Over the last few years, asset based lending has really skyrocketed in popularity. In particular, it has become a viable source of financing for smaller businesses. It is no wonder why considering all the advantages that stand to be gained through these loans.

One benefit is that it serves as a middle ground for businesses in an intermediate growth phase. Some types of financing are available exclusively to startups and very small businesses. Others can only be acquired by companies with sufficient footing, which means they are less of a risk. For organizations in the middle ground, asset based loans can be used to get through intermediary times.

Another perk is that asset based lending can be acquired fairly quickly. With other forms of funding, business owners may have to wait weeks to hear whether they were approved. This can be inconvenient, especially if the money is needed immediately. Fortunately, the underwriting process is much more streamlined for asset based loans. As long as your company is turning a profit, it should take relatively little time to get a response from the lender.

There is also greater flexibility. Some types of financing have very specific guidelines for what the funds are allowed to be spent on. Asset based loans are typically not as strict. Generally, the only criterion that needs to be met is that the loan needs to be spent on something related to your business.

Asset based lending is also great for businesses that are looking to improve their liquidity. This means your organization is provided with a predictable cash flow that can be used at various times when the business may be low in funds. Some examples of those times include being a business with seasonal revenues, having a tighter cash flow than usual or being in the process of rapidly growing.

Asset based financing is simpler to acquire than a line of credit or a standard business loan. The reason for this is that asset based loans require the business to put up something of worth as collateral. This can be real estate, equipment or inventory. Since something is offered as collateral, there is less of a risk for the lender, so the financing company is more willing to approve.

Small business owners need to look at all their options when they are in need of financing. During certain periods of growth, one of the best types of financing to be gained is definitely asset based lending.