Leveraging Assets For Long Term Financing

June 22, 2017 by CNH Finance, LP in category “Financing”

Businesses across all industries are leveraging assets for long term financing solutions, instead of relying on loans, merchant cash advances, and other high-cost funding structures. They key is to use asset based lending.

Why Businesses Are Shy About Merchant Cash Advances

Merchant cash advances are high risk funding structures. Merchant cash advances are structured around future receivables, which is why the interest rates are often much higher than even traditional bank loans. While merchant cash advances are marketed as “debt free” solutions, the interest rates and other fees frequently place a much larger strain on cash flow as the terms of the agreement come to a close. As flexible as merchant cash advances claim to be, the hard numbers end up being very cost prohibitive compared to leveraging assets.

The Private Sector Is Shifting Away From Loans

In order to get accessible and affordable financing, the private sector as a whole is moving away from traditional bank loans. To be honest, banks and similar institutions have been moving away from business owners for years. Traditional bank loans have prohibitively high requirements, making them only accessible to large corporations with impeccable credit ratings and a long history of borrowing. Additionally, bank loans place debt on the balance sheets, which is not always desired by business owners. Taking on debt and having business credit ratings compromised is not the best way to ensure growth and long term success.

Leveraging Assets For Working Capital And Business Growth

Businesses are leveraging assets in such a way as to provide a renewable source of working capital that increases as operations grow. The value of assets owned by a business can be used to create a revolving line of credit. Businesses pay on what they use, and because it is a line of credit, no debt is placed on the balance sheets. By leveraging assets for a line of credit, known as asset based lending, businesses of all sizes can get the financing they need without any of the restrictions or prohibitive fees of bank loans or merchant cash advances, respectively.

Grow Your Business By Leveraging Assets

At CNH Finance, we provide asset based lending to help businesses grow for long term success. Our team will perform a detailed analysis of your fixed assets to create the highest value revolving line of credit possible for your business. Contact our offices today to learn more.

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