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Despite the ongoing credit crunch there are plenty of commercial financing options available in 2011. Not from the banks which require stellar credit history and consistent and large business status in order to lend, but from asset based lenders who, based on your assets, would be happy to lend you money. It is a great option for small-sized or growing businesses who find it hard to get financing from other financiers.
You could get financing based on invoice factoring or based on your other assets such as inventory, equipment, plant, or property. In the case of invoice factoring, you will be getting cash based on your accounts receivables. You will be sending your invoices to the lender who would free up credit for you based on the invoices. The invoices would then be sent to your customers who will pay your lender directly. Based on individual lender policies, you can get roughly 90 to 95% of your accounts receivable as cash this way.
An immediate advantage of the invoice factoring process is that you will be getting the money your customers owe you almost immediately (albeit not from the customers). If you have customers who take a long time to pay, then this is the perfect option. The lenders will even do customer credit checks and share this information with you. This allows you to offer credit to new customers in order to expand your business without compromising your cash requirements.
If you do not have receivables then asset based lending may be for you. The cash flow in this case might be a lower percentage of the collateral than what you would get based on accounts receivable, but the results will be as immediate and the other advantages would also apply. Assets are typically evalued by a third party to receive credit. This is a perfect option if you are in immediate need of working capital and cannot find financing from banks.
In fact, asset based lending is a great commercial financing option even if you are able to get bank approved loans since you have much more flexibility with this type of lending. You can take the cash when you need it instead of in a lump sum as bank financing works. You do not have to submit your records for regulatory reviews as banks need you to, and hence, you have more freedom to work. Bernard Linney and his staff can be reached easily to help build a financial lending strategy that will allow your business to grow.
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