Small and growing businesses often have a hard time security finance for working capital and expansion needs. Banks and conventional lenders have a long list of requirements, and the actual process can take a considerable amount of time. A quick alternative to these traditional forms of financing is asset-based lending. An asset-based loan is secured by an asset, typically things like plant & machinery, real estate, equipment, accounts receivables, and inventory. In Canada, options like Accord Financial asset-based loans have helped hundreds of small & medium-scale businesses to secure loan when in need. In this post, we are sharing more on the advantages of asset-based loans.
- Better use of assets. It makes no sense to get an unsecured loan with a high rate of interest, when a business has assets that can be used as a collateral. It is also important to understand that asset-based loans are more beneficial for lenders too, because they are assured of recovering their money one way or the other.
- Low interest rate. This is one of the most tangible benefits of using an asset-based loan. Since the risk is low for lenders, the interest rate is usually low for the borrower. For small businesses, even a little difference in the interest can make a huge difference.
- No worries of the credit history. Since an asset-based loan is secured, lenders are not usually very specific with the credit history of the business. While some lending services may want good to at least average credit history, they don’t want to typically lose a client because of that alone.
- Flexibility. For businesses, asset-based loans are also handy because the repayment plan is particularly flexible and allows them to repay the whole amount in easy installments. Short-term loans are particularly easy to get rid of.
- Quick financing. With asset-based loans, you don’t have to wait for weeks to get an approval. Many lending services assure approval within days, and you can expect the money for your business needs within the same week. There is also less paperwork involved, and the whole work can be done online.
With asset-based loans, it is possible to borrow a part of the asset value, for which the lender will typically work with a reliable appraiser. If you are new to this kind of financing, we would recommend that you select a service that offers asset-based loans for small businesses in particular and is more flexible in their approach.