Asset-Based Lending

In the dynamic world of business growth, cash flow shouldn’t be a bottleneck—especially when your company’s assets can unlock new opportunities. That’s where asset-based lending with Cornerstone Capital propels you forward. It’s not about the depth of your liquid capital; it’s about intelligently leveraging what you’ve already built. With less emphasis on credit scores and reduced collateral requirements, Cornerstone Capital offers a potent blend of streamlined financial management and enhanced collateral flexibility to fuel your expansion. Step into a world where your business assets are your gateway to financial agility and minimized third-party oversight. When you partner with Cornerstone Capital, your assets work harder for you.

Key Takeaways

  • Asset-based lending utilizes business assets like inventory and equipment as collateral for financing, focusing on their value rather than creditworthiness.
  • Asset-based lending relies on tangible assets for collateral, while cash flow lending focuses on future revenue potential.
  • Cornerstone Capital offers a streamlined asset-based lending process, including assessment, customized solutions, collateralization, funding, and ongoing support.

What Is Asset-Based Lending?

Asset-based lending is a financing solution that allows businesses to leverage their assets to secure capital. Unlike traditional loans that rely solely on creditworthiness, asset-based lending focuses on the value of your company’s assets, such as inventory, accounts receivable, and equipment. By using these assets as collateral, businesses can access the funds they need to fuel growth and achieve their goals.

How Asset-Based Lending Works

At Cornerstone Capital, we make asset-based lending simple and accessible. Here’s how it works:

  1. Assessment: Our experienced team will conduct a thorough evaluation of your assets to determine their value and lending potential. This may include assessing your inventory levels, accounts receivable aging, and equipment valuation.
  2. Customized Solution: Based on our assessment, we’ll work with you to develop a customized lending solution that aligns with your business objectives. Whether you need a revolving line of credit to manage seasonal fluctuations or a term loan for a specific investment, we’ll tailor our approach to meet your needs.
  3. Collateralization: Once we’ve agreed on the terms of the loan, you’ll pledge your assets as collateral to secure the financing. This provides us with added assurance and allows us to offer competitive rates and flexible repayment options.
  4. Funding: With the collateral in place, we’ll swiftly fund your loan, providing you with the capital you need to move forward with confidence. Whether you’re launching a new project, expanding your facilities, or seizing a growth opportunity, we’ll ensure you have the resources to succeed.
  5. Ongoing Support: Our commitment to your success doesn’t end with funding. We’ll work closely with you throughout the life of the loan, providing ongoing support and guidance to help you maximize your assets and achieve your business objectives.

Unsecured vs. Secured Loans

When it comes to borrowing, businesses have two primary options: unsecured loans and secured loans.

Unsecured Loans: Unsecured loans are not backed by collateral and are typically based on the borrower’s creditworthiness. While these loans may offer greater flexibility and faster approval times, they often come with higher interest rates and lower borrowing limits.

Secured Loans: Secured loans, on the other hand, are backed by collateral, such as inventory, equipment, or accounts receivable. Because these loans are less risky for lenders, they often come with lower interest rates, higher borrowing limits, and more favorable terms.

At Cornerstone Capital, we offer both unsecured and secured asset-based lending options to meet your unique needs. Whether you prefer the flexibility of an unsecured loan or the cost-effectiveness of a secured loan, we’ll work with you to find the solution that best aligns with your financial goals.

Unlock the power of your assets with Cornerstone Capital today to learn more about our asset-based lending solutions and take the next step toward financial success!

What Are the Advantages of Asset-Based Lending?

  1. Easier Qualification: One of the primary benefits of asset-based lending is that it can be easier to qualify for compared to traditional business loans. Instead of solely relying on your credit history or cash flow stability, lenders focus predominantly on the value of your collateral. If you have strong assets to offer, such as inventory, equipment, or accounts receivable, you may still access financing even with a rocky credit history or unstable cash flow.
  2. Competitive Interest Rates: Asset-based loans often come with competitive interest rates due to the reduced risk for lenders. By using your assets as collateral, you mitigate risk, which can result in lower interest rates compared to unsecured business loans. At Cornerstone Capital, we strive to offer our clients the most competitive rates possible, helping you save money over the life of your loan.
  3. Flexible Financing: Asset-based loans provide flexibility in how you utilize the funds. Whether you need to manage cash flow gaps, cover operating expenses, or seize new opportunities, asset-based lending can accommodate a variety of business needs. Unlike some financing options that come with restrictions on fund usage, asset-based lenders typically allow you to use the funds as you see fit, empowering you to drive growth and innovation in your business.

A qualified buyer and business owner smiles confidently at the camera, knowing their asset-based lending practices will help them achieve their financial goals.

