Selling inventory for immediate access to cash is a basic business principle. Fewer business owners are aware of the option to use their inventory to obtain asset based lending. This provides fast and simple access to more operating capital to pursue business goals.
Where to Go for Asset Based Financing
Banks and alternative financial institutions like Black Wolf Capital Group are the typical lenders for this type of loan. It works similar to secured loans such as a mortgage. You receive a cash loan while the bank uses your business asset for collateral.
Understanding the Process
You should plan to present business financial statements such as your balance sheet, tax returns, and whatever else the lender requires. This assures the lender you operate your business successfully and expect to earn a greater profit in the future. You will also need to complete a credit application.
Interest Rate Expectations
Interest rates vary due to creditworthiness and other factors. The lender will probably charge due diligence and audit fees as well. However, the interest rate will be lower than other types of loans because of your pledged business asset.
In Case of Default
If you’re not able to repay the loan as agreed, the asset based lending provider can take control of your business asset. Be sure to evaluate the situation carefully to make sure you can afford the loan before you find yourself in that situation.
While paying in cash is always preferable, that isn’t always possible in business. Slow cycles are completely normal, as is the need to purchase more inventory, hire more employees, or pursue expansion. With asset based lending, you don’t have to put off your business goals due to a lack of positive cash flow. Please contact Black Wolf Capital Group today to learn more about this option or to request an application.