If you own a business or are looking to start one, you may have wondered if asset-based lending could help you secure the funding you need.
Asset-based lending, or loan-to-value (LTV) lending, allows businesses to borrow against their assets. Unlike traditional forms of financing that rely on your business’s income statement, asset-based lending requires little more than the value of your equipment and vehicles to secure an offer. But what does this mean in practice? How do businesses benefit from this type of funding?
In this article, we’ll explore asset-based lending in more depth. We’ll cover what it is, how it works, and some of the key benefits it can offer businesses. By the end, you should understand whether this type of funding could be right for your business.
What Is Asset-Based Lending?
How Does Asset-Based Lending Work?
Example:
Let’s say you own a small business that manufactures and sells products. You have RM100,000 in inventory and RM50,000 in equipment. You need RM10,000 to purchase raw materials and pay your employees. However, your bank denies your business loan request because your business is not generating enough income to meet their lending criteria.
In this situation, asset-based lending could be a good option for you. The lender would assess the value of your inventory and equipment and offer you a loan based on that value. You could then use the funds from the loan to purchase raw materials and pay your employees.
Key Benefits of Asset-Based Lending
1) Quick Access To Capital:
One of the biggest benefits of asset-based lending is that it provides businesses with quick access to capital. If you need funding for a short-term opportunity or to cover unexpected expenses, this type of financing can be a lifeline.
2) No Income Statement Required:
Another benefit of asset-based lending is that businesses don’t need to have a strong income statement to qualify. This type of financing is based on the value of your assets, not your business’s ability to generate income. This makes it a good option for businesses that are struggling to make ends meet or are in the early stages of development.
3) Flexible Repayment Terms:
Asset-based loans also offer flexible repayment terms. This can be a big advantage for businesses that need quick access to capital but may not be able to repay the loan in full within a short period.
4) Lower Interest Rates:
Asset-based loans typically come with lower interest rates than traditional loans. This is because the value of your assets secures the loan.
5) Higher Loan Amounts:
Higher loan amounts are another advantage of asset-based lending. This type of financing allows businesses to borrow against their assets, so the loan amount is based on the value of the collateral. This can be a big benefit for businesses that need a large sum of money.
Conclusion
Asset-based lending is a great way to get the money you need for your business. It can be used for a variety of purposes, such as expanding operations, buying new equipment or inventory, and even refinancing debt. If you’re interested in learning more about asset-based lending or want to apply for a property loan, apply for a business loan today!
About Limra Assets
Limra Assets is a Shariah-compliant financing solutions financier that provides loans for property financing, SME businesses loans and gold investment. We offer a range of financing options to help individuals and businesses, including alternative financing for businesses that are unable to obtain funds. Our goal is to provide access to funds for investments in a Shariah-compliant manner that focuses on transparency, customer service, and competitive rates, Limra Assets can be a valuable partner in your gold investment journey.
If you’re interested in learning more about Limra Assets and our Shariah-compliant financing solutions for property purchases, gold purchases or business loans, please contact us for more information.
Disclaimer:
It is important to note that taking out a loans for any purchases and gold investment, whether through Limra Assets or any other lender, carries risks and should be approached with caution. It is important to carefully consider your financial situation and investment goals before taking out a loans, and to ensure that you fully understand the terms and conditions. Additionally, investing in gold carries its own risks and should be done with the guidance of a financial professional. This information and all external links are provided for educational purposes only and should not be considered financial advice.