The kind of financing option known as Asset-Based Lending is secured by a company’s actual assets.Accounts receivable, inventory, machinery, and other forms of collateral are examples of these assets.A company can borrow between 75 and 80 percent of its accounts receivable and between 50 and 50 percent of its inventory and equipment assets.
This small financing option is much simpler to qualify for than others.Due to the presence of tangible collateral, the lenders do not face significant risks.By seizing and selling the collaterals, losses can be recouped in the event of payment failure.How can you ensure that your application is approved more quickly in these situations?
How do ABL applicants apply?
In contrast to applying for conventional loans, there are specific steps involved in the application process that may differ.To apply, follow these steps:
Lenders’ primary concern is the value of your company’s assets, but they do not completely disregard your financial situation when evaluating your finances.Although lenders are less likely to review all of your documents, it is preferable to have them on hand.
In the next step, you can use the aforementioned documents to demonstrate the value of your assets to potential lenders by providing a balance sheet, profit and loss statement, sales forecast, and bank statements and tax returns.You can get the following additional documents as well:
A UCC (Uniform Commercial Code-1) is typically completed by lenders following the receipt of your applications. These documents include accounts receivable, aging statements, inventory lists, and lists of machinery and equipment.This would reveal whether the creditor has a legal interest in business or personal property.If an asset is free and clear, no debtor has any right to it, and the lender is the only one who owns it as collateral.
Complete the application Submit the necessary paperwork and complete the application in the subsequent step.Try confirming everything directly with the lender to avoid having your information reviewed by a third party.
Preview the offer The lender may ask you to accept a preliminary loan offer after reviewing your application and the assets.Before accepting it as the final offer, try to take your time understanding the details and previewing it multiple times.Additionally, there may be room for negotiation.
With the asset-based lending options offered by Accord Financial, you can get your ABL approved as soon as possible.
