djamal-soft
الجمعة، 31 مايو 2019
One of the popular methods of financing that a lot of companies use would be to put their assets as collateral for loan. This is also known as asset based lending ventura county and is a very safe way of loaning money on the part of the lender. It is a win win method wherein the borrower gets the funds right away and the lender will have a valuable collateral in case of no payment.
Now, before discussing how this type of financing works, it is important to first know what assets are eligible to be put up as collaterals. For one, accounts receivable can be used as a safety net in case the borrowing business does not pay the loan. Aside from that, company equipment such as machinery, merchandise, property, or company cars can be used.
Now that one knows the various assets that can be used for the loan, the next thing would be to understand how to value collaterals. For the accounts receivables, the usual practice would be to loan up to eighty five percent of the total accounts receivable amount. As for the inventory or equipment, best practices would be fifty to sixty percent of the fair market value.
Now, another question would be how much the loan would cost. Costs would really differ among the lenders but a general amount would be somewhere in between seven percent to up to seventeen percent. Of course, the borrower would usually negotiate for a lower cost until there would have to be an agreement between the borrower and lender.
Now that one has an idea of the details regarding the loan, the next thing to know would be the process. Before the lender gives out any money, he or she will have to do a full background check by taking a good look at the financial statements and the company status. The next thing that has to be done would be the valuation of all collaterals mentioned to see if they are valuable enough.
When both parties already agree to the terms, then the money can be given out. If one would observe, there is no mention of credit score here unlike for banks and other financial institutes. This is because there is no need for that much background checks since there are valuable collaterals for the lender already.
As one can see, it is extremely easy to secure this type of loan, which is why it is popular. As long as the borrower complies with all the background check requests by the lender, then there should be no problem. The lender takes the collateral, and the borrower gets the funds.
Take note that the cost of this loan is quite high compared to conventional loans. However, it is going to be needed if a company has a lot of inventory or equipment but needs more working capital to keep afloat. The best part is that there are no debts involved as actual items are already going to be given up as collateral which makes it safe for lenders.
Now, before discussing how this type of financing works, it is important to first know what assets are eligible to be put up as collaterals. For one, accounts receivable can be used as a safety net in case the borrowing business does not pay the loan. Aside from that, company equipment such as machinery, merchandise, property, or company cars can be used.
Now that one knows the various assets that can be used for the loan, the next thing would be to understand how to value collaterals. For the accounts receivables, the usual practice would be to loan up to eighty five percent of the total accounts receivable amount. As for the inventory or equipment, best practices would be fifty to sixty percent of the fair market value.
Now, another question would be how much the loan would cost. Costs would really differ among the lenders but a general amount would be somewhere in between seven percent to up to seventeen percent. Of course, the borrower would usually negotiate for a lower cost until there would have to be an agreement between the borrower and lender.
Now that one has an idea of the details regarding the loan, the next thing to know would be the process. Before the lender gives out any money, he or she will have to do a full background check by taking a good look at the financial statements and the company status. The next thing that has to be done would be the valuation of all collaterals mentioned to see if they are valuable enough.
When both parties already agree to the terms, then the money can be given out. If one would observe, there is no mention of credit score here unlike for banks and other financial institutes. This is because there is no need for that much background checks since there are valuable collaterals for the lender already.
As one can see, it is extremely easy to secure this type of loan, which is why it is popular. As long as the borrower complies with all the background check requests by the lender, then there should be no problem. The lender takes the collateral, and the borrower gets the funds.
Take note that the cost of this loan is quite high compared to conventional loans. However, it is going to be needed if a company has a lot of inventory or equipment but needs more working capital to keep afloat. The best part is that there are no debts involved as actual items are already going to be given up as collateral which makes it safe for lenders.
About the Author:
For a closer look at the benefits of asset based lending Ventura County customers should turn to our recommended homepage and read all the information at http://www.cornerstonecapitalfinancegroup.com/cashflow.
Category ›
ليست هناك تعليقات:
إرسال تعليق