What is Asset Based Lending?

Asset Based Lending generally refers to a business putting up assets as collateral for a "no credit check business loan."  The actual words can be used in several different categories, but the most popular category is “accounts receivable funding” “invoice lines of credit” “ar funding” and factoring.

These are all words which explains a transaction, where a Lender provides a company immediate working capital in exchange for their current invoices, making the transaction an “asset based loan”

In Europe this type of transaction is extremely popular and in America the popularity of Factoring is growing each day because of the benefits which Accounts Receivable Funding provides.

The first benefit includes no financial or credit check on the company who is seeking immediate working capital.  The credit worthiness of the company’s client is what is important to the Lender.

The second benefit is, the Lender charges a fee based on the credit worthiness of the client, the amount of the Invoices, and the type of industry the company is in.  This fee is usually between 1.5%, to 3.5% of the total Invoice amount, and is 100% tax deductible as a business expense.

The third benefit is the time it takes to fund.  Some of the larger companies can fund within 48 hours and less if you establish a Factoring relationship with the Lender “before” you actually need the working capital.  Lenders who fund Government Invoices can take up to 4 weeks to fund.  The US Government does allow and encourages factoring for Government vendors, however to establish the transaction, sometimes it takes a little longer.

Staffing agencies, manufacturing companies, suppliers, distributors, medical invoices, commercial construction and a great number of other types of business can benefit from Factoring and asset based lending transactions.

The fourth major benefit concerns the added task some Factoring companies perform for their clients.  Collections and accounts receivable task, as well as running credit checks on your clients, prior to your involvement.  Consultation on how to write up the agreement with your client and details on how to protect your business is all a part of the service when you choose the right Lender.

The cheapest Accounts Receivable Lender may not be the best Lender.  And the largest Lenders often times is not the best Lender for certain industries. 

What we do is funding placement, based on location, amount of invoices (up to $10 Million) and type of business you are in.  Visit us at Factoring/Accounts Receivable Funding Placement,  and complete a six (6) question application.  We can find you a Lender within 24 hours.