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You need cash, but where are you going to get it? A bank? Good luck. Banks don't like to lend to businesses that are desperate for cash. Sure, they'll give you money when you don't need it, but they won't give you money for things like expansion, to start up your enterprise, or to do research and development. It's too risky - unless you're already a fortune 500 firm. Fortunately, you don't need banks. You just need a source for asset-based lending.

What Is It?

When you walk into a bank, they want an application, extensive documentation, and your first-born child. When you talk to a firm about asset based lending, the lender will look primarily at your company's assets. What do you have for collateral?

Asset-based lending focuses on your hard assets, rather than firmly on credit scores or cash flows. This makes it a bit easier to get the funding you need - especially if you're cash-strapped.

Asset-Based Loans

Asset-based loans are loans that provide businesses with immediate funds and ongoing cash for operational expenses. The loan amount is usually based on a percentage of the total value of the company's assets, like commercial accounts receivable or inventory, or even equipment and machinery.

It's set up as a LOC, or "line of credit." It's basically like a credit card, but usually with better interest rates. You draw down the account when you need money, and then pay off the balance on a flexible term. The only minimum requirement is that you pay the interest on any borrowed funds. Principal may be held on loan indefinitely. Pay back the principal and you may make future loans from the LOC.

Typical Loan Amounts

Typical loan amounts usually start at around $250,000 and can go up to $3 million for commercial finance companies. Larger lenders usually want you to have assets in excess of $3 million and the loan amounts are in-line with those figures.