When you seek financing from an institution, often you want to do so while putting very little down to secure it. However, there are times when you must lean on asset-based lending to get the cash you must have. Although you are giving up equipment, property, or invoices to receive assistance, you can get approval far more quicker. Here are a few times that you should use collateral for a loan.

In the Event Of an Emergency

This reason happens far more to all businesses than you would like. Whether it is a natural disaster or a failure of equipment, you need cash quickly to take care of the situation. When you choose asset-based lending, the organization you are working with will evaluate the collateral that you do have and base its offerings on that. This can include invoices that are due to you from your customers. This process, called factoring, can get you money within days while taking the responsibility of working with your clients from you so that you can concentrate on the matter at hand.

When It Is Time To Expand

Your business has picked up and you are ready to bring on another product line. To do that, you must expand your facility. The inventory you have currently is already stretching your limits and you must build on or find a new building. This also means you must hire additional staff. You must have financing to pay the construction crew and new employees. Traditional loans typically steer away from employment costs and materials. They usually are meant for building and purchasing equipment. However, asset-based lending can cover these areas. The money that you receive from the lender can be used in any way that is necessary for you and based on your company. Although the interest rate is higher, and you must have a current estimate of the value of your collateral, it is a quick way to get started on your new projects.

Less Than Favorable Credit

Whether it is due to a slump in sales or missing a few payments on a bill, your credit rating is lower than it should be. When this happens, it can be a challenge to get a loan from a traditional bank. If you need cash for your business, asset-based lending is the option for you. The organization will consider what your financial situation is at the time. However, you are more likely to be approved when you have collateral down as security towards the loan.