As you grow and acquire additional assets (equipment, accounts receivable, inventory, real estate), the asset base of the loan grows, thus providing increases in the availability under the line of credit, which then enables you to make purchases and increase or improve operations.

Many traditional bank loans are approved for a specific purpose or use of funds (equipment acquisition, for example) and therefore the proceeds cannot be used for other expenditures. Funds borrowed from an ABL can be used for any business purpose, and therefore at the discretion of the company.

Asset-based lenders typically approve loans faster than a bank will approve a traditional business loan. The lender will evaluate the collateral being pledged, but because the approval isn’t based solely on historical financial statements or predictable cash flow, review and documentation is often faster.

When banks review loan applications, they have specific ratios and loan covenants that must be met. Companies with high debt-to-worth ratios may fall outside the banks’ allowed credit approval criteria. Non-bank asset based lenders are not subject to these constraints and can therefore approve an asset based loan structure much easier with more weight on the collateral and future prospects of the business.

Asset based loans can improve your company’s cash flow by smoothing the peaks and valleys brought about by the timing differences between the expenditures and receipt of cash. Funds can be used to purchase inventory or raw material ahead of production and sales. Or, when using accounts receivables as the collateral, you have access to funds without having to wait the typical 30-90 days for reimbursement of contract payments.

Loan structure for ABL is dependent upon the capital intensity of your business. We can provide financing using different assets, such as accounts receivable, inventory, equipment, and real estate. Structure and asset mix depend on the assets available and the needs of the company.