If your business is unable to obtain the financing necessary to sustain or grow, then it might benefit from the flexibility and versatility of an asset-based structure. Whether your company is growing faster than its ability to retain earnings, in a turnaround situation, or need a larger, more flexible financing solution, CBC Business Credit has the potential to meet the needs of your business anywhere in the United States. We can fund loans from $500,000 to $15 million.
As The Premier Business Bank, we offer an array of commercial financing solutions designed to maximize the performance and value of your most important asset – your company. With decades of experience behind us, we have the depth and resources to provide customized financing solutions which help drive profits and maximize cash flow. Our objective is to build long-term relationships with clients, thus allowing us to bridge the gap from ordinary to extraordinary.
Asset-based loans are revolving lines of credit or term loans that are secured typically by assets (collateral) in the business. If collateral in the business is insufficient, other sources of collateral external to the business can be considered. The amount of credit that will be accessible is primarily determined by the quality and value of the collateral, which can range from accounts receivables and inventory to equipment and real estate.
- Working capital
- Turnaround financing
- Payroll funding
- Capital expenditures
- Purchase order financing
- Maximize borrowing capacity, increase liquidity
- Provide solutions during periods of challenging cash flow
- Enhance discipline and efficiency around the management and collection of accounts receivable
- Fuel growth and profitability
- Reduce or eliminate bank financial covenants
- Make available credit lines which can scale rapidly as your business grows
- Offer negotiable personal guarantees
The CBC Business Credit team has decades of experience working with businesses in a variety of industries. Their consultative, relationship-based approach to business truly resonates with clients.
Business Credit – FAQs
ABL is lending secured by an asset. This means that if a loan is not paid, an asset can be taken in its place. ABL allows your company to have available cash between the time of payment and expenses. This involves lending off of accounts receivable and bridges the gap between delays in selling a product and receiving payment for it. Instead of waiting for an actual payment of an invoice, your company can borrow based off of the value of the actual invoice. ABL is beneficial to the business client, because it allows for growth without unnecessary risk.
In commercial lending, the credit worthiness of the borrower is the deciding factor in obtaining a loan. In contrast, an ABL line looks at the credit worthiness of the borrower’s debtors. This is to ensure that the borrower’s customers can pay back the obligated invoices. A traditional line of credit would have a credit limit set by the accounts receivable size over a period of time, whereas an asset-based line would have a revolving credit limit that reflects the current accounts receivable. Also, an ABL line has to be monitored closely since the line often reflects daily changes. One must constantly review the status of the borrower’s accounts payable, accounts receivable and inventory. A traditional commercial line would not require this level of review.
In factoring, a business sells its accounts receivables at a discount. Factoring is not a loan, it is the purchase of an asset. Asset-based lending is an actual loan that the borrower can use on a daily basis. The borrower is still collecting on the invoices, but the cash goes directly to the ABL group and is then applied to pay down their line. Depending on the terms of an asset-based loan, a borrower would not have to tell their debtors that their invoices are owned by the ABL group. In factoring, the debtor would directly pay the factor (financial institution) for the full value of the asset.
A company must have an asset that the lender would be able to recoup funds with, if the borrower were to default on the loan. Industries that would qualify are manufacturers, temporary employment agencies, and various types of retail sellers. Businesses that would not qualify are professionals (i.e. Attorneys, CPAs), medical industry and construction. These would not qualify because there is no tangible asset to guarantee payment. Usually, these industries would have a contract stipulating what requirements must be met in order to receive payment. An ABL line would require a hard transaction that guarantees an amount is rightfully owed.
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