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For Your Small Business May 13, 2019

Assets That Can Be Used To Secure A Small Business Loan

Every business at some point or other will require extra finance to meet for their operational expenses or to continue their growth. The reason could be as simple wanting to venture into a new stream or inadequate working capital.

Discussed below are four important assets which can help you to acquire additional finance.

Invoices

As an entrepreneur, you have most likely dealt with your fair share of customers who are slow to pay off the invoices issued to them. As many such unpaid invoices continue to pile up, it could lead to a cash flow crunch for your business. You may also need additional cash to restock your inventory or to pay your employees.

There are some asset funding lenders that grant you alternative finance loans based on your unpaid invoices. This works well for budding entrepreneurs who do not have a strong credit score or don't wish to follow a lengthy bank process. The lenders mainly determine the worth of all your invoices and accordingly determine the maximum amount you are eligible to borrow.

The borrower might give you the invoice sum in cash and this is when entrepreneurs enjoy flexibility and security of additional funds. At this point, you can invest the funds available to you to build inventory, pay off your employees/vendors and to capitalize on growth opportunities for the business.

Cash

There are some lenders in the industry who could provide you funds based on the amount of cash you have in your account. There are companies that offer secured and unsecured business loans along with flexible repayment options.

Usually, business owners would apply to banks for such loans in which they already hold an account. The bank can liquidate your account in case you are unable to repay your loan. However, if you look from the perspective of the entrepreneur then you are putting up all your savings at risk because you can lose your entire savings.

Inventory

Inventory is yet another asset which can be utilized in order to acquire additional funds for your business. Inventory works in favor of product-based businesses rather than service-based businesses.

The actual cost of inventory is not the sum that you would acquire in form of funds. The lending companies would offer you additional funds based on the nature of your business and its functioning.

The fact is that the value of your inventory depreciates with time, which is also taken into consideration by prospective lenders. But, it is still important to keep in mind that the value of your inventory is a source of securing additional working capital.

This means that poor inventory results in poor purchase power and financial instability.

Therefore, business owners need to keep a close check on their inventory and ensure that they maintain proper records of the same.

Real Property

Property is one of the most valuable assets you could offer as collateral for a business loan. This asset is commonly used by small business owners in order to acquire additional funds from financial institutions. This is because real estate is a valuable asset as it retains its value, is widely available and it's valued remains static even after liquidation.

Property is the first choice of entrepreneurs when looking to secure a business loan.

As there are downsides in offering your savings as collateral for a loan similarly there are serious downsides in putting your property at stake. It is important to note that you do not put up your personal assets for your business because its repercussions are likely to be faced by you and your loved ones.

Besides, it is essential to check the risk involved while using residential/commercial property to borrow funds. Instead, you can use equipment, cars, boats, planes, motorcycles and other items which fall under the category of real property.

The good part is that once you acquire the asset back, you can reinvest it again to acquire better returns.

In order to not get entangled in an ugly financial turmoil you can always seek assistance from a reliable company that provides you with realistic solutions.

 

This article was written by TechBullion PR from TechBullion and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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