by ARTIS COMMERCIAL CAPITAL | Jul 25, 2023 | Blog
Asset-based lines of credit provide a great opportunity for businesses to access working capital while managing their cash flow. This type of financing can be especially beneficial for small and growing businesses that need additional funds to expand operations or purchase equipment. Asset-based lines of credit are also attractive because they offer more flexibility than traditional loans, allowing borrowers to draw from the line as needed and pay back only what is borrowed.
How Asset-Based Lines of Credit Work
When businesses take out asset-based lines of credit, they are essentially borrowing against their assets. This includes inventory and accounts receivable, as well as equipment or real estate. The line of credit is secured by these assets, which gives lenders more comfort because they know that if the borrower defaults on the loan, the lender can seize the collateral in order to recoup its losses. This type of financing is attractive to lenders because it’s a low-risk loan, and they typically offer competitive interest rates due to the security offered by the collateral.
More Financing than Traditional Loans
Asset-based lines of credit also allow businesses to access much larger sums than traditional loans. The line of credit amount is usually based on the value of the assets being used as collateral, so businesses can borrow up to 80-90% of the value of those assets. This provides businesses with more working capital and helps them cover costs associated with growth, such as purchasing inventory or investing in new equipment.
Better Cash Flow Management
Finally, asset-based lines of credit provide companies with flexibility when it comes to managing their cash flow. Since the line of credit is not a fixed amount like a traditional loan, businesses can draw from the line as needed and pay back only what is borrowed. This allows them to access additional working capital quickly when it’s needed, without having to make large lump-sum payments.
Asset-based lines of credit are an attractive option for many small and growing businesses looking for extra funds to capitalize on growth opportunities. They offer more competitive interest rates than traditional loans, as well as the flexibility to access larger sums of working capital. Plus, businesses can use their assets as collateral and benefit from the ability to draw from the line and pay back only what is borrowed. If your business is looking for a way to finance growth without sacrificing financial stability, contact Artis Commercial Capital and learn about our asset-based financing solutions.
by ARTIS COMMERCIAL CAPITAL | Jul 18, 2023 | Blog
Asset-based financing is a great way to fund your business without having to take on additional debt. It involves using your existing assets, such as inventory or accounts receivable, as collateral for loans from banks and other lenders. This type of financing can help you meet short-term liquidity needs and provide the capital required to grow your business. There are several different types of asset-based financing available, each with its own unique set of benefits and risks.
Secured Loans
Secured loans are a type of asset-based financing that involve putting up your business’s assets, such as inventory or equipment, as collateral for the loan. This reduces the risk to the lender since they can repossess and sell the asset if you default on the loan. The biggest advantage of secured loans is that they typically offer lower interest rates than other forms of financing. However, this type of financing also carries some risks; if you default on the loan, you could lose your asset.
Invoice Financing
Invoice financing is another form of asset-based financing in which a lender provides funds based on money owed to your business by customers or clients. The lender will advance you a percentage of the total amount owed and hold the remainder until it is paid in full. This type of financing is great for businesses with steady sales but cash flow problems, as you can access the money right away without having to wait for customers to pay their invoices.
Factoring
Factoring is similar to invoice financing in that it provides funds based on money owed by customers or clients. However, with factoring, the lender typically takes possession of your accounts receivable and collects payments from your customers directly. This reduces the risk to you since you won’t have to worry about collecting payments yourself. However, it also means that there may be less flexibility when negotiating terms with your lender.
These are just some of the asset-based financing options available to you. Each has its own set of benefits and risks, so it’s important to carefully consider which option is best for your unique situation. Before taking out any type of loan, make sure you understand the terms and conditions associated with it so that you can be sure it will meet your business’s needs.
Asset-based financing can provide a great source of capital for businesses looking to grow or cover short-term liquidity needs. By understanding the different types available and considering their advantages and disadvantages, you can choose the one that best fits your business’s needs and goals. With careful planning, asset-based financing can help take your business to the next level. Contact Artis Commercial Capital today to explore our asset-based solutions, and learn how they can help your business.
by ARTIS COMMERCIAL CAPITAL | Jul 11, 2023 | Blog
Are you a small business owner looking for financing options? Traditional bank loans can be difficult to get, especially if you have bad credit or lack the necessary collateral. Fortunately, there is an alternative—asset-based lending. Asset-based lending provides businesses with access to capital while allowing them more flexibility than traditional loans.
