans are generally best for business to business (b2b) industries. The reason this is the case is because B2B industries tend to have significantly more collateral than business to consumer (b2c) industries. For example, a manufacturer will have equipment, accounts receivables, and inventory/materials, while a restaurant will only have furniture, fixtures, and equipment.

Construction

Restaurant/Bars

Doctor/Medical Practices

Hotels/Lodging

Beauty Salons/Spas

Retail Stores

Auto Repairs & Sales

Landscaping Services

How does the Asset Based Loan process work?

The application process to apply for an Asset Based Loan is paperwork intensive and requires a business owner to have all of his/her financial information organized. Outside of the standard documentation an Asset Based Loan is going to require a detailed asset list so a lender can understand the collateral that’s available to them.

Prequalify

Speak with a SMB Lending Expert to prequalify for asset based. SMB Compass’s simple and secure online application can be completed in a matter of minutes, with no obligations and no impact on your personal credit!

Approved

Once your asset based application is complete we will review the rates, terms, and any questions you have about your loan approval. We will only move forward when all of your questions are answered!

Closed

Once you accept your approval and provide closing documents we will review your terms again to make sure that all your questions are answered. Your loan will then be closed and funded within 24 hours!

What is a real example of a company that used a Line of Credit?

A real example of a company that used a Line of Credit was a HVAC Contractor based out of Southern Connecticut. This contractor worked with both residential and commercial clients and decided to expand their business from just service contracts to add new construction as well. Service contracts are much easier when it comes to managing cash flow, their employees always had consistent work and payments flowed in on a monthly basis. Making the jump to new construction required them to lay out money for equipment, materials, and labor. In addition, these contracts were billable every 30 days and payroll was run weekly. This all resulted in capital needed before the job started and while the job was in progress. Without a Line of Credit taking on the new projects and expanding the business wouldn’t have been possible.

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Interested in learning about your financing options?
Speak with a lending expert today!

Interested in learning about your financing options? Speak with a lending expert today!