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While most large companies have access to capital markets to secure loans, smaller, closely-held businesses generally aren’t afforded that option. Asset-based lending is an ideal solution for small or middle-market companies that need capital to finance their growth into a new business vertical or geographical market, acquire a competitor or smooth out short-term cash flow demands.
Asset-based lending is a secured business loan whereby the borrower’s assets are pledged to the lender as collateral. The benefit of an asset-based loan is that it offers immediate access to funds needed to operate a business.
Here’s how it works: we will advance funds based on a percentage of the secured assets’ value, whereby the value of the collateral is determined by how easily it can be sold and its expected liquidated value. While most asset-based loans are secured or collateralized by accounts receivables, marketable securities or inventory and equipment, in some special situations, this might also include intellectual property, commercial real estate or a combination of assets. Asset-based loan transactions can be structured as short-term working capital loans, revolving lines of credit or term loans that are repaid over several years.