Asset Based Lending
What is the purpose or function of an Asset Based Loan?
Typically Asset Based Loans provide short (and sometimes long!) term
restructuring of a companies’ financial situation in a way that facilitates maximal Cash Flow. One purpose of this type of lending is to provide a limited
period of recovery time and a financial operating environment whereby a company
can demonstrate how it can perform were it to have a long term loan in place.
This opportunity allows the company to demonstrate that it is a creditable and
worthy candidate for financing.
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Typical Asset Based Loan Applications
On the positive side: Business opportunities appear in the market
place access to conventional financing may not always be executed in time to
take advantage of the situation. There may also be the need to
"stretch" the resources available to accomplish a company’s
objectives and conventional resources will not or cannot suffice. Herein is
where Asset Based Lending becomes the mechanism of opportunity!
Turning negatives into positives: Events can occur in the market
that deplete Cash Reserves and can invite the demise of the very best of well
managed companies. When this happens and conventional funding is withdrawn often
times only an Asset Based Loan will provide the financial mechanism for recovery.
Is applying for an Asset Based Loan difficult?
No! We normally need at least two years of financials and a summary of your
objectives. Most answers are provided to a customer within 24 hours as to
whether something can be done! After this it is a matter of documenting and
appraising the assets.
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Information
Execution of the loan and the issuing of funds is fairly rapid, varying from several weeks to 60 days – most often this is directly dependant upon availability of documentation!
Typical Customers for Asset Based Lending(ABL)
There is a "break-point" to access an ABL program due to the cost
of putting it into place and maintaining it (performed by the lender). Minimal
loans are as small as $50,000, however cost effectiveness is gained from
$500,000 and up. The reason for this is that there is nearly as much work in
providing $50,000 worth of financing as there is $5,000,000 worth of financing.
Most customers generate $600,000 in annual sales to meet a minimum program and typically have 5% of their receivables as Accounts Receivables. To Apply | Request More Information