Renewable Capital: Is It More than A Business Myth?

March 8, 2018 by CNH Finance, LP in category “Financing”

Many business loans products are marketed to entrepreneurs as featuring “renewable capital.” However, renewable capital is not always what it is cracked up to be, and can often leave business owners in dire financial straits after they have entered into an agreement with lenders.

Renewable Capital

Renewable capital currently has a very broad definition. Revolving lines of credit, for instance, provide renewable capital in possibly its truest sense. Business owners access capital and then repay the balance. The amount of capital available is then replenished and made available for future use. The process can bee repeated as many times as is necessary, giving businesses a perpetual source of funding and increased purchasing power. Other forms of financing, such as merchant cash advances, advertise renewable capital, but it works differently when you look at the fine print. Business owners do have the ability to take out consecutive merchant cash advances, provided the balance has been repaid. But the high interest rates and hidden fees often make paying off the balance on or ahead of schedule an impossibility, leaving business owners with large balloon payment. If the terms of the agreement allow for successive merchant cash advances before the first one is fully repaid, then the amounts are usually lower, and the total payments can quickly cause a business to go in the red.

Using Assets For Renewable Capital

Asset based lending is one of the most financially sound methods of accessing renewable working capital without the red tape and negative impact of traditional credit providers or merchant cash advances. Asset based lending creates a revolving live of credit around the value of things our business owns, such as receivables, property, vehicles, inventory, equipment, and much more. The funding is not marked for any specific purpose, so it can be used for anything your business needs. As the balance is repaid, the amount of funding is renewed. The big difference that sets lines of credit through asset based lending apart from the rest comes with growth. As your business grows, makes more sales, acquired new equipment, or moves into larger facilities, the amount of credit available also increases. Merchant cash advances and traditional business lines of credit are static and finite by contrast.

Learn More About Asset Based Lending

CNH Finance is a nationwide leader in asset based lending, providing a reliable and growing source of renewable working capital to businesses across all industries. Contact our offices today to learn more.

Image for 'Business Equipment: Tapping Into A Financial Goldmine'
Business Equipment: Tapping Into A Financial Goldmine

Every business uses equipment of one form or another to perform daily operational tasks or to complete customer requests. What many entrepreneurs do not realize is that the business…

Image for 'Loan Turndowns: Getting Approved for Business Funding'
Loan Turndowns: Getting Approved for Business Funding

Roughly 25 percent of new and small businesses are approved for loans. That is a staggeringly low number when one considers the millions of entrepreneurs that try to launch or grow their…

Image for 'Inflation Pushes Businesses to Seek Funding Alternatives'
Inflation Pushes Businesses to Seek Funding Alternatives

The economy is booming, unemployment is low, and businesses are poised for growth. However, the Fed is adjusting for potential inflation threats by raising the interest rates on loans.…

Image for 'Interest Rates Are Rising: Time for a New Strategy'
Interest Rates Are Rising: Time for a New Strategy

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…

CNH Finance
24 East Ave #1285
New Canaan, CT 06840
Phone: (203) 266-3210

Business Development
Long Beach, CA 90803
Phone: (562) 833-7815

Business Development
3334 E. Coast Hwy, Suite 541
Newport Beach, CA 92625
Phone: (714) 520-1788

Melinda Ficek
mficek@cnhfinance.com

Maryland Office
3 Bethesda Metro Center, Suite 723
Bethesda, MD 20814
Phone: (301) 529-9993

Steve Silver
ssilver@cnhfinance.com

Business Development
5050 Quorum Drive, Suite 700
Dallas, TX 75254
Phone: (972) 687-9157

Rossi Felix
rfelix@cnhfinance.com