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.
An asset-based loan can be used for many business purposes and is most commonly used for working capital.
A wide range of assets can be used as collateral, including inventory, equipment, accounts receivable, machinery, real estate etc.
The interest rate, in most cases, is fixed. A variable interest rate is much less common.
The underwriting for an asset-based loan can be very extensive with a long review and approval process. We consider this loan to be “relatively difficult” to get approved for.
There is typically no prepayment penalty.
The lender will likely charge additional fees in the form of closing costs, due diligence fees and/or an origination fee.
Payments are made monthly, like most traditional loans.
