Advantages To Using Business Assets for Securing a Loan
Like most institutions, small businesses occasionally need to borrow money to stay competitive. As an owner of a small business, you may find borrowing challenging; this is especially true when you have been operating your business for only a short period and can’t provide a long-term financial profile that traditional lenders can tap into. Asset-based lending can provide a solution, where your company equipment and other inventory are used to secure a loan. Here are the advantages to attaining a loan using computers and cars as assets.
Business Assets Work for You
The wonder of asset-based lending is that it allows you to use items your business already has in place to do double-duty. A lender will assess the value of your computers, printers delivery trucks, construction vehicles or other specific hard commodities your business owns. Using these resources as collateral for short-term loans makes attaining funding a straightforward process.
You Keep Your Personal Assets Out of It
Because these loans are based on business assets, you do not have to back the loan with your home, other commercial property, family car or personal finances. This aspect of the loan should bring you peace-of-mind since your personal property remains shielded, which is not the case with loans from traditional financial lenders; in fact, your personal credit does not come into play at all.
Your Credit Rating Will Not Hurt You
Just as your personal credit rating has no bearing on whether or not you will receive a loan, your company’s credit should not affect the application either. Any lender needs to have confidence that they will get a return on the loan; your assets can provide that security when your company has not shown consistent financial stability such that a bank would turn down your application.
Your Assets Stay Online
One of the other perks of an asset-based loan is that you get to operate as you normally do during the application process and after the loan is approved. In other words, there are no conditions on how many hours you use your printers or how many miles you drive your trucks. Equipment or vehicle depreciation does not suddenly reduce the value of your loan.
In business, there is no such thing as a free lunch. However, asset-based lending comes close: You can use the funding for a range of business operations or short-term growth opportunities while doing business as usual.