How Businesses Use ABL FundingAsset Based Lending
- March 3, 2018
- Posted by: Admin
- Category: Funding trends
ABL, or asset based lending, is the ideal tool for many businesses who need to quickly convert their current assets into readily available funds. This type of loan goes through quickly because it uses existing business assets as collateral. Through tangible assets like inventory or intangible assets like accounts receivable, or some combination of the two, businesses are able to receive the financing they need. Asset based lending isn’t a magical cure for everything that ails a business. It is, however, an excellent opportunity for businesses to acquire the capital they need. Whether the need is surviving a slow season or financing a long-term project, ABL gives companies quick access to needed funds.
- Fund Quick Growth:
The factors that lead to quick business growth aren’t always predictible. Sometimes are blindsided by their advances-and the available funds to hire new employees, acquire new equipment, or replace inventory aren’t always immediately on hand. Many businesses use ABL to handle these deficits, using short-tem loans to handle the business’s current needs and then repaying the loans when the growth has paid off in terms of concrete assets.
- Begin Long Term Projects:
In many cases, the ideal time for starting a long term project is during the business’s slowest season. In order to build up to the coming busy season, businesses take on projects that will enable them to meet the needs of their customers. ABL finances these projects, making it possible for businesses to handle them even when current cash flow isn’t up to handling the existing needs of the business.
- Survive Slow Season:
Slow seasons can also be hard on a business’s ability to stay afloat. Hard workers aren’t always easy to come by, and it’s difficult to let employees go simply because the current needs of the business don’t support their continued employment. During slow seasons, maintaining a larger office or store may also be difficult. ABL stands in the gap, making it possible for business owners to use the company’s assets to support them during these slower times. They’re able to keep their spaces, hold on to their employees, and keep the business afloat while waiting for a busier season to begin.
- Lower staff turnover:
When a company already has a number of existing debts, it can be difficult to acquire an additional line of credit in order to finance improvements to the company. Unfortunately, that money may be necessary in order to achieve the improvements the company needs. Through ABL, businesses are more likely to be able to secure the funds they need in order to finance those improvements.