Seasonal Businesses Are Preparing For The Summer Rush

April 26, 2018 by CNH Finance, LP in category “Financing”

As we leave April, many seasonal businesses are gearing up for summer sales. From resorts to restaurants, fairgrounds, food trucks, and more, seasonal businesses are putting together advertising campaigns, ordering supplies, and hiring staff. However, all these preparations require capital, and loans may not be the best fit.

Loans Place A Burden On Seasonal Businesses

Seasonal businesses are not strangers to loans. Taking out a loan to ensure a business is fully stocked and staffed to maximize sales seems like a sound strategy. But what happens once summer draws to a close? Business owners are left paying off the balance of the loan during the off season. Loans almost negate the hard work leading up to and during the summer months, because a good portion of the revenue generated will be going to the bank. This can even end up eating into personal finances if summer sales are not as strong as anticipated. Depending on the terms of the loan agreement, a seasonal business may not even finish paying off the balance due before the following summer.

A Better Source Of Working Capital

Instead of going into debt and paying off loans well after the summer ends, seasonal businesses are turning to asset based lending. At its heart, asset based lending is a revolving business line of credit. Instead of a lump sum, businesses can access working capital as it is needed, and then replenish the amount available by paying off the balance. The amount of financing available is determined by the value of assets owned by the business, such as property, vehicles, equipment, inventory, receivables, and more. If sales are particularly strong during the summer or the business expands, the asset based line of credit will increase to provide even more working capital.

No Debt

Perhaps the biggest difference between asset based lending and traditional loans is that the former does not come with any debt. Also unlike traditional loans, asset based lines of credit do not have a specific purpose. The capital can be used for anything from purchasing supplies to running advertising campaigns, hiring employees, or purchasing equipment.

CNH Finance is a national leader in asset based solutions. Our team will run an in-depth analysis of your business to unlock the value of your fixed assets. Contact our offices today and get a head start on a great sales season.

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