Fixed Assets: An In-Depth View For Business Owners

April 13, 2017 by CNH Finance, LP in category “Financing”

When private lenders discuss fixed assets, a number of things come to mind. When business owners are considering asset based lending solutions, fixed assets play a central role. As a leader in asset based lending, CNH Finance has put together a guide to fixed assets to help business owners understand what goes into creating asset based lines of credit.


Asset based lending uses equipment as one of the cornerstones for structuring a line of credit. However, for equipment to be considered a fixed asset and able to qualify for asset based lending, it cannot be leased. While leased equipment offers its own advantages to businesses, owned equipment has a defined value, which can be used to create a line of credit.


Owned property provides a considerable value to asset based lending. Very few businesses own their offices or facilities. If you are considering the benefits of a large, revolving line of credit based around fixed assets, consider purchasing property for your business instead of leasing it.


In terms of asset based lending, inventory refers to finished products, which are able to be sold. Occasionally, asset based lending will consider raw materials, but more often than not, private lenders will focus on eligible finished goods which can be easily converted to future receivables.


Receivables form yet another big part in asset based lending. No matter how you slice it, receivables are considered fixed assets. Receivables are sales. Even if the customers have a 30 day aging period or more on their invoices, the fact that invoices were generated for sales makes them fixed assets. Apart from property, receivables typically are the largest contributing factor when structuring asset based lending.

Changes In Fixed Assets

Despite the implications of the term, fixed assets change quite a bit during the life cycle of a business. Businesses acquire larger facilities in which to operate. Old equipment is traded in for more advanced and efficient models to complete operations and fill customer orders. Inventory increases as businesses reach out to a broader customer base. Receivables increase as businesses grow, roll out new products and services, and generate more sales. All of these changes in fixed assets must be accounted for in order to get larger and better asset based lines of credit.

Learn More About Leveraging Assets For Credit

At CNH Finance, we will conduct an in-depth analysis of your fixed assets to get your business the highest possible value on an asset based line of credit. We take into account the above mentioned items, as well as other things most traditional lending channels overlook. Contact our offices today to learn more.

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