Asset based financing enables your company to capitalize its assets. It provides you with immediate funds which can be used to cover operational expenses, finance new purchase orders, or make strategic investments. Asset based loans are an ideal alternative for small and middle-market companies who need a flexible financing solution.
Our solutions are provided using a revolving line of credit structure. They allow your company to draw on a percentage of the value of your assets, as needed. The line gets paid back as the assets convert into cash, through sales.
For more information, fill out this form or call us toll-free at (877) 300 3258.
How does asset based financing work?
Most asset based lending facilities operate like a revolving line of credit that is secured by specific collateral. The collateral is used to determine a borrowing base – the amount of funding that you can obtain. The line allows you to withdraw funds as you need them, based on the value of the assets in the borrowing base. The line is paid back as the assets are converted in to cash, through your normal operations.
The borrowing base is determined as a percentage of the value of the collateral that has been pledged. Usually, companies can finance 75% – 85% of the value of their commercial accounts receivable. The borrowing base of inventory and equipment is often 50% or less. In general, the actual percentages depend on the quality of the assets and how liquid they are. The borrowing base usually changes regularly as assets – namely, accounts receivable – fluctuate.
You can learn more by reading “What is Asset Based Lending?”
Benefits and advantages
Asset based financing solutions have a number of advantages, including:
- Improved liquidity for your company
- Flexibility – lines can be used for many purposes
- Speed – lines can be deployed faster than other solutions
- Fewer covenants than most alternatives
- Lower costs than comparable options
To learn more about the benefits of our solutions, read “Six Advantages of Asset Based Loans.”
One of the main advantages of using asset based lending is that the solution is flexible and can be used to solve a number of problems. Common uses include:
- Working capital improvements
- Turnaround situations
- Leveraged buyouts
- Debtor-in-possession financing
- Corporate acquisitions
We can work with companies that offer products and services to other businesses or government entities. Industries we work with include:
Qualifying for an asset based lending facility is easier than qualifying for comparable solutions, such as lines of credit. In most cases, we can provide an underwriting decision quickly and funding shortly thereafter. Qualification criteria include:
- Minimum monthly line requirement of $1M
- A solid client base
- Accounts receivable must be free of liens, or an existing lender must be willing to subordinate its position
- Other assets to use as collateral, as required
- Company must be up to date on taxes or working on a plan with tax authorities
- Must be profitable or have a turnaround plan in place
Note that this list is not all-inclusive. To find out if we are the right solution for you, fill out this form or call us toll-free at (877) 300 3258.
Choose the right asset based lender
The decision to use an asset based financing solution for your company is strategic and should be made carefully. The right financing partner can be critical in helping you achieve your corporate objectives. Consider asking the following questions as part of your due diligence process:
- How long have they been in business?
- How do they get their funding?
- Do they have experience financing companies in your industry?
- What collateral are they comfortable financing?
- Will clients be notified of the relationship? If so, how?
- How will customer payments flow?
Get a instant quote
We can provide asset based financing at competitive terms. For more information, get an instant quote or call us toll-free at (877) 300 3258.
To learn more about our asset based financing programs, read: