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Asset Based Loans – Something to Consider

By Ace Walmsley

Business lending can come in a variety of different forms, from traditional business loans to more obscure types of business funding. Alternatives to traditional business funding including things such as asset based loans or inventory financing. As with most things these days, the choices can be overwhelming for many people. Too many choices make it difficult to be decisive. When ends up happening is people tend to defer to what they are already familiar with. In the case of business funding, this usually means that they stick to trying to get traditional business loans or merchant cash advances.

Every type of business funding has its own set of advantages and disadvantages. But this is one reason that they are so popular among business owners. As a low cost source of business funding, small business loans are great. On the other hand, merchant cash advances are very quick to get and easy to access. Asset based loans have their own advantages, so what are some of them?

As far as term goes, asset based loans tend to be shorter term, sometimes less than a year. Depending on what you plan to use the proceeds of the loan for, you may need a long time to repay it. Sometimes, however, all you need is a quick injection of working capital for short term use. Since risk is lower on short term loans, the cost of an asset based loan can be very low.

Another thing about asset based loans it that the amount of money you are able to borrow is tied directly to the value of whatever asset you wish to pledge. Your borrowing power will be determined by a percentage of the value of your collateral. Your collateral’s value always has to be a fair amount greater than the loan amount. This is because in the event that you default on the loan, the lender will look to this asset as a way to recoup its investment. They don’t want to have to spend a lot of time and energy on the open market trying to find a buyer, so they need to be able to sell it at a discount while still being able to cover their losses.

Whether it’s for business funding or it’s a personal loan, you’ll be able to find someone to lend you money based on just about anything that has a lot of value. There are companies who specialize in funding based on strange collateral. Whether it’s a collection of baseball cards, a boat, or your wine collection. As long as it has value, you can probably borrow against it.

The most effective site for comparing small business loan prices is http://smallbusinessloanoptions.com/for-borrowers/small-business-loans/asset-based-loans/. Not only is it really easy and fast, however, you also control the number of lenders they’ll share your application with.

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Article Citation
MLA Style Citation:
Walmsley, Ace "Asset Based Loans – Something to Consider." Asset Based Loans – Something to Consider. 13 Aug. 2012. uberarticles.com. 18 Jul 2014 <http://uberarticles.com/business/asset-based-loans-something-to-consider/>.

APA Style Citation:
Walmsley, A (2012, August 13). Asset Based Loans – Something to Consider. Retrieved July 18, 2014, from http://uberarticles.com/business/asset-based-loans-something-to-consider/

Chicago Style Citation:
Walmsley, Ace "Asset Based Loans – Something to Consider" uberarticles.com. http://uberarticles.com/business/asset-based-loans-something-to-consider/


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