April 18, 2024

How Asset-Based Lending Can Propel Business Growth

In today’s rapidly changing business environment, gaining access to capital is crucial for growth and success. Many businesses, especially small and medium-sized enterprises (SMEs) experiencing rapid growth opportunities can face challenges when it comes to securing financing from traditional lenders.

This is where asset-based lending (ABL) offered by Bridge Business Credit provides companies with practical solutions. Through this financing option, asset-based lending provides businesses with the working capital they need to fuel growth and overcome cash flow challenges based on their available collateral.

Simply described, asset-based lending is a financing solution that allows businesses to borrow money against their assets. Unlike traditional lending, which mainly focuses on the borrower’s creditworthiness via historical cash flow, asset-based lending primarily relies on the value of the borrower’s assets. These assets can include accounts receivable, inventory, equipment, real estate, and even intellectual property.

Bridge Business Credit CEO Rhett B. Rowe describes how asset-based lending has gained popularity in recent years due to its flexibility and the benefits it offers to businesses.

“Many businesses have had difficulties obtaining financing due to limited credit history or lack of adequate cash flow,” Rowe said. “Asset-based lending provides a reliable funding source which emphasizes a business’s assets rather than its cash flow history. This opens opportunities for businesses which may not qualify for traditional loans.”

One significant benefit of ABL is the flexibility to fund business growth – perhaps to expand the services you offer, grow or launch a new product line, expand to brand-new markets, pay suppliers, or to add staff and retain valued team members.

“Through Bridge Business Credit, asset-based lending offers funding that is delivered quickly and adapts to the growing needs of a business.  Every solution we provide is customized to the needs of each borrower,” Rowe added.

Here’s how asset-based lending allows companies to manage rapid growth or position themselves for future growth.

Lending done creatively

Asset-based lending is a creative form of financing which allows firms to secure a loan based on the value of business assets, such as accounts receivable, inventory, machine and equipment, real estate, and even intellectual property.

This differs from traditional bank loans, which are based predominantly on the stability of a company’s cash flow history and resultant ratios—which can be difficult to maintain. In short, by choosing asset-based lending over a traditional bank, borrowers have more freedom on how to use the money to fund growth strategies.

Money when you need it

With asset-based lending, borrowers have a revolving credit line—an ideal position which means funds can be made available whenever needed. This can help accelerate the cash flow cycle and offers flexible working capital. For example, in the case of unexpected growth or the need to purchase additional inventory or pay suppliers quickly, asset-based lending offers a near perfect solution.

Tuned in to your business plan

Unlike traditional bank loans, asset-based loans can be customized to meet specific business needs. If, for example, the growth plan changes while there’s a credit line in place, how does a borrower quickly react?    All borrowing decisions must be carefully considered, but it’s also well worth reviewing an asset-based lending approach offered by the specialists at Bridge Business Credit. We collaborate with our clients to create a customized plan that works to keep your business growing.