An asset-based loan is another excellent option for a company looking for cash to grow or to cope with cash-flow challenges.
Fredericksburg, VA – November 30, 2010 — (http://www.smart-business-financing.com) – These days, many business owners and financial managers know a lot about rejection. Their education comes at the hands of bankers who are all too frequently denying applications for new credit or curtailing existing business credit lines, if not closing them altogether. From start-ups to well-established companies, the story is often the same.
For companies trying to get through a seasonal downturn or having the enviable problem of funding a growth spurt, an asset-based loan may be a good solution. And, as is quite common for this type of business financing, the loan could be structured as a new business line of credit, which can not only provide a business the cash it needs now, but also maximum financial flexibility for future needs.
In the past, the asset-based loan was characterized as a financing strategy of last resort – a lifeline appropriate only for troubled companies. Today, though, that’s no longer the case, according to Mike Lieber, 13-year finance industry veteran and creator of the business financing web site, www.smart-business-financing.com.
“Many customers for these loans are successful companies that are growing so rapidly that traditional commercial bankers can’t or won’t keep up,” says Lieber. “But even if your company is not currently in need of a cash infusion, you can unlock the value of its assets for the future – expansion, acquisition capital, recapitalization, or any other purpose requiring business capital – with a business line of credit that can be used at your discretion.”
In an asset-based loan situation, a lender evaluates one or more of a company’s assets, which might include its accounts receivable, machinery and equipment, real estate, inventory, or even contracts. If satisfied with their value, it will make a loan against these assets – often in the form of a new business line of credit – holding them as collateral until the loan is paid off or the credit line is closed.
The size of a business line of credit or loan is based on a percentage of each asset’s appraised value, and the percentages vary according to the type of asset. For example, the percentage lent on machinery and equipment – the so-called “advance rate” – might be as much as 80% of its appraised value, while the advance rate on accounts receivable from creditworthy customers could be as much as 85% of the receivable amount.
Many kinds of companies benefit from asset-based finance, but there are some industries that find this technique particularly valuable. Here’s a sampling:
• Automobile parts and supplies manufacturers
• Department stores
• Food processors/manufacturers
• Groceries and related products
• Lumber and other building products
• Metal goods manufacturers
• Motor-vehicle supplies and parts
• Radios, TVs, consumer electronics
As is the case with any loan, price is an important consideration, so it makes sense to comparison-shop.
Says Lieber, “If you align yourself with a competent and ethical professional who deals with a number of different lenders, he will be able do the leg work for you, and present you with the best options to meet your requirements.”
About AEGIS Financial Solutions, Inc.: Since 1998, AEGIS Financial Solutions, Inc. has offered uncommon solutions to common problems using the fast, flexible and powerful resources of the cash flow industry and asset-based finance techniques. Helping people solve financial problems and get money when they need it most, without bank loans, is what we do best.
Press Contact:
Mike Lieber, President
AEGIS Financial Solutions, Inc.
88 E. River Bend Road
Fredericksburg, VA 22407
mjl@aegisone.com
PH: (540) 548-2270
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