Asset Based Financing: Debunking the Myths for Business Owners

July 19, 2018 by CNH Finance, LP in category “Financing”

Asset based financing, or asset based lending, often receives disparaging comments from traditional lending institutions. A lot of the information available is misleading or written by people who do not fully understand how asset based financing works. As a leader in asset based financing in the United States, we offer the following facts to debunk the myths surrounding this form of business financing.

Myth 1: Asset based financing puts businesses in debt

False. Asset based financing is debt free, unlike traditional loans. This makes asset based financing ideal for new and small business owners who may not meet the prohibitively high requirements for bank loans.

Myth 2: The amount of funding offered is low compared to traditional loans

False. Asset based lending is structured around assets owned by your business. The value of things such as equipment, receivables, and more are used to determine the amount of financing available.

Myth 3: Once the funds are used, you can’t get additional financing

Asset based financing is one of the only renewable sources for working capital. This financing program acts just like a revolving business line of credit. This means that businesses can access capital as needed, and then repay the balance to replenish the amount of financing available. Compare this to traditional loans, where businesses must go into debt to access a finite amount of capital.

Myth 4: Only big businesses can leverage assets for financing

The truth is that businesses of all shapes and sizes can unlock the hidden value of owned assets for financing. Almost every business has equipment, vehicles, inventory, or receivables, which can be used to create a revolving business line of credit. We have seen businesses ranging from niche tech companies to restaurants, and even large healthcare centers use asset based financing to gain a competitive edge and reduce the need for debt-based loans.

Myth 5: Asset based financing quickly becomes irrelevant for growing businesses

Quite the opposite. As businesses grow, the asset based line of credit can be reconfigured to reflect the increase in sales and the acquisition of new assets. In short, asset based financing is the only commercial program designed to grow with your business.

CNH Finance specializes in asset based lines of credit for businesses across all industries. If you are in need of an extra source of working capital but want to steer clear of debt-based loans, contact the experts at CNH Finance today.

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