In this new Spotlight series by AmRock Financial, we will            explore all the debt financing options that are available to your company.

In this first Spotlight, we focus on why an Asset Based Loan (ABL) could be the right funding option for your company so you don’t ever have to worry about giving up equity in your business.

ABL is a form of financing that involves borrowing against the value of a company’s assets. These assets may include inventory, equipment, accounts receivable, or real estate. In an asset based loan, the lender or bank assesses the value of the assets and then offers a line of credit or a term loan based on that value.

There are several reasons why companies should consider asset based loans as a source of financing:

Firstly, an asset based loan can provide companies with access to larger amounts of funding than traditional loans. This is because the loan is secured against assets, which reduces the lender’s risk. As a result, companies can typically borrow more money through an asset-based loan than they could through an unsecured loan. This can be particularly beneficial for companies that need to finance large projects or make significant investments in growing their business.

Secondly, an asset based loan can be more flexible than traditional loans. This is because the loan is secured against assets, rather than being based solely on a company’s creditworthiness. As a result, companies with weaker credit profiles may still be able to obtain funding. Additionally, the terms of the loan can often be tailored to suit the company’s needs. For example, the repayment schedule may be adjusted to match the company’s cash flow, or the loan may be structured to allow for seasonal fluctuations in revenue.

Thirdly, asset-based loans can be obtained more quickly than traditional loans. This is because the lender is primarily focused on the value of the assets, rather than on a lengthy credit review process. This can be particularly important in situations where a company needs funding quickly in order to take advantage of a business opportunity or to address a pressing financial need.

Finally, asset based loans can be a good option for companies that are growing rapidly or undergoing significant changes. This is because the value of the assets is likely to increase over time, which means that the amount of funding available through an asset-based loan may also increase. An added benefit to consider as the company’s financial profile improves, it may also become eligible for more favorable loan terms or lower interest rates.