There are a number of reasons why you, as a business owner, may need to raise additional cash quickly. Perhaps you need to finance a small equipment upgrade, pay for an unplanned expense, or fund a minor renovation on your property. Whatever the reasons for your need, asset-based lending offers a potentially easy means to quickly secure needed financing, for several reasons. 

Borrow With Poor Credit

Asset-based lending depends on established business assets as collateral for any loan. Consequently, factors like your personal credit are less important when applying for a loan — provided you have sufficient assets to be put up as collateral. Assets may include vehicles or equipment owned by your business, or even more flexible assets, like inventory or accounts receivable.

While interest rates on an asset-based loan may vary, they are often favorable compared to other types of hard-money loans. It’s always a good idea to look at more than one lender, to compare rates and terms.

You Don’t Need Personal Collateral

A major reason to consider asset-based lending is that you do not need to put up personal collateral — like your home, or other property — to back up the loan. While defaulting can lead to negative consequences, including losing valuable business inventory, investments, or other assets, you are more effectively able to separate your personal life from your business life with this type of loan.

Useful For Short-Term Purposes

While not typically utilized as a long-term financing strategy, an asset-based loan can be incredibly effective in the short-term. Because the loan is wholly dependent on established assets, the loan can ordinarily be approved fairly quickly, giving you a rapid and needed cash infusion. As an added bonus, you can continue to utilize your assets used as collateral over the course of the loan.

For instance, say you utilize your business’ computers as collateral for your loan. You’ll get a cash injection — plus, you can continue to use the computers for all of your typical business needs.

Consider An Asset-Based Loan

It’s always a good idea to carefully consider any loans for your business. This is doubly true for short-term loans, which can get you cash quickly, but can often have very destabilizing consequences if you default.

But once you have a solid plan for your loan, and are confident you can repay, it’s well worth considering the myriad benefits of an asset-based loan. Favorable terms, quick cash, and a depersonalized investment may be just what you need to keep your business thiriving.