Increasing Cash Flow with Asset-Based Lending
Keeping your small business afloat comes down to a few key points. Above all, having available capital is essential. When your cash flow is disrupted by factors beyond your control, you need to take time to learn about how you can obtain working capital. There are a number of different options to consider and each will yield different benefits for small business owners. Look into these suggestions on asset-based lending to discover an option that will help your company find the capital it requires for success.
Traditional Loans
When issues with cash flow arise, your first thought might be to explore your options with a traditional loan. This involves going to a larger lending institution like a bank and applying through the proper channels. While it may be a commonplace option, it is not always the best choice. Loans can put you further into debt, which can create lasting problems with your access to capital. Taking out a loan using an asset-based service like factoring may be a better option for your company in the long run.
Factoring 101
Asset-based lending services like factoring are quite simple. A company that specializes in the service of factoring invoices will come to your company and determine if your account receivables qualify for this type of financing. If approved, you will receive a percentage of the total value of the invoices in cash. The difference is given to you when the company collects the rest of the debt and all you need to do is pay a fee for the service itself. You get the cash you need to keep your business operational without crippling interest rates and repayment terms.
Benefits of Factoring
Factoring is a great option to think about for your financing needs because it does not put you in debt. Instead, you are given an advance on the money you are already owed. This helps you discover the cash flow your business requires without taking on debt that will negatively impact your company down the line. What’s more, the approval process is straightforward and the service is flexible. This means you can explore factoring as an option whenever you experience problems with your access to capital.
In order for your small business to get ahead, it can be a good idea to explore your options with financing services. Asset-based lending services like factoring can help boost your access to working capital without the need to take on any additional debt.
