The financial meltdown in 2008 led banks worldwide to tighten their lending policies, and this means more and more people are looking for alternative forms of funding.

One result is that asset-based lending has become a mainstream option for anyone with valuable assets. Here we outline some of the main advantages of asset-based loans.

Improved cash flow

With the lending policies of banks turning even more stringent, both private individuals and businesses are finding that they do not qualify for traditional loans and lines of credit. These individuals and companies – particularly – SMEs – are therefore using their valuable assets to improve their cash flow.

With an asset-based loan, businesses can use assets, such as inventory and equipment, to access funds to stabilise their operations and facilitate growth.

Private individuals can also use their personal assets, including jewellery, artwork and vehicles, to acquire funds for emergencies, holidays and everyday expenses.

Easy application

Any organisation that offers unsecured loans and lines of credit puts itself at risk of losing money if the borrower defaults on the loan. As a result, conventional lenders require surety – in the form of credit ratings, financial statements and income forecasts – before they will approve a loan application.

Short-term, asset-based loans, on the other hand, are easy to obtain because the value of the loan is secured against the asset/s provided by the borrower as collateral. This means that all you need to acquire an asset-based loan is a fully-paid asset of value.

Applications can generally be made online, and once the asset has been appraised, you simply need to sign the loan agreement in order to access the funds you require.

Fast approval

Getting approval for a conventional loan or line of credit can take weeks while the lender performs credit checks and assesses whether or not the applicant will be able to repay the loan.

In contrast, a short-term asset-based loan can be secured on the day of application because there are no credit checks, background checks, or other investigations into the finances of the borrower involved with this type of loan.

Fewer restrictions

Conventional loan agreements usually include restrictions as to how the money can be spent, in order to protect the interests of the lender.

However, with an asset-based loan, the borrower gets to decide what they do with the money, which provides greater flexibility for both businesses and private individuals looking for a loan.

In addition, the loan term of an asset-based loan can quickly and easily be extended with minimal paperwork (as long as the borrower is up to date with payments).

No impact on your credit rating

As an asset-based loan is secured using an asset/s as collateral, defaulting on the loan will not affect your credit rating – you will simply lose the asset/s that you used to secure the loan.

This can be a massive advantage if you have a bad credit record, are blacklisted, or are a start-up looking for funds to grow your business without impacting your credit rating.

We offer discreet, short-term loans against the value of assets such as vehicles, jewellery or artwork, with no delays and no need for time-consuming or invasive credit checks. For more information, contact us on 086 111 2866.