ABL is commonly referred to as factoring’s big brother since many early stage business owners involved in manufacturing and distribution and utilizing factoring for cash flow solutions eventually will evolve to the use of a larger Asset-Based Lending arrangement for the financing of their inventory and equipment.
Unlike factoring which requires no credit history for qualifying, however, a business will need some amount of credit history to qualify for an Asset-Based Lending Revolving Line of Credit.
Asset-Based Lending meets clients’ working capital needs by offering innovative structures that reduce funding costs and lower operational risks while improving earnings.
This is done by leveraging accounts receivable, inventory or fixed assets as collateral.
Small and mid-sized companies that are stable and that have physical assets of value are the most common Asset-Based borrowers.
Asset-Based Lending provides Revolving Lines of Credit based on valuation of inventory and receivables held by a business and term loans based on valuation of fixed assets that include machinery, equipment and real estate.
When a business does not qualify for traditional bank financing or needs fast money Hard Money is usually the next option.
Asset-Based Lending always involves loaning money using the borrower’s assets as collateral.
The terms and conditions of an Asset-Based Loan depend on the type and value of the assets offered as security.
SECA Funding Company provides professional access to cash when you need it!
Asset-Based Financing is based on the value of a company’s assets.
This allows a company to immediately access the working capital available in their assets, such as Accounts Receivable, Equipment and Inventory.
Asset-Based Loans can be structured as revolving credit.
when the borrower needs additional working capital, they request an advance, and the Capital is sent directly to the borrower’s bank account.
Asset-Based Lenders will advance funds based on an agreed percentage of the secured assets’ value, with the percentage ranging from between 70 % to 80 % of eligible receivables and 50 % of finished inventory.
Securing an Asset-Based Loan is comparatively easy when a company has good financial statements, good reporting systems, with commonly sold inventory, and customers who have a track record of paying their bills on time.
A mortgage would an example of an Asset-Based Loan.
Special arrangements such as FILO tranches (for “first in, last out”) could increase the amount a company is able to borrow.
When dealing with any Asset-Based Lender first in order is accounts receivable.
Only current receivables those that are less than 90 days from invoice date or no more than 60 days past due are considered.
Next come assets such as inventory, machinery and equipment, real estate and sometimes intellectual property.
A Distribution Business is a good candidate for an Asset-Based Loan.
“Hard Money Loan” refers to a type of loan that is backed by a “Hard” Asset, such as real estate.
Hard Money Loans are Asset-Based, which are never contingent on the borrower’s creditworthiness.
Asset-Based lending is any kind of lending secured by an Asset.
Asset-Based lending is usually obtained when the normal routes of raising Capital is not possible.
An Asset-Based Line of Credit will generally have a revolving credit limit that fluctuates based on the actual accounts-receivable balances that the company has on an ongoing basis thus requiring the lender to monitor and audit the company to evaluate the accounts receivable size.
We here at SECA Funding Company can help leverage a variety of company assets-accounts receivable, inventory, fixed assets including machinery & equipment.
Start working now with the proven Asset-Based Lending (ABL) Experts at SECA Funding Company.
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Because your assets are used as collateral, Asset-Based Financing can be a very cost-effective solution that enables you to maximize borrowing capacity and meet liquidity needs for you business.
Start empowering your business through an Asset-Based Loan and achieve your financial goals by harnessing the potential for growth through Asset-Based Lending.
If your company does not have enough cash assets or cash flow to cover a loan, Firms like SECA Funding Company that do Asset-Based lending can help you get approved for a business loan by using the physical assets of your company as collateral.
We build a strong business relationship with all potential borrowers, and as our client you can be assured that you will be treated with the upmost respect and you will get the answers you need in an instant from the Firm with the most experience SECA Funding Company.
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