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When should you use asset-based financing?

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As a business owner, you’ve likely faced a few financial ups and downs. Since the COVID-19 pandemic began, most companies have experienced uncertainty, supply challenges, and other financial issues. One of the options available to you in these uncertain times is asset-based financing, which uses your business assets as secured collateral, giving you leverage to borrow extra money when you need it. Whether your business needs to borrow funds to weather a storm or prepare for growth, asset-based financing may fit your needs perfectly.

Overcoming challenges

Before committing to a commercial loan, it is important to understand its benefits. Here are a just a few of the business challenges that can be solved with an asset-based loan.

Ownership transition

Are you a partner in a company, considering retirement? Without careful planning, you could run into financial obstacles. While you may have significant wealth tied up in the business, most of it probably isn’t liquid.

To leave with the money that’s yours, the other partners will need to find a solution that keeps the company whole. Asset-based financing can help to streamline your transition out of your business partnership.

Seasonal operations

Asset-based lending is also beneficial for a business that provides seasonal products or services. If this describes your company, it’s important to build up inventory, staff, and assets before heading into your busy season. Not only will this allow you to handle higher customer demand, but it will also put you in a better position when it comes to asset-based financing.

 After all, many seasonal companies find it difficult to borrow money based on cash flow. Having a strong asset base allows you to leverage it at the opportune time. This way, you can continue to provide your customers with optimal service during the peak season.

Rapid growth

The COVID-19 pandemic has left some businesses struggling, while others experience rapid growth. Even some of the businesses hit hard in the early months now have more work than ever. This uneven growth is another scenario asset-based financing can help with.

If it’s time to expand your operations, you’ll need additional capital. With adequate funding, you can hire more staff, provide better training, purchase new equipment, increase your inventory, and more. With the right financing in place to support the growth of your organization, it won’t take long to see a significant increase in revenue. 

Using asset-based financing to grow your business will allow you to stay competitive in a rapidly changing market.

Struggles with cash flow

If your business is struggling with cash flow, asset-based financing is a viable option to help you bridge the gap between costs and income. Using assets such as inventory or equipment, you can secure a loan that helps you through challenging times.

Through our partnership with Accord Financial, Meridian offers a wide range of customized financing solutions. Our Business Advisors can help you explore asset-based financing as a solution to cash flow issues.

A trusted source for asset-based financing

Meridian has partnered with Accord Financial to bring dynamic financing options to our business Members. Through this partnership, you’ll gain easy access to the financial solutions you need.

Our advisors are always happy to talk about asset-based lending and other customized financing solutions to help your business thrive.

If you’re considering asset-based financing for your business, talk to a Meridian Business Advisor.

Learn more about business financing

How to increase cash flow with financing

Learn more about business financing options

Learn more about asset-based financing with Accord

Meridian Credit Union communications are intended for informational purposes only and do not constitute financial advice or an opinion on any issue. We would be pleased to provide additional details or advice about specific situations if desired.

For permission to republish this content, please contact the Meridian Credit Union Marketing Department at communications@meridiancu.ca. ©️ 2022 Meridian Credit Union