You might do well to remember that your destiny is in your own hands. Whether your business sinks or swims is totally up to you and the decisions you make. Therefore, you should know that a line of credit might be better than an asset based lender.
On paper, your business might be thriving. However, without enough cash flow, it could all come crashing down around you. If you are thinking about a business bank loan or accounts receivable factoring, you should be aware that a line of credit might serve your needs better than using an asset based lender. When considering cash management strategies, it’s vital to look at all your options.
The Advantages and Disadvantages of an Asset Based Lender
Asset based lending involves pledging collateral (or assets) in order to secure a small business loan. This might include inventory, accounts receivable, real estate and equipment.
Using balance sheet ratios and cash flow predictions, these lenders make funding decisions based on your assets and how much quick business funding you need. The biggest advantage of using an asset based lender is that you typically get your money faster than going to a bank.
In addition, you can use the instant business financing for any purpose, unlike getting a fast business loan from a bank, which is usually restricted. You may also get a lower interest rate.
The disadvantages include losing your assets if you are unable to repay your immediate small business loan. Also, with too many of these loans, you could end up owing more in loans than you have in equity.
Where to Get a Line of Credit Other than Going to an Asset Based Lender
If you are already looking at getting financing or factoring through an asset based lender, there is an additional product that you should consider. A line of credit (LOC) from Financing Solutions (www.financingsolutionsnow.com) is easy to get set up, inexpensive to use, and it doesn’t cost you anything until you use it.
Combined with an asset based lender or factoring company, your LOC allows you to use additional funds for short term and emergency situations. Every business owner is anxious about having enough money if sales go down, expenses go up or if payments are delayed.
Nowadays, having capital lined up just in case is so important. Anyone who went through the 2008 recession knows what it is like to not have capital reserves in place. This is not an ideal position. No cash flow will leave you unable to make payroll, purchase supplies or handle other daily operating expenses.
Your Business Might Be Better If…
- You really listen to those around you. Your employees and even your customers might have great ideas for how you can improve.
- You keep an eye on distractions. Decide which activities are most important for you to perform in order to grow your business; delegate the rest.
- You get fast business funding from Financing Solutions. This can have a major, positive impact on your business.
