In Malaysia, the financial products available to businesses are plenty. If you’re a company on the cusp of exciting growth, but feel hampered by the lack of capital, look no further than asset-based loans for an answer.
Asset-based loans provide companies that are aggressively growing with an injection of funds to ensure business continuity.
But first, what are asset-based loans, and do you qualify for such a solution?
Asset-based financing is a flexible option for gaining additional capital by putting up a company’s assets as collateral. In other words, you offer up your assets to a financier in order to receive extra capital to grow your business.
Once you receive this additional financing, it gives you the freedom to take on new initiatives that will grow profits for your business. It’s also a great capital injection to ensure project completion. In some cases, businesses make a request for asset-based loans to finalise an acquisition.
The assets that borrowers can offer up as collateral varies. Different lenders will have different preferences. However, it is common for lenders to ask for accounts receivables and inventory as stakes.
But there is no limit to the type of collateral required. Some financial organisations accept tangible assets such as property (free of encumbrances), gold, art pieces, luxury watches, or cars that appreciate in value, and intangible assets such as share capital.
After some calculations and valuation of the assets up for collateral, the lender may offer up between 50% and 80% of the asset value as cash advance to the borrower.
Borrowers with a good track record of business operations and growth, along with excellent credit standing and financial systems may easily obtain asset-based financing. Successful approval of asset-based loans also depends on the number of customers with good credit ratings that the company has.
Whether you are looking to get some additional working capital to finance your growth, to acquire additional resources, to turn around your business, or simply to get over a financial bump, asset-based loans are a viable option especially for companies with good financial records, fast-moving inventory, and customers with quick turnaround time when it comes to settling payments.