How to Use What You Have to Get More of What You Need
Being in a tough financial situation is never fun. That’s especially true if you’re a small business owner and you’re not only worried about your own financial situation, but that of your business and employees as well. If you’re in that situation now, you might be trying to figure out how you can resolve the situation without putting your own personal life on the line as well. If that’s the case, you might consider using asset-based lending to leverage what your business owns in order to get some funding and help your business out.
How to Do It
Once you’ve done your research and decided that asset-based lending is the way to go, you need to make sure you’ve got a few things in order. Even though this type of funding is typically easier to get than a traditional bank loan, any potential lenders will still want to see your business financials, so make sure you have them all in order. The next step is to know what your assets are since those are what you’re using to get that funding. You’ll want a list of all of your equipment and machinery, as well as any product that you have in inventory. It’s also a good idea to have all of your outstanding accounts receivable in order since some lenders will include that in a list of leverageable assets. As long as no one else could claim rights to your assets in the case of a loan default or anything similar, any and all of these can count towards the sum you’re eligible to receive through this kind of financing.
The next step, unsurprisingly, is to complete your application paperwork. After you’ve submitted that, expect to wait a few days before moving forward. If the lender is interested in proceeding, you’ll enter the due diligence phase, in which your lender will review the assets you’re proposing to use as collateral. After conducting a field review and speaking with you to ensure that the relationship will work out, you’ll move into the final phase and either be approved or not.
The Takeaway
Small businesses often have needs for various types of funding that work in different ways. Asset-based lending is a great option if you’re looking to increase your cash flow without going through an arduous loan application process, or risk your own personal assets for your business’s success. With the right research and planning, this can be a great way to get the financial boost your business needs.
