Asset-based lending for small businesses usually involves putting up collateral such as equipment, inventory, buildings, or accounts receivable, in exchange for immediate cash. The amount that you can receive for such assets will depend on the kind of asset involved, although it is generally in the neighborhood of 70% or 80% of the actual value of the asset.
Securing an asset-based loan
It is sometimes difficult for a new company to arrange for an asset-based loan, because lenders prefer to see some company history before taking a chance on a new client. It will generally be necessary to make inquiries and do some research in order to find a lender willing to work with a startup or fairly new enterprise. However, lenders do look favorably on small businesses which have good paying customers, keep their financial records in good condition, have accurate reporting systems, and which have on-hand inventory that is commonly exchanged.
Advantages of small business asset-based loans
There are several situations which small business routinely face where an asset-based loan makes good sense. Many businesses which are at least somewhat seasonal in nature may find it beneficial to secure an asset-based loan to get past the periods where cash flow dries up until the next busy time of year. If an opportunity for growth pops up, this may be the right solution for obtaining needed capital to take advantage of the opportunity. In cases where the asset being used as collateral are your accounts receivable, there would be a strong chance for approval as long as your customers pay their invoices fairly promptly. This means that approval does not depend so much on your company credit history, or your personal credit history.
Asset-based lending with Himsl Consulting
If asset-based lending is an option that you’ve been considering, we may be able to help your small business with favorable opportunities. Contact us at Himsl Consulting, so our financial specialists can discuss possibilities which may work for you, and be beneficial for your small business.
Business Mergers: Different Types and How They Work
There are three main types of business mergers, and they are all executed for reasons which improve the standing of the companies involved in some way or another. One of the reasons you would take on a merger is to strengthen your standing in a market, or to acquire access to a different market. It’s also possible that your company would merge with another company for the sake of gained efficiencies, or simply to diversify product lines as a hedge against downturns on one product line. The different types of mergers are described below.
Vertical mergers take place between two companies which are involved in making the same finished goods, but which make their contribution at different stages of that product’s manufacture. For instance, a plant which manufactures the engines for a particular car might merge with another company that manufactures auto chassis, so as to have more of the finished good assembly accomplished by a unified company.
These kind of mergers take place between companies which market the same goods to customers. As an example, a company in your area which makes swimming pools might merge with its competitor so as to eliminate the rivalry, and enjoy greater success as a single entity. One of the big advantages to this kind of merger is that it has the potential to achieve an economy of scale, meaning that the cost of doing business decreases because volume of manufacture increases.
The objective in a concentric merger is for two companies which have the same target audience to join forces, so that both can diversify their offerings. As an example, a company which manufactures golf clubs might arrange a concentric merger with another company that makes golf balls, so that the combined company has additional product lines to offer the same customers.
Do you need funding for a planned merger?
Business mergers can be very important steps to make toward achieving significant company growth. If you need funding for your planned business merger, contact us at Himsl Consulting. There may be ways which we can help you achieve your goals and objectives, so discussing your plans with our financial experts could be beneficial.