When businesses try to position themselves for growth, using loans seems to be the conventional solution of choice. However, loans frequently keep businesses from reaching their potential or maintaining momentum. Instead, growth-focused businesses are turning to ABL to solve financing needs and bring operations to the next step.
What Is ABL?
Asset based lending, or ABL, is a revolving line of credit structured around the fixed assets owned by a business. For ABL, fixed assets include equipment, machinery, inventory, receivables, vehicles, real estate, and more. The revolving line of credit allows businesses to access funds as they are needed, and then repay that amount, which means financing is available for the duration of business.
Loans Can Slow Business Growth
Traditional loans do three things: First, they provide a finite amount of working capital. Second, they impact business credit ratings. Third, the force businesses to assume debt. When trying to achieve growth, traditional loans do not offer the continuous funding to push beyond milestones. Additionally, the debt and lowered credit ratings mean businesses have to set aside a portion of their revenue to pay down a balance for months, if not years before reaching another growth stage. Asset based lending, by contrast, preserves credit ratings and does not come with any debt. Businesses can maintain their momentum and achieve rapid growth without having to deal with the red tape and potential pitfalls of traditional loans.
Many businesses leverage ABL for growth, and while doing do, increase the financing available to them. As businesses purchase new equipment and vehicles, acquire larger facilities, expand inventory, or see a rise in receivables, the amount available through asset based lending will also increase to reflect the new total value of the company’s fixed assets. Businesses use asset based lending as a reliable and flexible means of growing operations, as well as increasing the size of your source of working capital. For small and growing businesses, asset based lending often makes much more sense than utilizing traditional bank loans for continued success.
Get A Financing Program That Fits Your Business
At Vortex Funding, we specialize in ABL, as well as a wide range of debt-free working and growth capital solutions. We work directly with business owners to design a strategy that is tailored to their needs, so they can achieve their goals quickly and affordably. Contact our team today to get started.