- January 21st, 2013
- John Dillard
- Financial Statements & Bookkeeping, Virtual CFO, Business/Tax Consulting, Financial Planning, Business Loans & Money Management
Finding Alternative Sources of Funding Your Atlanta Business
Atlanta CPA on What to Do When the Bank Says No
Asset based lending is perhaps one of the least known of all the funding opportunities a business owner or entrepreneur has at their disposal when traditional banking options fail. Banks traditionally have and continue to focus more on the track record of a business given its past results, history and profits. However an asset based lender is much more apt to loan monies to businesses based upon their present. For example if you a new business and still marginally profitable, a traditional lending institution is more apt not to make a loan to a business, especially in light of current business and economic conditions. However a asset based lender might be much more inclined to make a loan to you using your current assets, such as Accounts Receivable rather than your Profit & Loss statement to make an underwriting decision.
For example a business that is growing quickly, has good financial sound clients, a good track record for internal control and integrity should consider Asset Based Lending when the bank declines to extend a offer or credit. An asset based lender, will spend much of their underwriting time evaluating your billing procedures, the integrity of your clients and their industry and the age of your receivables. An Asset Based Lender is likely to only extend a credit line when you have fiscally sound procedures in place and that your Accounts Receivable stay current. To protect themselves an Asset Based Lender will usually request that that all of your billings are paid to a lockbox under their control. The advantages of using an Asset Based Lender include the procurement of capital where it otherwise might not be available, flexible lending levels based upon the growth and size of your Lending base.
Traditional banking sources should always be explored first, as almost always, this will be a less costly alternative. Asset based lending is traditionally exponentially more expensive that standard sources but would still remain substantially cheaper than bringing in a Venture Capitalist (VC), who will own a percentage of your profits forever. Most Asset Based Lenders work hand in hand with banks and are more than willing to transfer the account to a traditional lending source as soon as the business’s profits, net worth, and track record make the business more “bankable.”
www.HisCPA.com A Christian CPA Firm in Duluth GA Proudly Offering Corporate and Personal Income Tax Returns, Offer in Compromise, Tax Advocacy, Tax Mitigation and Tax Compliance, Back Taxes, IRS Representation, IRS Appeals, IRS Collections, IRS Installment Plans & IRS Wage Levies.
www.HisCPA.com A Christian CPA Firm in Duluth GA Proudly Offering Corporate and Personal Income Tax Returns, Offer in Compromise, Tax Advocacy, Tax Mitigation and Tax Compliance, Back Taxes, IRS Representation, IRS Appeals, IRS Collections, IRS Installment Plans & IRS Wage Levies