Here’s One Reliable and Flexible Asset-Based Financing Option You Should Consider

Financing officerAsset-based lending, for decades, has been a popular financing choice to secure capital under restricted cash flow and high-interest rate loan options.

Recently, it has also been a growing tool for many borrowers who are seeking for loan opportunities equipped with financial maintenance covenants and flexible terms and conditions.

Reliability

With asset-based lending, companies that lack disposable cash can borrow against their existing assets, such as machinery and inventory. The loaned sum is often used to fund operational needs, such as payroll and capital purchases. Such dependability makes asset-based lending a popular financing option.

Asset-based lending is perfect for companies abundant with accounts receivable and inventory. Such companies, either small or large, operate in many industries, including wholesale, retail, rental, transportation, logistics, oil and gas, and durable goods manufacturing.

Flexibility

In the lending world, agreements run deals, and future deals rely heavily on their successful implementation. With asset-based lending, borrowers want the same covenant package across their instruments (i.e., high-yield bonds), the term loans as well as their other asset-based loan credit facilities.

Besides easing the loan process, being able to negotiate with covenants allows borrowers to check with their term loan and debt agreements throughout the life of the loan.

Another source of flexibility with asset-based lending is the creation of an integrated capital structure, which helps borrowers in solving issues that are inherent in the loan process.

The borrowing base under asset-based lending resizes the availability of funds when the business expands or contracts, ensuring greater control to the lender and, hence, avoiding unwanted losses. More so, asset-based loans are self-liquidating. Receipts automatically repay outstanding loans.

Asset-based lending is a reliable and flexible financing option in most industries and companies of all sizes.

Posted on by Tsfp6 in Money Times

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