If you are looking into financing your assets you are most likely looking for cash to grow your business pretty quickly. Asset based lending can help reduce any startup or expansion costs by supporting you with the capital you need while still managing to keep money in the bank.
Asset Based lending is taking out a loan against your assets. Typical assets financed include accounts receivable, real estate, inventory, and equipment. Companies use these assets as collateral when applying for financing.
Asset based loans are a great way to get cash fast if your business is in need of extra capital to help get through a difficult financial crisis or looking to grow your company without the immediate expense impact, because they usually do not require a down payment.
Finding asset based lending should not be much of a problem if your business has a good financial record, can prove steady sales, and has customers that are known to pay their invoices. However, if your customers have a bad track record of not paying their bills on time, lenders will possibly offer the loan at a much higher rate.
Equipment Leasing can be a great option for technology or heavy equipment companies. Since the company does not actually purchase the equipment they essentially do not have to worry about depreciation value on the equipment and may return the old for newer equipment, without the loss in investment. Also with equipment leasing the company does not have to worry about the disposal procedure and costs due to all the new environmental regulations.
Leasing costs and interest can also be a tax break for businesses since they can write them off as a business expense, ultimately covering the cost of the loan interest after receiving the tax return.
On the downside, asset loans tend to be more expensive than a traditional loan in terms of rates and other fees. Regardless, Asset Based Lending is still one of the more popular forms of financing because it works so quickly to generating opportunities for businesses by helping accelerate their cash flow.