There are so many ways and methods of financing whether it be through loans or collateral. Now, one of the more common methods of financing that a lot of companies use would be the asset based lending Ventura county method wherein the company puts up its assets as collateral in order to get financing. This provides a safe option for lenders and a fast way for companies to get money that they need.
So before anything else, the first question that one should ask would be which collaterals can be considered for this type of loan. Well, one of the most popular forms of collateral are accounts receivable which is cash that debtors will pay to the company. Other than that, there would also be the equipment that the company uses or the merchandise that the company sells.
That said, the next question to tackle would be exactly how one values the collateral. For accounts receivable, it would usually be somewhere at eighty five percent of the total accounts receivables that will be used for the loan. For the businesses giving inventory or equipment, the loan value would be somewhere at fifty percent of the fair market value or total value if inventory is used.
The next thing to know would be how much the cost of this loan is. This would really depend on the lender that the borrower is talking to but the usual rate would be somewhere in between seven percent to seventeen percent annually. As mentioned, this would wholly depend on the agreement of the lender based on general risks that are involved.
Now, do take note that there is a whole process to this thing. Before the lender would provide any money to the borrower, he or she has to first do a background check on the borrower and the performance of the said company. This is usually done through examination of the financial statements as well as the collaterals that were offered up for the loan.
When all the background checks are done and all the terms are agreed upon, the money is given. Now, do take note that credit score is not a criteria in lending money. This is because lenders already feel safe even though the borrowers do not pay up since the lenders already have a hold of collaterals that are worth more than the loan itself.
That is, in fact, one of the reasons as to why these types of loans are so popular in the first place. They are very easy to get as long as the borrower complies with all the requirements set by the lender. If everything checks out, then money is given.
As one can observe, the cost of this loan is pretty high if compared to the traditional ones. However, the advantage would be time and accessibility on the part of borrowers. At the same time, lenders will have the safety since it is easy for the lenders to get hold of collaterals that can be used to pay off the loan.
So before anything else, the first question that one should ask would be which collaterals can be considered for this type of loan. Well, one of the most popular forms of collateral are accounts receivable which is cash that debtors will pay to the company. Other than that, there would also be the equipment that the company uses or the merchandise that the company sells.
That said, the next question to tackle would be exactly how one values the collateral. For accounts receivable, it would usually be somewhere at eighty five percent of the total accounts receivables that will be used for the loan. For the businesses giving inventory or equipment, the loan value would be somewhere at fifty percent of the fair market value or total value if inventory is used.
The next thing to know would be how much the cost of this loan is. This would really depend on the lender that the borrower is talking to but the usual rate would be somewhere in between seven percent to seventeen percent annually. As mentioned, this would wholly depend on the agreement of the lender based on general risks that are involved.
Now, do take note that there is a whole process to this thing. Before the lender would provide any money to the borrower, he or she has to first do a background check on the borrower and the performance of the said company. This is usually done through examination of the financial statements as well as the collaterals that were offered up for the loan.
When all the background checks are done and all the terms are agreed upon, the money is given. Now, do take note that credit score is not a criteria in lending money. This is because lenders already feel safe even though the borrowers do not pay up since the lenders already have a hold of collaterals that are worth more than the loan itself.
That is, in fact, one of the reasons as to why these types of loans are so popular in the first place. They are very easy to get as long as the borrower complies with all the requirements set by the lender. If everything checks out, then money is given.
As one can observe, the cost of this loan is pretty high if compared to the traditional ones. However, the advantage would be time and accessibility on the part of borrowers. At the same time, lenders will have the safety since it is easy for the lenders to get hold of collaterals that can be used to pay off the loan.
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For a closer look at the benefits of asset based lending Ventura County customers should turn to our recommended homepage and read all the information at http://www.cornerstonecapitalfinancegroup.com/cashflow.
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