Traditional Loans Are Not The Answer For Growing Businesses

August 10, 2017 by CNH Finance, LP in category “Financing”

For the longest time, when businesses wanted to get past their growing pains and hit the next milestone, they turned to traditional loans. Unfortunately, in today’s business landscape, traditional loans frequently deter businesses from reaching their full potential. In fact, traditional loans keep businesses from being able to thrive in a competitive economy. However, business owners do have an alternative to loans, but it will never be mentioned by banks and similar lending channels.

The Problem With Debt From Traditional Loans

Debt-based financing structures, such as loans, have been viewed as a necessary evil for businesses to get the working capital they need to grow, complete internal projects, or roll out new products and services. The problem with debt is that it severely slows down any momentum a business has. Instead of using revenue to reinvest in the company, business owners must now set aside a good portion to pay off any loans they have on their balance sheets. This delays growth. If the business needs another source of working capital, traditional loans will not be much help because credit ratings have already been impacted from previous debt-based financing. In short, loans are far from ideal when it comes to long-term success.

Cash Advances Are Not What They Seem

When looking outside the realm of traditional loans for adequate financing, it is hard to ignore cash advances. Cash advances are promoted as the answer to everything from financial strain to business growth. Advances are made even more alluring by claiming to be debt-free and not impacting credit scores. But that is where the positive points end. Cash advances provide a large sum or working capital, structured around future sales. Because there is no collateral involved, the interest rates are very high. Advances are repaid from a percentage of sales, which means that if sales are low, businesses will end up with a large balloon payment at the end of the terms of the agreement, saddling entrepreneurs with even greater liabilities.

There Is A Better Solution

Asset based lending allows businesses to create a source of working capital based on the value of their fixed assets. Asset based lending is not a loan, but a revolving line of credit. Businesses only draw on it as needed, and then repay the amount used, plus a low interest fee. There is no debt, no negatively impacted credit ratings, and as the business grows, so does the amount of financing available. To learn more, contact the experts at CNH Finance today.

Image for 'Business Loans: Going Beyond Conventional Thinking'
Business Loans: Going Beyond Conventional Thinking

Business loans have long been the mainstay for entrepreneurs, however, a new school of thinking has taken over. More business owners across all industries are thinking outside of the box…

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

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.…

Image for 'Trucking Fleets: Making The Most Of Your Equipment'
Trucking Fleets: Making The Most Of Your Equipment

Trucking fleets are constantly trying to balance the cost of overhead, maintenance, logistics, and marketing. This can make it very difficult to get ahead and accumulate working capital…

Image for 'Zero Debt Financing For Businesses: Is It Possible?'
Zero Debt Financing For Businesses: Is It Possible?

Traditionally, when businesses are seeking funding for any reason, they turn to loans. Traditionally loans provide funding, but compromise credit scores while simultaneously placing debt…

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

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

Steve Silver

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

Rossi Felix