Regardless of the size or industry, every business is unique. For that reason, it shouldn't come as a surprise that traditional credit solutions don't suit the needs of all companies. Thankfully, alternative business funding options have become more readily available. To determine if asset-based lending is right for your company, here's a closer look at the ins and outs of the process.
A Brief Guide to Alternative Financing for Business Funding
What Is It?
Instead of relying on credit scores and business performance, non-traditional funding is a collateral-based method of credit provided by banks, credit unions, and investors. While the assurance can be physical items, like merchandise or machinery, companies can also utilize their impending payments and invoices. Such a vast selection of collateral options makes business funding achievable for a wider range of companies.
Who Can Benefit?
Alternative business funding is commonly utilized for companies experiencing rapid growth. For example, if there's a drastic uptick in orders, inventory financing allows you to use your merchandise to secure a business loan. This step ensures that you have plenty of capital available while waiting for payment from current and expected orders.
A similar situation occurs for small construction businesses that need cash to purchase supplies and tools as well as cover the labor costs of an upcoming contract. However, instead of inventory financing, the company can obtain an asset-based loan using their fixed assets, equipment, or the impending contractual project payment. Additionally, alternative financing is used for businesses undergoing a restructure, pursuing an acquisition, or after completing a bankruptcy.
What Arrangements Are Available?
There are a few different loan structures available with asset-based loans. Revolving loans are the most common, which allow the company to repay the funds once earned capital becomes available, followed by the opportunity to access more credit. Businesses can also obtain term loans with a set repayment period.
If traditional financing options are unable to meet your company's needs, turn to K-WAM Financial Solutions in Jacksonville, FL, for alternative business funding options. For over a decade, the firm has assisted companies of all sizes across northeastern Florida obtain unique non-traditional financing solutions. Visit their website to learn more about asset-based lending, or apply for a business loan today by calling (904) 220-2567.