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With new trade agreements in place, the lumber industry in the United States is experiencing a new surge. This year, the lumber industry saw prices hit a record high and an increased demand from customers. Indeed, the recent spike in demand has lumber companies rolling out plans for growth, but they are still wary of debt-based solutions.
Loans Hinder Growth for Lumber Industry
Even if the surge in customer demand for lumber is sustained, using loans for growth is a financially risky move. Taking on debt for the sake of growth hinders momentum. Instead of a single-use loan that places debt on the books and impacts credit ratings, business owners in the lumber industry are looking for a better solution. They need a reliable and renewable source of working capital without the burden of debt. In this new economy, old-fashioned loans simply do not offer the flexibility for growth that the lumber industry demands.
Finance Solutions that Promote Growth
If traditional loans are not in the picture, lumber companies have to start thinking outside of the box. Fortunately, asset based financing checks the boxes for accessibility, renewable funding, and no debt. Asset based financing is a revolving line of credit structured around the value of lumber equipment, land, receivables, inventory, and vehicles owned by lumber companies. The revolving line of credit is debt-free. Lumber companies can draw on the line of credit as needed, and the amount of capital available is replenished as the balance is repaid. This gives lumber companies the ability to roll out plans for growth without hindering momentum with debt.
With the rising demand for lumber in the United States, the industry needs a solution that will provide increased funding with business growth. Asset based financing provides just what the lumber industry needs. As lumber companies grow, acquire new equipment, expand inventory, and see more sales, the amount of available working capital will also increase. This provides ongoing and increasing funding that helps to ensure long-term success.
CNH Finance specializes in working capital solutions for lumber companies of all sizes. If your lumber business needs a reliable source of capital to maintain or grow operations, contact the experts at CNH finance today.