(This is the first part of a two-part guide on asset-based financing—for part one, click here!)
In the first part of our guide, we talked about the basics of asset-based financing and how it can be an optimal option for any business looking to seek money for its needs. However, it’s vital to cover all bases concerning these financial tools so that you can head into the application process with the right information in mind!
Without further ado, let’s get right back into our guide on the lending option in question:
What Are the Common Uses of Asset-Based Financing?
The general premise of asset-based financing is to provide easy funding for businesses, and there are specific ways in which it can be best used. Companies often use this loan for their cash flow needs. Given its flexibility, however, the loan can be used in an assortment of ways for various purposes, such as:
- Boosting cash flow
- Buying more assets
- Making investments
- Restructuring your business
- Purchasing equipment
- Leveraging a buyout of another small business
- Growing your working capital to pay expenses or make business improvements
How Can You Benefit from Asset-Based Financing?
There are a handful of benefits that any business owner can stand to gain from asset-based financing:
- More relaxed credit guidelines
- Easier qualification criteria (as compared to traditional bank options)
- Less lender involvement
- Lower financial ratios
What Are the Common Misconceptions Regarding Asset-Based Financing?
Like any other kind of loan, asset-based financing is not without its fair share of myths—many of which are untrue, and most of them being blown out of proportion.
For a better idea of how your experience with a reputable lender like Porter Capital will go, let’s debunk some of its most common misconceptions:
Myth #1: They’re Expensive
Well, this couldn’t be any further from the truth.
Thanks to how it’s structured, asset-based financing is one of the more affordable options in the market, which is why an increasing number of businesses are applying for them annually. The reason for this lies in the fact that the loans allow lenders to take less of a risk when handing them out, inevitably resulting in favorable interest rates for borrowers.
Myth #2: They’re Only for Small Businesses
While asset-based financing has a history of being a “Get Out Of Jail Card” for small businesses a few dollars shy of bankruptcy, its benefits are applicable for even the largest of conglomerates. These loans can always be applied for and easily granted regardless of how big your operations may be or how much cash one needs!
Myth #2: They’re Not Flexible
This cannot be further from the truth. When compared with traditional options, you’ll quickly realize that asset-based lenders offer more flexibility because of the simple structure of the loan. As long as your business has assets that can be declared, you won’t have to worry about risking outright denial or going through all sorts of hoops and hurdles just to get approved.
As one of the most dependable options available in the market today, asset-based funding presents an array of opportunities that businesses can use to keep themselves afloat. Through the help of this well-rounded and accessible option, you can take care of your needs more efficiently and effectively without any worries of compromise or difficulties!
At Porter Capital, we take immense pride in providing the best asset-based lending experiences that businesses can ask for. Get in touch with us today!