The economic climate is currently strong. Businesses are experiencing growth, and entrepreneurs are capitalizing on that growth to maintain forward momentum. However, anyone who has been in business for a few years knows that there are always peaks and valleys in the economy, and finding adequate financing that is recession-resistant can be extremely challenging.
Traditional Loans are not Recession-Resistant
Just a little over a decade ago, we experienced the Great Recession. In a quick move to cover their interests, banks and other traditional lending channels raised the requirements for business loans. Those requirements have become even more prohibitive over the years, pushing new and small businesses to the sidelines. Retailers, manufacturers, tech start-ups, even the healthcare industry cannot access the capital they need due to the high point of entry set by traditional lenders. Even if the requirements are met, traditional loans are still subject to interest rate hikes by the Fed. To offset inflation, businesses may end up paying more per month on a traditional loan than when it was first approved. This prevents businesses from reaching their potential, regardless of how well the economy is doing. Business owners need recession-resistant financing that places more control in their hands.
Financing from Within
Businesses to have a recession-resistant financing option that doesn’t place debt on the books. Asset based financing allows businesses to get working capital by leveraging the assets they already own. Receivables, equipment, vehicles, property, inventory, and more have an inherent value which can be used to create a revolving line of credit. The line of credit can be used for anything the business needs, without putting debt on the balance sheet. Leveraging the objective value of assets to get a renewable source of working capital makes more sense than relinquishing control to arbitrary loan board decisions and interest rate hikes.
Higher Growth Potential
Asset based financing if not only more recession-resistant than traditional loans, it also promotes business growth. As sales increase or your business acquires more assets, the amount of capital available also grows. Compare this with debt-based financing which places a severe strain on cash flow. At CNH Finance, our specialty is asset based lines of credit. Our goal is to provide flexible financing that promotes growth and allows businesses to break free of the restrictions and fluctuations of traditional loans. Contact our offices today to get started.
