By Vivien Aruwa on April 15, 2021

What you need to know about Asset Based Lending

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Finding the right type of loan can be a difficult and lengthy process. Understanding the types of loans that are available to you can help simplify this process. Almost all U.S businesses have collateral such as inventory, accounts receivable, equipment, or more, making Asset Based Lending a popular loan solution.

What is it?

Asset Based Lending or an ABL Loan is a type of loan that is secured by an asset. This form of loan is excellent for businesses who have a lot of tangible assets. While it has its advantages and disadvantages, Asset Based Loans are one of the most popular type of loans for business owners. This loan structure reduces funding costs and lowers operational risks. By leveraging accounts receivable, fixed assets as collateral, and inventory, company earnings can significantly improve. Since this loan solution required collateral, if the loan is not repaid, the asset is taken. Similar to a home mortgage, the loan must be paid or the asset will no longer belong to you.

Who is a good candidate?

If a business is seeking a loan but does not have the cash flow or cash assets to cover the cost of the loan, physical assets may be used as collateral. Typically, Lenders prefer highly liquid collateral that can easily be converted to cash if the borrower defaults on the payments. Interest rates also can vary, depending on things such as credit history and cash flow.

We can help you find an Asset Based Lender!

The AmRock Financial team is dedicated to helping you find the right Asset Based Lender. Asset Based Lenders are available to businesses in all states including Florida and New York. Whether you are looking for an Asset Based Loan for Equipment or an Asset Based Loan for Inventory, we can help!