Finance Heavy Equipment with Asset-Based Lending
When your company relies on heavy equipment to fill orders, finish projects, and keep that working capital steadily rolling in, you definitely face your share of challenges. One of the largest is how to cover the costs of acquiring and maintaining that equipment. Asset-based lending can help take a lot of the guesswork out of heavy equipment financing that doesn’t break the bank. Here’s a closer look at how it works and what it can do for you.
How Does Asset-Based Lending Work?
Asset-based lending works almost exactly the way you’re probably thinking it does. In order to get approved for the financing they need, the owners of a given business use their assets as collateral instead of going through the usual approval process associated with a traditional loan. The benefits of doing things this way include:
- Not having to undergo a standard credit check.
- Circumventing the usual approval process.
- Getting access to the current value of the assets in question as a simple, accessible line of credit that can be used for just about anything, including heavy equipment financing.
This type of lending is an especially good fit for companies in construction, contracting, factory production, and similar industries because of the sheer flexibility it brings to the table. Since the funds involved really do work just like any other revolving line of credit, they can be used to make a purchase, be paid off, and then be used again toward another expense down the road.
Choosing the Right Lender for You
Don’t simply assume that one asset-based lender is just as good as any other. When you’re dealing with big ticket items and valuable collateral, it pays to do your homework and shop around a little. Generally speaking, it’s best to choose an establishment that specializes in heavy equipment financing. If they’re experienced when it comes to the exact type of equipment you’re interested in, so much the better.
Before you sign on the dotted line, make absolutely certain that all of the associated terms make sense and seem reasonable to you, especially when it comes to repayment. Don’t be afraid to ask questions if something seems confusing or just plain doesn’t look right to you. A reputable lender will be more than happy to clarify things. Watch out for hidden charges and fees that could elevate your overall rate as well.
Asset-based lending is a simple, nearly foolproof way to get the money you need to cover your equipment costs. Just makes sure you take the time to fully evaluate your choices before you settle on a lender.