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Asset Based Lending – What is it and Is it The Right Choice for Your Business?

Raising funds for business growth and expansion is a vital necessity that decides the fate of small and mid-size businesses. Whilst there are many kinds of loans that you can apply for, it’s the asset-based loan (ABL) that’s most beneficial for you if you are planning for:

  • Refinancing
  • Rapid growth
  • Restructuring
  • Turnaround
  • Acquisition
  • Merger
  • Payout

If the answer to any of these is a yes, it’s definitely asset based loan that you should opt for. That settled, you might want to know what asset based loan is and how does it work? So, it goes:

To put it out simply, an asset-based loan is the amount of funds that can be released on the basis of your assets. Assets include any or all of the following.

  • Inventory
  • Equipment
  • Real estate
  • Customer base
  • Accounts receivable

Based on the figures drawn down by the evaluation of your business’s worth from these assets, Accord financial releases amounts between $1 million to $20 million.

All in all, Accord Financial asset based lending will be the backbone of your business once you are qualified for it.

That said, your ABL request at Accord financial is calculated on the basis of the following factors.

  • The experience of your management team.
  • The experience of your collateral team.

Once the financial team at Accord evaluates all these parameters, the amount of ABL is decided.

That said, there are primarily 4 kinds of asset-based finances – listed below – that are provided at Accord. Have a look to find out more about them.

  1. Lender Finance

This assistance is for businesses involved in lending money. In other words, if you’re an alternate lender, what you need is a Fintech lending company like Accord Financial because:

  • They have over 2 decades of experience in Fintech financing.
  • They have a secure funding source. So, you won’t run out of money when loaning it to your customers.
  • They do not impose standby fees.
  1. Retail Inventory Finance

This solution is for retailers and e-commerce shop owners. It converts your inventory into a source of a working capital.

But, how?

Well, it’s important that the goods that customers want are always in stock in the retail market. If you have just enough cash flowing between what you sell and what your customers pay, it won’t be enough to keep refreshing your inventory to allow uninterrupted flow of goods, especially during peak season.

But with Retail inventory finance, you’ll be given funds to replenish your inventory. This will help in the growth and expansion of the business.

  1. Debtor in Possession Finance

Also known as DIP, the Debtor in Possession Finance is lended for businesses that are left operational even while it’s getting restructured under bankruptcy protection act.

  1. Purchase Order Finance

Also known as PO, the Purchase Order Finance is given out as a guarantee on your behalf. As a result, your customers develop trust in you and the number of orders surge.

On a parting note, it’s up to you to decide which types of asset-based loans you’ll benefit from, and then pick one accordingly.