Everything You Need to Know About Asset-Based Lending

Discovering the right financing for your business can be a challenge. There are many options out there to consider and it can be difficult to know which is the right fit for your unique needs. One option worth looking into is asset-based lending. Also known as ABL, this is a form of financing that a business can acquire by using its existing assets. Look into the details and see if this is the right fit for you.

Cash Flow

One of the biggest reasons businesses tend to explore this type of loan is to create cash flow. Having available capital is incredibly important for a business. When you have available funds in your budget, it is a lot easier to take advantage of opportunities for growth that come your way. Cash flow also allows you to maintain your standard operations, covering necessary expenses like payroll.

Small Business Advantage

Asset-based lending can be particularly useful for smaller businesses. If your company is stable enough, then a lender only requires you to have assets of a certain value in order to qualify for the loan. The terms of an ABL loan state that you may not use any assets that are already being used as collateral in another deal. If you have assets that are free from other ties, then you definitely should consider looking into what ABL options might be able to do for your company.

Common Assets

While several different areas can be explored when you’re looking for assets to use as collateral, lenders tend to prefer invoices. Using the value of these invoices as collateral for your loan can help you make a big difference to your cash flow without taking too big of a risk. While an ABL loan might seem similar to the financing option of factoring, there are some differences. The biggest difference is that factoring is an advance on payment, whereas asset-based lending is an actual loan.

Assess Your Needs

To discover the most appropriate type of financing for the needs of your company, it can be helpful to give yourself time to research all of your options. Every company is going to have a different set of needs when it comes to capital. Understanding the differences between factoring and ABL loans can give you the insight you need to make the right decisions.

Freeing up cash flow for your company is easy when you know what options await you. Discover the advantages of ABL loans and see what you might be able to accomplish with a bit of extra capital.


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