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…
Business finances can be tricky once you launch your operation. Regular bills for utilities, maintaining equipment, making payroll, advertising – all of these things can eat into a budget, even if sales are through the roof. New business owners need a reliable source of working capital to handle the day-to-day expenses, so they can focus on growing operations.
The Crunch on Business Finances
Shortly after launching a business, a number of budgetary issues come to the forefront. Business finances are often torn between the regular outflow of capital that needs to be used for weekly, bi-weekly, or monthly expenses, and paying down loans to get out from under the debt on the books. Very few businesses launch without taking out at least one loan. Paying off those loans can become a huge burden, even when sales are high. Which brings us to the next point.
High Sales do not Equal Revenue
If a business starts off making high sales it doesn’t equate to a healthy cash flow. New businesses still have to depend on staggered payment schedules before revenue comes into the business. Sales make up a large part of business finances, but if customers aren’t paying immediately, then there are few positives on the balance sheet while money owed keeps racking up negative numbers.
So What do Business Do?
Business finances can be corrected very early on, despite debt from previous loans and delayed payments from customers. Asset based financing allows new business owners to leverage owned assets to create a renewable source of working capital. Equipment, receivables, property, and more are assessed for their inherent value and used to create a revolving line of credit which can be accessed as needed, without placing further debt on the books. New businesses can draw upon this line of credit for everything from supplies to meeting regular business expenses.
Financing that Helps Your Business Grow
One of the biggest advantages of asset based financing, apart from being debt-free, is that the amount of capital available increases as your business grows. As your business acquires more equipment, stocks more inventory, makes more sales, or expands into larger facilities, the credit line will also increase to promote growth and success.
Rightsize Your Business Finances
CNH Finance provides the most comprehensive asset based solutions for businesses in all industries. Whether you are just launching your business, or are looking for new and reliable sources of working capital, we can help. Contact our offices and get started today.