When a business has to borrow money, there is a great deal of mystery as to whether a loan will be approved. Conventional lending will take into account a number of issues. Even the smallest inadequacy in the amount of revenue a business generates or the their creditworthiness can effectively end any hope of receiving outside financing. Fortunately, a business may have another option for getting the capital they need without some of the pitfalls that exist with conventional business lending.
An Alternative Form of Lending
A business owner only needs to look at Asset based lending details to understand the advantages of alternate forms of business lending. Unlike conventional lending, asset-based financing is a bit different. Instead of looking solely at the profitability that a business has experienced either in the past year or over the long-term or looking exclusively at their credit worthy status, asset-based lenders will look at assets that the business has accumulated.
What an Asset Base Lender Looks at
For construction companies or medical practices, these assets can be rather significant and, in essence, they can be used as collateral for business financing. Construction companies may have a wide range of construction equipment. A construction company may have a great deal of money tied up in these assets and a lender may strongly consider the total value of these assets to help them approve a financing agreement.
The same can be said for medical practices. Whether it’s a dentist office or a standard doctor’s office, if they have different types of laboratory equipment or imaging devices, there can be significant amounts of value in this equipment. The value of the equipment alone can help a business receive the financing they need, even if revenue isn’t all that high or their credit score leaves much to be desired.
If your business needs funding, but you are concerned that your creditworthiness or a lack revenue is going to hamper those efforts, you may want to consider asset-based lending. If your business has a great deal of equipment and resources, it may be the best way to easily secure the funding your business requires.