For companies that require a business loan, but have little or
less than ideal credit, pursuing an asset-based business loan may be the most likely way to receive
finances. Moreover, pursing this type of loan is often a quicker process than a traditional
business loan approval process.
There are multiple options to use as collateral for an asset-based
business loan. Often times, companies offer their inventory as collateral. However, any liquid
assets can sufficiently satisfy as collateral. In fact, a business' accounts receivable can also be
used to secure a loan.
The upside for pursuing an asset-based business loan is that the
company often receives a significantly greater amount of financing, at a faster rate than they will
from a conventional business loan. The downside, for the borrower, is that the collateral they’ve
used as security, their possessions, are in the balance should they fail to make payments.
Additionally, using assets to generate capital tends to undercut profit margins. However, for those
companies with little or no option, when it comes to pursuing a business loan, an asset-based loan
is often a viable choice. For those companies that qualify, a small business loan may also
offer the financial advancement needed, with a competitive interest rate.
