What is asset based lending?
Asset-based lending also referred to as ABL is a financial service where the lender gives working capital or term loans to the client based on the value of the company’s assets.
These assets can be real estate, equipment, inventory, or anything else of value owned by the company. ABL is faster than traditional business loans, has flexible terms and can offer higher funding amounts than traditional lines of credit. For businesses struggling with liquidity, asset based loans are one of the best financial options on the market.
ABL is best for businesses who:
Need large amounts of funding
Have collateral to leverage
Have capped out traditional options
Need funding faster than a bank or a loan for a short-term
What industries use Asset Based Lending?
Asset based loans are a viable financial solution for almost any industry and work well for both small businesses and large. Asset based loans are most commonly used by business to business (b2b) industries, because these companies often have much more collateral than consumer serving industries. Here are some examples of industries we have done ABL deals with:
Oil and Gas
Distribution & logicistics
Real estate development
What are the benefits of Asset Based Loans?
There are tons of benefits of Asset Based Loans, but here are some that our clients consistently share.
Unlock capital tied up equity
Increase your cash flow
Access more capital than traditional financing can offer
Improve your balance sheet
What types of collateral can I use for an Asset Based Loan?
Asset bands loans can harness a number of types of collateral to provide cash flow. At Cultiva Financial we primarily use the following types of collateral:
Commercial Real Estate
Commercial real estate, also called CRE, is the most common asset that we work with when providing an Asset Based Loan at Cultiva Financial. Often property or land is used to provide additional liquidity onto of another loan. Sometimes these loans work as a bridge loan, but no matter how it is used, ABL customers are able to increase their cash flow when development stalls or more is needed.
Machinery and Equipment
Hard assets lending allows borrowers to convert capital tied up in machinery and equipment into cash. The type of equipment, age, and condition, and market demand for resale all play a role in how lenders value assets and these factors also play a role in determining the advance rate.
Business owners are often sitting on valuable inventory, without any capacity to collateralize the asset for cash flow. Asset based loans help small businesses harness this in the form of an Asset-based Loan. When applying, an Asset Based lender will assess the value of the inventory and in the case of a default sell it to recover the loan. Loans based on inventory have variable advance rates that depend on factoring like location and type of storage, how easy it is to resell, and the type of goods. Most companies will also be required to have an inventory system for managing inventory and keeping track of the assets at all times.
How does the Asset Based Loan process work?
The application process to apply for an Asset Based Loan is paperwork intensive and requires a business owner to have all of his/her financial information organized. Outside of the standard documentation an Asset Based Loan is going to require a detailed asset list so a lender can understand the collateral that’s available to them.
Fill out an application
Complete our asset based loan application which will provide us information about you and your business.
After your application has been approved, identify potential collateral like real estate, equipment, and inventory.
Credit Review & Structure
Cultiva Financial will review the full and create a structure that meets your needs.
Once the loan is approved, and final paperwork is signed, funding will be transferred.
What documents are needed to apply for an Asset-Based Loan from Cultiva Financial?
At Cultiva Financial we typically ask for the following when applying for an Asset Based Loan
A valid photo-ID
6 months of bank statements of all accounts used for your business activities.
Our Credit application
Most recent 3 years of tax returns for personal / business
3rd Party Appraisals (if available)
Business Financial Statements
What factors determine rate and approval?
Property value based on recent appraisal
The quality and size of your clients.
Previous payment history with your clients
The frequency at which your inventory churns
The profitability of your business
The age and quality of your machinery and equipment
Your business and personal credit score
Here's what some of our customers are saying.
Cultiva Financial provided me the cash flow and helped with payroll to grow my business. Now, big businesses are more willing to work with me because I have the capital and workforce to keep meeting their needs and projects.
I would recommend Cultiva Financial to other companies because it will give you the possibility to expand your business and run it in the proper way. They are very easy to work with because they understand the business.
Visit Us in San Antonio, Texas
1901 NW Military Hwy Suite 218,
San Antonio, TX 78213
Mon: 9:00 AM – 5:00 PM
Tue: 9:00 AM – 5:00 PM
Wed: 9:00 AM – 5:00 PM
Thu: 9:00 AM – 5:00 PM
Fri: 9:00 AM – 5:00 PM
Cultiva Financial recently relocated our San Antonio office. Cultiva Financial can now be found on the north west corner of the intersection between NW Military Highway Moss Dr., just a few blocks from 410. You will see our building called the Gallery nestled amoung oak trees and once you arrive, head inside and upstairs where you can turn left down a hallway to find our office at Suite 218. You will know if you are in the right area if you see Sushihana Japanese Restaurant across the street.
How long does the application process take for asset based lending?
The length of the application process for an asset-based loan varies depending on the type of asset. For example borrowing against accounts receivables is less time intensive then borrowing against real estate or equipment.
Is collateral required for asset-based lending?
Yes, asset-based lending requires the company to provide collateral like real estate, inventory, or equipment to qualify for the loan.
How is an asset based loan different from invoice factoring?
Both asset based lending and invoice factoring provide viable tools for businesses to alleviate cash flow challenges. Where asset based loans determine approvals and deal size based on the value of hard assets like land, equipment, or inventory, invoice factoring basis approvals on the payor of an invoice and the value of the invoice. With invoice factoring, businesses can access capital even if their credit history is sub par, as long as the client paying the invoice has strong credit. Factoring deals typically only last 30-90 days and approvals and funding can be as fast as a day or two. With ABL, the timeline is still faster than a traditional loan, but depends on how long it takes to accurately value the asset being leveraged.