Traditional Lending: A Big Risk for Businesses

January 17, 2019 by CNH Finance, LP in category “Financing”

Traditional lending used to be the “go to” solution for businesses. Loans offered everything from startup money to growth capital and everything in between. In recent years, traditional lending channels have marginalized businesses, and placed more risk in the hands of entrepreneurs.

Traditional Lending Is Inaccessible

One of the biggest complaints we see on a regular basis is that traditional lending no longer favoring new and small businesses. The prohibitively high requirements make it night impossible for all but the largest corporations to get favorable loans. Lenders also impost arbitrary funding limits on business clients. Once those limits are reached, funding stops, regardless of how profitable the business is. This leaves many entrepreneurs selling off control of their businesses for equity loans or simply using their personal savings to keep things going.

Businesses Bear More Risk

As we’ve seen over the past year, more risk is being shifted from traditional lenders to business owners. Businesses are being asked to put up more collateral. Interest rates are subject to hikes from the Fed, placing an even bigger strain on business finances. All of these factors are actually preventing businesses from maintaining operations and growing successfully.

Financing Your Business Without Debt

Smart business owners are moving away from traditional lending channels in favor of a solution that is more manageable, debt-free, and renewable. Instead of taking on debt and the uncertainty of future rate hikes, businesses are leveraging their own assets to create revolving lines of credit. Practically every business has assets in the form of equipment, property, inventory, or receivables. The value of these items can be used to structure a revolving line of credit which can be used for anything a business needs. Businesses can access the line of credit as needed and then the amount of financing available is replenished when the balance is repaid. What’s more, the amount of financing grows as the business acquires more assets. Unlike traditional lending, asset based lines of credit promote growth and success without the burden of debt.

CNH Finance is a nationwide leader in asset based financing for businesses across all industries. If you want to move away from debt and the restrictions of traditional lending channels, contact CNH Finance today.

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