Skip to main content

3 Things That Makes Asset-Based Loans Better Than Conventional Loans

In today’s competitive business environment, achieving constant growth is imperative for achieving long-term success. However, one of the basic requirements for magnifying and maintaining business operations is the arrangement of additional capital.

Asset-Based Loans Better Than Conventional Loans


The most common method that businesses use to arrange money for themselves is a loan. Typically, loan providers charge a fee from lenders that depends on the loan amount and the time within which the loan is to be repaid. Moreover, there are different loans available for firms such as SBA loans, medium-term business loans, and small-term business loans.

Asset-Based Loans

It has been a couple of years since asset-based loans have become a popular option for financing businesses. In fact, the recent years have witnessed a great upsurge in the demand for asset-based loans and many businesses now prefer using asset-based loans to finance themselves. The main attraction of asset-based loans is that the loan amount is secured by assets such as inventory, account receivables, machinery, property, etc. Moreover, the maximum loan that a business can get depends on the value of assets that are put up as collateral.

Why Better Than Conventional Loans?

Many businesses claim that asset-based lending is a better alternative to conventional loans and the reasons are more than one. From a business point of view, the following three things make the asset-based loan preferable over other conventional loans:

·Secure Lending

Unlike most traditional financing methods, the asset-based loans do not consider the credit history of the business to assess its eligibility for getting the loan. Moreover, such loans also pose no threat to the credit history of the business as the loan amount is completely secured by the collateral.

·Highly Affordable

Compared to many traditional loans, the affordability of asset-based loans is pretty much the same. In fact, in certain cases, the interest/fee that the business needs to pay for asset-based loans is even lesser as compared to the interest rate charged by traditional business loans.

·Usage Flexibility

Most traditional loans consider the motive for which the finance is needed and also impose numerous restrictions on areas where the money can be spent by the business. However, this is not applicable in the case of an asset-based loan. The borrowers are free to use the loan money for supporting any business activity.

The asset-based loans are increasingly becoming a preferable choice among businesses of all sizes thanks to their added set of benefits. Moreover, their features such as high affordability and flexibility make them a better option than most conventional
loans. 

Read more from Matthew Ledvina’s on his blog, or follow him on Facebook or Youtube for video updates.

Comments

Popular posts from this blog

Best Ways for Americans to Make Donations to International Charities

Donating to a non-profit charitable organization is one of the best ways of helping others who are in need. In general, there are several charities that work for different causes such as providing disaster relief, healthcare facilities for the poor, protecting animals from cruelty, etc. Considering the USA, charities raise billions of dollars each year for the betterment of mankind, the animal kingdom, and the planet Earth. In fact, the annual charity generation in the USA is one of the highest in the world. Among the billions of dollars, most donations are made to the US charities while the remaining small portion goes to the international charitable organizations. No doubt, there are many Americans who are eager to donate their fortune to international charities but due to some reason they don’t. One of the foremost problems is that most international charities do not provide tax deductions to the US citizens and as a result, most people choose to make donations to US charitie...

Navigating Swiss-US Estate Planning: What You Need to Know

  By Matthew Ledvina , JD, LLM (US Taxation)  If you have connections to both Switzerland and the United States, managing your estate—basically, what you own—can be like walking through a maze. Both countries have their own rules, and they don't always play well together. Let's break down some of the tricky areas you might encounter, so you can avoid unpleasant surprises for you and your heirs. Different Rules for Different Lands In Switzerland, if you pass away, the laws of the last place you lived will usually govern what happens to your stuff. This includes both your bank accounts and your real estate, whether they are located in Switzerland or elsewhere. But the United States takes a different approach. The place where real estate is located will have its own set of rules, separate from the rules governing personal property like bank accounts. This can create confusion when estates have assets in both countries. I nheritance: A Tightrope Walk Switzerland has strict rules a...

Clarifying U.S. Gift Tax on Wire Transfers of "Cash" from Non-U.S. Persons to U.S. Residents

By Matthew Ledvina , JD, LLM (US Taxation) Introduction In a globalized financial landscape, a recurring question perplexing tax practitioners is whether wire transfers of "cash" from non-U.S. persons to U.S. residents are subject to U.S. gift tax. The crux of the matter revolves around whether these wire transfers are classified as tangible or intangible assets under U.S. Tax Code §2501(a). Historical Context Although existing guidelines like Private Letter Rulings (PLRs) and General Counsels Memoranda (GCMs) offer some insights, these are largely outdated and may not suit the complexities of modern finance. Specifically, references like PLR 8210055 and older GCMs (such as GCM 36860 from 1976 and GCM 34845 from 1972) leave much to be desired in terms of current applicability. Additionally, the Curry v. McCanless case from 1939 further complicates the issue by defining intangibles as rights unrelated to physical things.  Bank Deposits as Intangibles According to Regulation §2...