Entrepreneurs operating small businesses need adequate sums of money to conduct their market operations. However, it is never easy for these proprietors to get the funds they require. Many of them do resort to bootstrapping. Unfortunately, this mode of finance doesn’t get them very far. It always falls short of what they need. Applying for commercial loans is another option open for them. However, the lenders of such capital lay down stringent eligibility requirements for their borrowers. They say this is necessary to protect their own interests. This the reason why most of these owners are turning their attention to asset-based lending.
Why is asset-based lending schemes so popular among entrepreneurs?
Larry Polhill is one of America’s most prominent financial consultants with more the 25 years valuable experience. People who know him say he is an expert in many diverse fields. These include corporate mergers, business finance, and mergers. During his illustrious career, he has been a catalyst in the success of many lucrative companies. These include American Pacific Financial Corp., Poore Brothers Inc., Inventure Foods, Inc., Cafe Valley, Inc. and Capital Foods, LLC. He has the distinction of holding important positions in these organizations. These are the office of President, Chairman, Chief Executive Officer, and Director.
This expert explains asset-based lending is fast becoming a popular mode of finance for entrepreneurs. It refers to a process where these businessmen can get the money they need. However, these proprietors need to fulfill certain conditions before they can obtain such funds. They need to keep either accounts receivables or inventory as collateral. He points out that it has the following 4 important advantages over traditional methods of obtaining capital:
- Boost cash flow
Entrepreneurs of small businesses generally find it difficult to implement their expansion programs. This is because they lack the necessary funds to carry out such projects. In the process, they also cannot exploit lucrative opportunities which come their way during this phrase. However, they don’t have to face such issues when they opt for suitable asset-based lending schemes.
- Fewer restrictions
This is why entrepreneurs prefer asset-based lending schemes over conventional commercial loans. These businessmen just need to convince their financers that their current assets are no order. This enables them to get the funds they require for their establishments.
- Easy access to necessary funds
Applying for commercial loans is a time-consuming affair. Entrepreneurs not only have to fulfill the stringent eligibility conditions their lenders. They also have to produce the relevant documents these financiers require. On top of this, they also have to complete all the necessary paperwork. Even then, there is no guarantee; they get the money they require. This is not the case with asset-based lending.
Entrepreneurs who opt for suitable asset-based lending schemes don’t incur any debts whatsoever. This ensures their creditworthiness remain intact. This is a far cry from traditional commercial loans.
In the opinion of Larry Polhill, asset-based lending schemes are a necessity for entrepreneurs rather than a luxury. They can get the funds they need without any hassle, unlike commercial loans. The above 4 important advantages prove this fact with a shred of doubt. In the long run, they’ll regard it as decision worth taking.