What Is Asset-Based Lending?
Asset-based lending is a form of financing that relies on the value of a company’s assets as collateral. This type of loan can be used to finance a variety of needs, including starting up a business or expanding operations. It offers businesses more flexibility than traditional bank loans because it focuses on the value of the assets rather than creditworthiness.
Easy to Obtain
One advantage of asset-based lending is that it is easier to get approved for compared to traditional bank loans. As mentioned before, banks typically require good credit and collateral, which many small businesses don’t have access to. With asset-based lending, all you need is an inventory or other assets with sufficient value—you don’t have to worry about your personal credit score or lack of collateral.
More Capital then Institutional Loans
Another advantage is that asset-based loans can provide businesses with more capital than traditional bank loans. Because the loan is secured by assets, lenders are willing to offer larger amounts of money than they would for an unsecured loan. This can be especially useful for small businesses that need extra funds to grow their business but may not qualify for a traditional bank loan.
Flexible Repayment
Finally, asset-based lending offers flexible repayment options. Unlike traditional bank loans, which require regular monthly payments over a fixed period of time, asset-based loans allow you to pay back the loan amount in installments or on an as-needed basis based on your cash flow. This makes it easier for small businesses to manage their finances without worrying about meeting strict repayment deadlines.
Getting Approved for Asset-Based Lending
To increase your chances of getting approved for an asset-based loan, make sure you have a detailed business plan that outlines how the money will be used and why it is needed. Additionally, provide the lender with accurate information about your assets—including inventory count, estimated value, and past performance data—so they can evaluate your application objectively. Finally, be prepared to pay fees associated with this type of loan; these may include appraisal costs or other setup fees.
In conclusion, asset-based lending provides small businesses with access to capital while offering more flexibility than traditional bank loans. By understanding how asset-based lending works and taking steps to increase their chances of approval, business owners can take advantage of this unique financing option to get the funding they need. Contact Artis Commercial Capital today to learn more about our asset-based lending solutions.
by ARTIS COMMERCIAL CAPITAL | Jul 4, 2023 | Blog
If you’re a business owner, you know how important it is to have access to the right kind of funding in order to help your business grow. One option that many businesses are turning to is purchase order financing. This type of financing can be used for a variety of purposes, from purchasing inventory and supplies to expanding operations or hiring new employees.
How Purchase Order Financing Works
Purchase order financing is a type of short-term financing that enables businesses to pay for goods and services they have ordered from suppliers. With this type of funding, businesses can finance purchase orders for inventory or supplies without using their own cash flow or borrowing money from a traditional lender. Purchase order financing is an attractive option for many small businesses as it provides them with the necessary funds to grow without having to wait months or years until the product is sold.
This type of financing works by allowing a third-party lender to provide funds in exchange for a portion of the total cost of the purchase order that will be paid on delivery. The lender assumes part of the risk associated with completing the project, so they will typically require some form of collateral or guarantee before approving a loan. Once the order is fulfilled, the lender will receive their portion of the total cost plus a fee for providing the funding.
Growing Your Business
Purchase order financing can be beneficial to businesses in a number of ways. It can help businesses that need funds quickly to purchase supplies and inventory without having to dip into their cash reserves or take out loans from traditional lenders. This type of financing also helps companies expand operations without waiting months or years until product sales are sufficient enough to cover such costs. Additionally, it can help businesses build relationships with suppliers by allowing them to pay suppliers on time for goods and services they have ordered.
Overall, purchase order financing is an attractive option for many small business owners as it provides them with the necessary funds to grow without having to wait months or years until product sales are sufficient enough to cover such costs. If you’re looking for a way to finance your purchase orders and help your business expand, this type of financing might be right for you. Reach out to the team at Artis Commercial Capital today to learn more about our purchase order financing program.
