Asset-Based loans provide businesses with immediate funds and ongoing cash flow in the form of a revolving line of credit based on a percentage of the value of the company's assets, such as commercial accounts receivable and inventory. Businesses pay interest only on the funds they've drawn.
Asset-based revolving lines of credit typically range from $2 million to $25 million.
Most companies qualifying for a First Capital asset-based loan will be B2Bs (business-to-business) in manufacturing, wholesale, distribution or business services generating commercial accounts receivable invoices. In most cases, annual sales range between $10 million and $250 million.
What is an Asset-Based Loan?
A commercial Asset-Based loan provides businesses with immediate funds and ongoing cash flow based on a percentage of the value of your company’s assets such as commercial accounts receivable, inventory, business equipment and machinery, and recurring revenue contracts. Funds from Asset-Based finance can be used for day-to-day operating expenses, or as capital for restructuring, turnarounds, mergers and acquisitions, and buyouts.
How does Asset-Based Lending provide working capital?
First Capital assigns your business a revolving line of credit based on a percentage of each of the qualifying asset classes. You may draw on your line of credit whenever needed and pay back to increase availability for future use. You only pay interest on the funds you’ve drawn down so overall it’s less expensive than a term loan.
Why Asset-Based Financing?
First Capital can custom tailor an asset based loan that fits your business needs. Asset-Based finance can be underwritten relatively quickly and easily by First Capital to get you the funding that you need when you need it. Because Asset-Bassed financing is often provided on a revolving line of credit, you draw down only what you need. Asset-Based loans are generally cost effective and competitive relative to other financial options. Because of First Capital’s expertise, internal resources and flat management structure, we can move faster than traditional financial institutions.
Who uses Asset-Based Lines of Credit?
Small to Middle-market companies that need working capital to support growth, acquisitions, turnarounds and restructurings. Some companies may need funding quicker with a more flexible structure than a traditional lending institution can provide. This is where First Capital has the advantage as an independent lender.
When should Asset-Based Lending be used?
Many companies use Asset-Based Lending as a constant source of working capital since borrowers only pay interest on the funds they draw. Other companies use Asset-Based lending when they haven't been able to secure financing through traditional lenders for a multitude of different reasons including:
- Need for quick financing
- Need for flexible and customized package
- Unable to get traditional financing due to high growth, shallow sales history or restructuring situations
Does First Capital offer Credit Protection? What is Credit Protection?
Credit protection is an agreement between your company and First Capital whereas First Capital pays you if your customer does not have the financial ability to do so. Click here to learn more about Credit Protection with First Capital