Asset based finance is becoming an increasingly popular choice of funding for many businesses. This is because asset based loans offer a number of the advantages which you can expect from other forms of lending but qualifying for an asset-based loan is much easier.
There are multiple forms of asset based finance but two key ways this can be used to support your business. Firstly, you can use asset-based finance to purchase new, costly equipment to support your business operations or as an investment to enable your growth plans. This is something that a lot of SME’s may find difficult to afford in a lump sum payment so having the option of spreading out your costs makes it possible. The second way to use asset-based finance is to release cash which is tied up in your existing assets. This increases your cashflow allowing you to focus on investing in other areas of your business.
The benefits of asset based finance
There are several significant benefits to using asset based finance, a few of the main advantages include:
- Easier than other types of loans and credit – qualifying for asset-based finance is easier than many other forms of lending which is particularly useful for an SME who may find more traditional lending difficult
- Can be obtained quickly – once you meet the qualifying criteria you can get an asset-based loan fairly quickly – much faster than a traditional loan
- Enables growth – asset based finance can support business growth at times where you need to make a significant investment or gain quick access to increased cashflow
- Offers flexibility – most forms of asset based finance offer great flexibility and can match your changing business needs
- Can be used as a stepping-stone to other products – this is a great solution for companies in the middle of a period of growth where other types of lending may not be an option yet. Asset-based finance allows you to gain the cashflow or assets needed for growth whilst building a strong track record with a lender
If your business is looking to explore asset-based finance as an option for lending, our experts at Compare Your Funding can guide your though finding the right solution at rates to suit you.
Types of asset based lending Compare Your Funding can support with
Invoice Finance The largest asset a company has is usually the ‘debtor book’ – your sales ledger can be used to advance your business 100% of your outstanding invoice(s). This is now the single biggest form of financing within the UK. Invoice finance works for all companies that invoice business-to-business. If your customers are taking longer and longer to pay in the current climate, getting an advancement on the value of an outstanding invoice rather than waiting for it to paid is hugely beneficial to