Asset based lending partners with growing businesses
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Posted On :
Oct-13-2011
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Article Word Count :
482
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Asset based lending and other forms of alternative financing continue to grow during the post recession era and commercial finance institutions such as Far West Capital are fostering the growth of new businesses as seen in the case of BestFit Media.
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Erik McMillan is the founder and CEO of BestFit Media, an affiliate marketing company that connects their clients to target consumers by using mobile SMS and text, social media, email and mobile apps. Their clients include Dell, HBO, Southwest Airlines and Google. Not bad for a start-up. But it wasn’t always so easy. Like many new ventures, BestFit Media had their share of growing pains.
The budding company needed capital to nourish their growth, but they had a hard time getting a typical credit line from a bank. That’s when a friend of McMillan’s recommended going to Far West Capital, a commercial finance institution.
Commercial finance institutions work with businesses who have a hard time securing enough traditional credit because their rapid growth is too much for a bank to handle and they don’t want to sell part of their business. These businesses are high-risk for traditional banks, especially in the post-recession era.
"Unlike banks, companies like ours will provide credit based on future potential as opposed to historical profitability and balance sheet strength,” Cole Harmonson, CEO of Far West Capital, said. “If the business has great projections, excellent leadership, and a clear path for growth, we're willing to consider a revolving credit line and provide financial support until the business can stand on its own."
Commercial finance institutions explore different financing options such as asset based lending, accounts receivable factoring, and invoice factoring to help borrowers secure funds quickly. Assets such as account receivables, purchase orders, and inventory are typically used as collateral, a practice known as asset based lending. Commercial lenders also look at the financial standing of the borrower’s clients when determining how much a particular resource is worth, a benefit for growing businesses who may not have old ledgers to testify on their behalf.
“We can get funded [on invoices] the same day we get approval from our clients,” McMillan said. McMillan now has a $450,000-credit line to spend on daily operations, payroll, and major capital expense.
Leveraging monetary and material inventory is a scary idea. However, statistics show that the benefits of alternative financing are outpacing the risks. According to a study published by the Commercial Finance Association (CFA), asset based loans totaling $66.1 billion dollars were still open at the end of 2010, a $2.5 billion increase from 2009.
If asset based lending is an option, it’s best to contact a lender who is willing to explain the process and logistics involved. The more knowledge you have, the better decision you can make for your business and employees.
“I thought I’d have to give away my business to do it. I didn’t,” McMillan said. “[Far West Capital] made it really easy to get something that could be complicated done in an easy way.”
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Article Source :
http://www.articleseen.com/Article_Asset based lending partners with growing businesses_91444.aspx
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Author Resource :
Jane Ibi. Accounts Receivable Factoring - Far West Capital provides business financial growth through accounts receivable factoring in a variety of industries.
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Keywords :
Accounts Receivable Factoring,
Category :
Business
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Business
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