Asset Based Loans
Asset Based Loans are a great tool to assist growing companies with improving working capital. With so many options in the market today, we are pleased to share everything you need to know about Asset Based Loans. Below we discuss how these loans can help improve your working capital.
The greatest benefits of an Asset Based Loan are the flexibility of the borrowing base and the pricing. The loan is supported by assets on hand including inventory, Accounts Receivables, Intellectual Property, and Real Estate. The availability of funds for borrowing increases as the assets of your business increase. Borrowers can rely on the funding as they continue to grow.
Sounds easy, right? ABL structures are relatively simple to qualify for and arrange, making them a favorable option for funding. Asset Based Loans are great for wholesalers, distributors, manufacturers and business service companies. Borrowers can expect the up front costs to be minimal and funding can happen as quick as 5-8 business days. These features provide a low cost, user friendly option for companies looking to improve their working capital.
Who are Asset Based Loans for?
Asset Based Loans work great for businesses with significant assets. Assets that can be leveraged for these loans include inventory, accounts receivable, equipment, etc. Therefore, target borrowers include Manufacturers, Distributors, and Service Companies. There are usually no industry limitations for Asset Based Loans.
How do I qualify for Asset Based Loans?
Qualifying for an Asset Based Loan is quite simple. Complete our application HERE and send a P&L and balance sheet to Submissions@mrktcapital.com. Once the submission is reviewed, you will receive a call from a Mrkt representative within 24 hours.
Cost 6-18% per annum
Term 12-24 Month Commit
Set Up 5-10 Business Days
How long does funding take?
Asset Based Loans are based on a simple formula, therefore they should take no more than 5-10 business days to fund. Depending on the size and complexity of the deal this timeline can vary. Underwriting these loans is rather simple. The steps to underwrite include application, proposal, due diligence(including field exam or audit), documentation and closing. Furthermore, quick turnaround of an asset based loan makes it a great type of financing to help with urgent needs.
Do I need a personal guarantee for an Asset Based Loan?
Typically an Asset Based Loan will require a personal guarantee. The loan is backed by the assets of the business, however the guarantee protects against fraud and mismanagement by the principals and leadership team. Small to medium sized businesses will usually have to offer some form of personal guarantee, while larger businesses can sometimes get away with a validity guarantee or no guarantee.
What can the funds be used for?
Asset Based Loans do not usually restrict the use of funds, so you can use them for most business functions. There may be certain covenants and restrictions like subordinating existing loans or a throttle on salaries paid to senior executives. This really depends on the type of business, strength of the balance sheet, and size of the company.