LEVERAGE COMPANY ASSETS
An asset-based loan is a bank loan secured by assets of the company and can be a great option when real estate collateral is not available. A wide range of assets can be used – from inventory to equipment to accounts receivable. Typically, up to 85% of the asset value can be financed.
1 year in business
$250,000 annual revenue
650+ FICO
Sufficient level of un-encumbered assets
Completed application
Most recent business tax return
Inventory list
6 most recent business bank statements
AR/AP aging report
YTD financials
Current debt schedule
My company does consulting work for the federal government. I don’t have a whole lot of traditional assets but I always have a very high level of reliable accounts receivable. Clear helped me get a long term loan at a great rate and I was able to use my AR as collateral.
Businesses use an asset-based loan for various purposes. Above all, the most common application is for working capital.
The asset-based loan can encompass a broad spectrum of assets as collateral. i.e. inventory, equipment, accounts receivable, machinery, real estate, and more.
In most cases, the interest rate for the asset-based loan is fixed. Comparatively, a variable interest rate is much less prevalent.
The underwriting process for an asset-based loan can be very extensive. Generally there is a lengthy review and approval process. Therefore we consider this loan to be “relatively difficult” to obtain approval for.
There is typically no prepayment penalty.
The lender is likely to impose additional fees. i.e. closing costs, due diligence fees, and/or an origination fee.
Borrowers make monthly payments.
