As we’ve detailed in previous blogs, asset-based lending solutions are a big part of what we do here at The Commercial Finance Group in Atlanta. Asset-based financing works differently from factoring or receivables financing in that it provides necessary operating capital, eliminating the need to wait for collections on accounts receivable.

Asset-based lending is an especially smart solution for companies in industries that experience seasonal or cyclical fluctuations in revenue, as it converts assets to cash at the times when businesses need it most.

Asset-based loans are, as the name suggests, based on assets pledged as collateral against the balance of the loan. In order to determine whether or not asset-based lending is right for your current financial needs, it’s necessary to evaluate the assets currently held by your business.

Types Of Assets Upon Which Your Business May Be Built

  • Tangible Assets – Holdings included in the tangible asset category include buildings, vehicles, office equipment, and other things that are not consumed, but definitely used, during the daily operation of your business. In most cases, tangible assets are listed under Plant, Property, and Equipment on your Balance Sheet. These items are considered to be “high liquidity” assets because it’s relatively easy to convert them into cash via a loan or permanent sale.
  • Intangible Assets – Holdings included in the intangible asset category have no physical form and include your company’s reputation, social media presence, industry knowledge, brand name recognition, and other things that allow your business to succeed but can’t necessarily be held or sold. These assets have intrinsic value that can make your company a more attractive applicant for commercial loans.
  • Intellectual Property – Similar to intangible assets, holdings that fall into this category have no physical form but are rich in value. This category of assets includes trademarks, patents, brand names, logos, formulas, inventions and other creative communication tools. Though not included on your balance sheet, intellectual property is indeed an asset that increases the value of your business.
  • Financial Instruments – Finally, we have assets that aren’t considered to be assets in a traditional sense, but still provide financial value for your business. These financial instruments include bank deposits, accounts receivable, and long-term investments such as stocks and bonds. While they’re not quite intangible assets, these holdings derive value from the fact that you can use them to receive cash or cash equivalents in the future.

evaluating1-1The Commercial Finance Group Helps You Take Advantage Of Accounts Receivable

If you find that your business is lacking in tangible, intangible, or intellectual assets, remember that The Commercial Finance Group can help you capitalize on your financial instruments. Accounts receivable tend to have a higher advance rate than other assets, presenting a perfect opportunity for you to create cash that will sustain you throughout unpredictable business cycles.

If you’re entering an expected (or unexpected) period of financial leanness, don’t hesitate to contact our small business loan experts. We have many years of experience matching small to medium-sized businesses with the asset-based financing solutions that they need to survive.