Benefits of Asset-Based Lending
Asset based lending offers non-bankable business owners a viable financing solution by leveraging their tangible assets (accounts receivable, inventory, equipment and real estate) as collateral which provides more availability and cash flow. Unlike traditional loans that rely heavily on creditworthiness, asset-based financing provides flexibility and accessibility. It’s an attractive financing option in that the structure allows for financing tailored to the specific needs of the business and aligned with the business’s asset value. Asset based financing provides a lifeline for a non-bankable business. And when done correctly, business owners can’t get in too much trouble in terms of debt vs. assets.
The revolving nature of asset-based lending ensures ongoing access to funds as the business grows. As such, it can be a faster and more responsive option than traditional loans, enabling quicker access to capital for operational needs.
Another benefit that we’ve heard from many of our former borrowers is that while they may have initially resisted the tight control reporting asset-based financing requires, they learned it imposed a discipline (a form of which) they continued when they returned to bank financing. The discipline of closely monitoring receivables kept them more in tune with customer issues which allowed them to more quickly address those issues. This sped up collections and enabled the collateral to perform better. This discipline also carries over to inventory and helps borrowers from carrying too much inventory and not having controls over the inventory they have.
All told, an asset-based mindset helps keep borrowers out of trouble in terms of borrowing too much and it helps the business run better all of which leads the business owner back on a path to bank financing.
About Celtic Capital
Companies looking for working capital to cover operating expenses, fund growth, increase buying power and take advantage of vendor discounts and rebates turn to Celtic Capital. With an appetite for the more complex transactions, Celtic Capital has a history of success in crafting creative, flexible asset based financing solutions from $500,000 to $5 million with no financial covenants.
As an independent lender, working with companies nationwide, Celtic Capital is willing and able to alter price and deal structure and expand lines of credit to handle its clients’ increased revenues; and when cash flow is an issue, will look toward providing an inventory facility to help offset lost cash flow.
If you know of, or are, a business in need of non-traditional financing, contact Mark Hafner at 800.742.0733 or mhafner@celticcapital.com, or visit us at www.celticcapital.com.