If your business has assets such as inventory, real estate, accounts receivable, equipment, stocks or bonds, etc, you can use these assets as collateral for a small business loan.
In the current economic times banks and lending institutions are willing to take on any kind of risk whatsoever. Collateral is a form of defense for the banks so that if you default on the business loan, the bank can take that asset and sell it as a form of repayment.
When using assets as collateral, you will only be able to receive financing for about 70% of the total worth of that asset. Banks use this strategy just in case they cannot get the total value out of that asset down the road when it might need to be sold for cash.
Because the lending market is so tight right now, lenders want to see good quality small business borrowers. Be sure to be prepared before you go and apply for a asset based loan. There are hundreds of small business borrowers out there and banks are only going to spend their time with borrowers that are educated and prepared.
For the best results in getting approved for an asset based loan, be sure to have a good business credit score with all three business credit reporting agencies, a solid business plan, and financial documents that you can share with the lender to show them you are a positive cash flow kind of company.
SmallBusinessLoans.com has relationships with over 300 lenders across America. Use our lender search tool to find the right kind of asset based lender for your business.
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