How to Get Asset Based Loans

Businesses looking to gain working capital when they need it oftentimes find asset based loans to be an advantageous approach. For example, a company with the opportunity to merge with another company can use the projected profitability of the expansion as collateral for the cash it needs now to finance the deal. This applies to expansion opportunity for a company not looking to merge either and many other cash-related needs. Obtaining asset based financing is not difficult, provided you meet all the qualifications.

Assess Your Assets

You won’t secure asset based loans if you don’t have any projected assets to offer up as collateral, so you must assess your current and future assets first before your approach a potential lender. Take a look at your balance sheet and see what you have and what you will have over the next few months. If everything is in the black, and you have or will have the liquidity to back up your loan request, you might be approved to receive this funding.

Prepare Your Financials

As with any loan, the financial institution is going to want to see professionally prepared financials that confirm you are managing your business profitably. You must present a full set of financials with your loan application, including your balance sheet outlining your current and projected assets, or the bank will not consider you a good risk. You must also show that your business has a solid system in place for accountability and collections and that you and your business are creditworthy.

Find Your Lender

The bank with which you have an established relationship might be the first place you approach for your asset based lending. If it does not offer this type of funding or does not feel you are good fit for the loan, you may also research other financial institutions known for offering asset based loans. For the most part, asset based funding is a secured loan, so traditional financers as opposed to alternative lenders are the ones to approach for your financing needs.

Secure the Collateral for Back Up

Asset based loans are oftentimes issued ahead of possession of the collateral. In other words, you might request funding to pay for operating costs and use your projected accounts receivable to secure the loan. You may also be asking for cash to purchase additional inventory that you will sell to pay back the loan. Once the bank hands over the cash, you need to secure the assets to pay it back, so take the appropriate steps whether through invoicing or liquidation to do just that.


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