Working Capital Solutions: Is Debt-Based Financing Necessary?

March 9, 2017 by CNH Finance, LP in category “Financing”

Businesses of all sizes need working capital solutions to thrive and grow. Even on a very basic level, working capital provides a means to cover financial obligations and get supplies. However, for many businesses, finding working capital solutions can be a challenge, and many resort to loans when cash flow is tight. Fortunately, there is a source for working capital that does not require bank loans or other debt structures.

Relying Solely On Loans

Relying on short-term loans for capital when cash flow is tight can lead to larger problems. First, loans provide a finite amount of capital. Second, once that capital is used, the debt and interest remain. Taking out another loan further impacts business credit ratings, while creating a larger financial liability. When all is said and done, a new or small business may be juggling multiple loans at different rates, with a compromised credit score and the inability to get further financing. This is not a comfortable situation.

Asset Based Lending

Asset based lending taps the value hidden in equipment, inventory, receivables, and more to create a revolving line of credit. Asset based lending does not place any debt on the balance sheets, and is treated like any other business line of credit. When the line of credit is accessed for working capital, it can be replenished and used continuously. Contrast this with the debt structure of traditional loans, and how they can negatively impact a business that relies on them solely for short-term working capital. Additionally, asset based lending works well in conjunction with traditional bank loans to lessen the required amount to reach critical goals.

Working Capital Solutions That Grow With Your Business

As your business grows, so does the spending limit on asset based lines of credit. As you acquire new equipment and make more sales, asset based lending can be refactored to show those improvements. By accessing asset based lines of credit, businesses can actually increase their credit ratings, which goes a long way when loans become necessary for completing large internal projects, or taking that great leap forward in a competitive marketplace.

Get The Working Capital Solutions You Need

If your business needs an extra source of working capital without the debt and restrictions of short-term loans, talk to the experts at CNH Finance. We will conduct an in-depth analysis to unlock the potential of your assets to create the best line of credit possible for your business, to ensure growth and success.

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 'Is It Possible To Get Business Financing Without Bank Loans?'
Is It Possible To Get Business Financing Without Bank Loans?

For emerging and small business owners, getting access to business financing is not an easy obstacle to overcome. Usually, entrepreneurs are under the impression that business financing…

Image for 'Alternative Lending In Newport, CA For Small Businesses'
Alternative Lending In Newport, CA For Small Businesses

Alternative lending in Newport, CA is quickly becoming the “go to” solution for local small businesses. Traditional loans have increasingly prohibitive requirements, and most small…

Image for 'Debt Financing: Is There a Better Way to Grow a Business?'
Debt Financing: Is There a Better Way to Grow a Business?

Debt financing has long been the standard way to sustain and grow a business for centuries. Business owners borrow capital in exchange for debt and interest and pay off the balance over…

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