Loans based on your business assets can provide you with a large sum of working capital as needed to manage your business. Some companies even use them as sources of general operational funding. However, asset-based lending is slightly different from traditional loans and financing deals. It has its own risks, but it also has its own distinct advantages. If you have never used asset-based loans before, here are a few of the unique perks you will find when using them.

Loans Based on Assets Depend Less on Your Credit Score

Asset-based loans are secured by the value of your business assets. How that value is calculated and what that means can be different for different borrowers depending on the assets you have. Invoices that are financed are tied to agreements that customers repay the lender directly in many cases. Inventory loans are contingent on the inventory remaining in your possession and due if it is sold. The takeaway from this is that your credit score does not represent as much risk to the lender when you have assets to bring as collateral or sources of revenue, so the requirements are a lot less stringent.

Asset-Based Lending Flexes To Work With The Assets You Have Today

Another huge advantage of this kind of lending is that it works with you where your business is at today. Most healthy companies get approved easily for the amounts their assets qualify them to borrow, and as business increases, future loans will reflect the value of the higher volume of invoices or greater amount of inventory and equipment on hand. This lets you use them as you grow without worrying that you’re going to wind up needing to shop for a larger financial instrument.

Refinance As Needed With New Assets

The last and probably biggest advantage of using your business assets for credit is that you can finance new assets as they come in. For example, if an old loan was tied to inventory and invoices and you have fresh invoices that are not currently financed, you can finance those new ones. Some programs even offer rolling asset evaluations to keep credit accessible whenever your asset value increases. This makes asset-based lending incredibly versatile as a cash management tool, especially when you’re backing it up with valuable items like invoices from longstanding customers.

To learn more about asset-based loans and credit lines, you really need to talk to a program representative. Each lender works a bit differently, so if you don’t like all the features of one program it is to your benefit to shop around.