Renewable Financing For Small Businesses: Is It Still Just A Dream?

October 26, 2017 by CNH Finance, LP in category “Financing”

Sources of renewable financing often seem out of reach for new and small businesses. Revolving lines of credit from traditional providers often require an inordinate amount of collateral. On top of that, most small businesses do not have the established credit ratings to get the spending limits they require, and there are hidden fees or severe increases in the interest rates. However, in the quest for renewable financing, there may be one solution which provides the capital new and small businesses require, without the drawbacks of traditional lenders.

Leveraging Assets For Renewable Financing

Every business has fixed assets, whether they realize it or not. Owned equipment, facilities, and vehicles are fixed assets. Inventory and receivables are also considered fixed assets, because they are owned by businesses. Items which are leased are not considered fixed assets, because they are owned by a bank or third party. All fixed assets have an intrinsic value. Equipment, vehicles, and property are all worth a certain amount, as evidenced by depreciation charts when filing taxes. Inventory has a set value, because it has a price tag. Receivables obviously have a definite value, clearly shown on the invoices. The value of fixed assets can be used to create a source of renewable financing.

Asset Based Lines Of Credit

Asset based financing provides renewable financing in the form of a revolving line of credit. The amount of financing available is not based on some arbitrary number like credit ratings or bank board decisions. Instead, the renewable financing is based on the value of fixed assets. As a business acquires more assets, produces more products for inventory, or makes more sales, the limit on the line of credit increases. The reason asset based financing is renewable is because the line of credit is revolving. Much like a personal credit card, business owners can spend what they need, and then make payments to replenish the balance. The difference is that asset based financing offers a much larger amount of capital than personal credit limits, or even introductory business lines of credit.

Learn More About Asset Based Financing

If you own a new or small business, and you are looking for a source of renewable financing without debt, talk to the experts at CNH Finance. We specialize in asset based financing solutions for new and small businesses to promote growth and success without becoming dependent on traditional loans.

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