What is Asset Based Lending: Asset Based Lines of Credit & Refinancing

Looking to get financing for your business, but don’t meet traditional income or credit history requirements? Find out how asset based lending can help.

Are you a business owner in need of financing but can’t meet the stringent lending requirements in place for traditional business loan options from banks and major lenders?

A traditional loan is approved based on cash flow, income, and credit history, but asset based lending in Canada is when a loan is granted primarily on the value of the assets the borrower offers as security or collateral, allowing a company to access the working capital available in their assets immediately.

Asset-based lending is a great way for small and medium-sized businesses without a significant amount of cash flow to receive large loans from lenders. As long as your company owns valuable collateral, asset based loans are easier to qualify for when compared to other types of small business loans.

If you’ve ever dealt with a big bank, you know that they often don’t show up for business owners when times are hard. The overall rejection rate for small and medium businesses accessing bank financing is 15 per cent, according to research from the CFIB from 2016.

The report also shows that 27 per cent of business owners were not able to receive the funding they needed, with many relying on their own assets for additional sources of financing, 49 per cent of small businesses relied on their own personal equity, and 30 per cent used a credit card.

We know that a business equipment loan can be essential to the growth or survival of your business, which is why we offer the financial help that business owners need. We provide asset based lines of credit and refinancing at fair rates to help you leverage the equity in your assets and equipment.

Our asset based lending is not based on your business’ past credit history, income, or ratios. It’s based on what you presently have and the assets you already own.

What is an Asset Based Line of Credit?

A line of credit is a type of loan that lets you borrow money up to a pre-set limit. You don’t have to use the funds for a specific purpose, which is especially helpful for business owners facing different needs.

When you seek an asset based line of credit with Capital Hands, we look beyond the traditional numbers. We evaluate your assets, and a line of credit is then offered based on that evaluation. 

Some of the most common assets used to secure a business line of credit in Canada include:

  • Accounts receivable
  • Equipment
  • Property
  • Inventory

Your asset backed line of credit will be based on your accounts receivable, not your financial ratios. Our line of credit is flexible and can grow as your receivables grow.

What is Asset Based Refinancing?

Perhaps you have entered into expensive financing but want to find a better rate. Or maybe you’ve fallen out of covenants with your bank.

Through our refinancing services and leveraging of assets, you can obtain money for assets you own or in which you have equity. You can refinance equipment, property, homes, commercial buildings, and more.

If you’re managing previous debts, asset based refinancing can be a great option to consolidate your debts. This helps to lower your interest rates, generate operating capital, and provide tax relief.

How We Can Help

Here at Capital Hands, we offer a completely holistic consultative approach to your business and its financing needs. With our Capital Hands business financing product options, we’ve already helped many businesses across Canada access the financing they need to grow and secure their business.

We have years of experience in a wide range of industries, and we understand the struggles that business owners face every day. That’s why we’re willing to work with you to simplify the process and get you the capital your business needs to survive and grow.

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