What are the Benefits of Asset Based Loans?
- Flexible and Affordable Loan Structures
- Maximum Availability of Funds from Collateral/Assets
- Funds Available to Companies with All Credit Types
- Focus on Collateral instead of Credit-worthiness
- Funding Much Faster Than Bank Financing
What is Asset-Based Lending?
Asset-Based Lending is financing that is secured or collateralized with one or more business assets (inventory, accounts receivable, machinery, equipment, etc.). It utilizes the value of these business assets to provide loans from $250K – $10M+. Many small businesses don’t understand the sheer extent to which they can leverage their business assets and cash flow to maximize funding amounts. LendSpark’s Asset-Based loan solution offers an alternative (or additional) financing option to traditional bank lines-of-credit or term loans for businesses that need additional funding.
How Does It Work?
Similar to a bank revolving line of credit, your borrowing capacity in an asset based line of credit is simply the drawing down, on a weekly, monthly, or in fact anytime basis, of your total borrowing capacity based on your reporting of current A/R, inventory and equipment levels.
The initial underwriting process requires a brief review of the client business’ financial and collateral information. If the initial results of the review appear positive, a preliminary approval is received and a LendSpark engagement agreement is executed by the client. Very standard legal costs, due diligence fees, and origination fees usually are part of the term sheet you will receive. More formal underwriting and due diligence results, and the entire process typically requires 30-45 days to achieve funding.
With Asset-Based lending, 99% of the time clients can extract additional borrowing power out of the assets when compared to traditional bank lines-of-credit. That is simply because a bank focuses on overall financial health and considers a number of external metrics to the actual line of credit – these include balance sheet and income statement rations, personal guarantees, outside collateral, and the overall nature of your industry and business model.
Asset based lines of credit tend to minimize many of those considerations, and focus on the assets! Because that is the case receivables and inventory are margined up to a much higher level than might otherwise be maintained with traditional financing.
“Many small businesses don’t understand the sheer extent to which they can leverage their business assets and cash flow to maximize funding amounts.”
LendSpark offers a wide variety of solutions and our experienced professionals will present you with the best fit for your needs, budget and business profile.