Asset-based lending is a financing arrangement that loans money to a business and secures it with some type of collateral. These types of loans or lines of credit can be secured by accounts receivable, inventory, equipment, or other property owned by the borrower. Asset-based lending serves businesses, not consumers, and it’s often referred to as asset-based financing. ABL's prefer liquid collateral to physical assets such as equipment and are often used by small and mid-sized companies in Las Vegas to cover short-term cash flow demands.
Many business owners need to take out loans or obtain lines of credit to keep up with the cash flow demands of the business. For example, a company might need a line of credit to make sure it can cover payroll expenses even when there's a delay in payments it expects to receive. If the company asking for the loan cannot show enough cash flow or cash assets to cover it, the lender may offer to approve the loan with its physical assets as collateral.
The terms and conditions of an ABL will depend significantly on the type and value of the assets offered as security. Asset-based lenders prefer highly liquid collateral, which can readily be converted to cash if the borrower defaults on the payments. Loans that use physical assets run a considerably high risk so that the maximum loan amount will be less than the established value of the assets. Interest rates also will vary depending on the applicant's credit, cash flow, and length of time doing business.
Many businesses in Las Vegas can benefit from asset-based loans. Companies needing help with growth and looking for consistent access to working capital will benefit the most from ABL’s. Businesses in the expansion, acquisition, or turnaround stages can also find great value in working with these lenders. All companies with accounts receivables, inventory, or fixed assets can use asset-based loans for alternative financing. ABL agreements do not require many years in business, an implacable credit record, and it does not add additional debt.
It is essential to mention that asset-based lending might not be the right solution for every business. Businesses using a recurring revenue model have no assets due to the nature of their business and, therefore, might not qualify for an ABL. In addition, those companies dealing primarily with cash transactions would also not be a good fit.
Industries in a capital-intensive nature tend to be the perfect fit for asset-based lending. You can get the most out of working with 1st Commercial Credit if you're a manufacturer or distributor. We offer competitive financing and lending services to businesses in Las Vegas every day. The stronger your collateral is, the more attractive your business will be to a lender. Financing businesses is an easy process for us, and we can give your company immediate access to funds. An increasing number of businesses in various sectors are also thriving with our asset-based loans. Some of the sectors taking advantage of asset-based lending in Las Vegas include retail, staffing, apparel, and service companies extending credit to their customers.
Many asset-based loans are structured as lines of credit. They allow the company to access funds to pay business expenses or make new investments. The lender will use the assets' established value to determine the borrowing base, the sum of money you can borrow. The borrowing base is shown as a percentage of the asset value. ABL lenders often offer a loan-to-value ratio of 75% to 90% for accounts receivable. Other collateral, such as equipment or inventory, is financed at a lower loan-to-value ratio, usually 50% or less.
ABL provides a flexible alternative to financing a company's operations and needs for growth and success. Unlike conventional banks, where a long list of requirements needs to be fulfilled, asset-based loans are based on collateral for the loan. The most typical type of ABL uses a business's accounts receivables. When financing accounts receivables, 1st Commercial Credit will advance funds to the borrowing business based on the value of the receivables submitted.
As mentioned before, to qualify for asset-based lending, 1st Commercial Credit will focus on the collateral quality and not on the borrower's credit rating or cash flow situation. They evaluate the creditor's ability to pay and determine their creditworthiness, making it a much easier financial solution to qualify for. Traditional bank lenders are limited by internal bank lending standards and strict requirements. On the other hand, asset-based lenders are not subject to these types of constraints, giving them the freedom to finance many small businesses that otherwise would not meet traditional bank lending standards. 1st Commercial Credit has provided financing solutions, including asset-based lending and factoring services to businesses in Nevada just like yours for more than 18 years!
Benefits of Working with ABL’s
Use our cash to meet payroll, pay bills, service customers, and much more. With over 18 years in the business, 1st Commercial Credit has been a leading factoring Nevada company serving Technology and IT companies. These companies use factoring to access the cash they need for payroll, equipment, inventory, unexpected expenses, and so much more. If you deal with slow-paying customers and wait too long for payments, factoring will provide the cash you need. We can offer competitive cash advances and low factoring rates.
Many technology companies in Las Vegas have a cash-flow gap caused by most of their customers taking several weeks to pay their invoices. This is a challenge when this cash is needed to fulfill many of the ongoing business financial responsibilities. With banks making their lending qualifications and limit stricter and more time-consuming, IT companies can have a hard time obtaining the business loan or line of credit they need to continue running their business. Even if a company gets approved for a bank loan, the process is lengthy, and the loan amount may be insufficient to keep up with the growing demands of the business.
Accounts receivable financing offers an alternative financing solution that IT companies can use to access the working capital they need. While traditional loans and lines of credit can take weeks or months for approval, factoring IT businesses is a fast and straightforward process for us. We can get you a quote for accounts receivable factoring in as quick as a few hours.
Instead of waiting for 30+ days to receive invoice payment, we provide a competitive advance within 24 hours. Once your customer pays your invoice, the remaining balance is remitted to you after subtracting a small fee. Access to working capital is made easy for technology companies when choosing 1st Commercial Credit as their factoring company.
Benefits of Factoring for Tech Companies:
For more than 18 years, 1st Commercial Credit has provided factoring services for small business and IT companies with cash-flow solutions. Providing a reliable and consistent cash stream makes it possible for these companies to take on new contracts and grow their operations. Some of the types of tech businesses working with us include:
The healthcare sector is notorious for having an outdated billing and payment system. With the added hurdles of insurance and layers of bureaucracies, medical bills often take weeks or even months before they're paid. Even though it is common for healthcare companies to experience slow-paying customers, too many unpaid invoices can negatively affect a business's cash flow, including restricting cash flow and growth. The good news is that medical companies could benefit from healthcare factoring.
Healthcare factoring is a financing arrangement specifically for companies in the healthcare industry struggling with cash flow problems caused by outstanding invoices with net terms between 30 to 120 days. With healthcare factoring, medical businesses can continue to take care of their patients without worrying about limited cash flow.
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