It is vital for every business to grow in today’s marketplace. Long period of stagnation without growth capital frequently cause businesses to go under with increasing strains on…
At the beginning of 2018, the Fed announced projections for increased interest rates on bank loans. As of this month, interest rates have jumped twice, with at least one more on the horizon before the year is over. While interest rates are being raised under the auspices of combating inflation, traditional loans are becoming even more cost-prohibitive for businesses across all industries. It’s time for entrepreneurs to devise a new strategy in order to get the capital they need while reducing the need for debt-based lending.
Step 1: Consolidate Debt & Interest Rates
Many businesses are currently juggling multiple loans. Debt consolidation is the easiest way to lower the number of liabilities on the balance sheet. Businesses are able to take multiple loans and compile them into one manageable payment. Debt consolidation also offers fixed interest rates, which will protect against rate hikes in the future.
Step 2: Take Stock of Owned Assets
It is not unusual for businesses to lease things such as property, vehicles, and equipment. Unfortunately, leasing companies are also raising their rates to be more in-line with what banks are charging. Continuing to pay for something that will never be owned by the business throwing money away. Purchasing assets not only saves money in the long run, but also increases the equity of a company’s financial portfolio.
Step 3: Leverage Assets for Capital
Instead of taking out bank loans with unpredictable interest rates, business owners are using their owned assets to create a renewable source of capital. Facilities, machinery, tools, vehicles, and receivables all have an intrinsic value. Asset based lending taps into that value to create a revolving line of credit. Businesses can access capital as they need it, and then repay the balance, just like other revolving lines of credit. There is no long-term debt, and interest rates are not wildly unpredictable. Additionally, as businesses grow, the amount of capital available will also increase. Asset based lending is becoming the “go to” solution for businesses that want to reduce their reliance on bank loans and avoid arbitrary interest rate hikes.
Step 4: Talk to the Experts
CNH Finance provides the most comprehensive asset based lending program for businesses spanning all industries throughout the US. If you want to pivot away from debt-based vehicles and create a self-sustaining and renewable source of capital that promotes growth, contact CNH Finance today.