What Are Potential Pitfalls of Asset-Based Lending?

  1. Asset Qualification Limitations: While asset-based lending offers flexibility, not all assets may qualify as collateral. Certain types of assets, such as specialized goods, perishable inventory, or equipment with high depreciation rates, may not meet the criteria set by lenders. At Cornerstone Capital, our team works closely with clients to assess asset eligibility and explore alternative financing options when necessary.
  2. Additional Fees: While asset-based loans often feature lower interest rates, it’s essential to consider potential additional fees associated with these products. These fees can include origination fees, audit fees, and due diligence fees, which may impact the overall cost of borrowing. Our transparent approach at Cornerstone Capital ensures that you understand all associated costs upfront, allowing you to make well-informed financial decisions.
  3. Asset Risk: Perhaps the most significant consideration with asset-based lending is the risk of putting your assets on the line. In the event of default, lenders have the right to claim and sell your business assets to recoup their losses. While this risk exists, our team at Cornerstone Capital works diligently to structure loan agreements that align with your financial capabilities and risk tolerance, minimizing the likelihood of asset seizure.

Who Is Eligible for Asset-Based Lending?

Essentially, anyone who is able to demonstrate that they have invested value in collateral–especially business collateral–likely has their wealth tied up in ways other than liquid cash. However, investing in your business can be seen as a positive thing by lenders, as it shows your dedication to growing your capital–and, especially if you have a good financial history and decent credit score, you are more likely to be able to qualify for asset-based lending.

Want to see if you qualify for the benefits associated with this type of borrowing? Connect with our experienced team at Cornerstone Capital today and learn how we can come up with a custom financial plan together!

What Counts As An Asset?

Even if you don’t have an abundance of freed up capital to pay upfront for a sizeable loan, you may be surprised at how many assets to which you already have access. Let’s take a look at some valuables that may boost your likelihood of qualifying for asset-based lending, including (but not limited to) the following:

  • Real estate or property ownership
  • Land
  • Equipment
  • Machinery
  • Vehicles
  • Commodities or even company inventory

Why Choose Asset-Based Lending With Cornerstone Capital?

Asset-based lending is not the right lending solution for every business owner–but for many, it can be a relatively seamless and sensible way forward. Let’s look at the reasons why Cornerstone Capital is your best bet for this approach to lending.

Streamlined Financial Management:

No requirement for annual account clean-up or the need to zero out your balance at the end of the fiscal year. Focus on business growth without the burden of unnecessary administrative tasks.

Enhanced Collateral Flexibility:

Smaller collateral requirements to qualify for asset-based lending with Cornerstone Capital. Enjoy higher lending advance percentages, maximizing the capital available to support your business expansion.

Reduced Third-Party Oversight:

Experience less scrutiny from third parties when applying for asset-based lending with Cornerstone Capital. Benefit from increased autonomy and control over your loan without external interference, ensuring peace of mind and security.

Minimized Reliance on Credit Scores:

Credit scores and personal credit histories carry less weight in Cornerstone Capital’s asset-based lending eligibility criteria. Focus on the strength of your assets rather than past credit issues when seeking financing.

Flexible Payment Structure:

Access funds as needed with Cornerstone Capital’s asset-based lending, without the requirement to commit to a lump sum that exceeds your current needs. Enjoy the flexibility of paying for what you use and optimizing financial management for your business growth.

Asset-Based Lending vs. Cash Flow Lending

A black credit card sits atop a black keyboard, waiting for a business owner to capitalize on asset-based lending.

Asset-based lending relies on tangible assets like inventory and equipment as collateral, making it accessible even with weak credit. In contrast, cash flow lending focuses on future revenue potential, requiring robust financial projections. Both offer financing solutions, but asset-based lending emphasizes collateral, while cash flow lending prioritizes projected earnings. They share the goal of providing capital for business growth but differ in the criteria for eligibility and evaluation. Ultimately, the choice depends on a company’s assets, financial stability, and growth trajectory.

Characteristics of Cash Flow Lending

  • Future Cash Flow Collateral: Cash flow lending hinges on the projected future operating cash flows of the business as collateral. This forward-looking approach allows businesses to access funding based on their anticipated revenue streams rather than solely relying on existing assets. 
  • Stringent Criteria: While cash flow lending offers the potential for accessing funding based on future earnings, it often comes with more stringent operating criteria. Lenders may require comprehensive financial projections and performance metrics to assess the viability of the loan.
  • Evaluation Metrics: When evaluating cash flow loans, lenders focus on profitability metrics that strip away non-cash accounting impacts. This ensures a clear understanding of the business’s earning potential and its ability to generate sufficient cash flow to repay the loan.

Reliable Asset-Based Lending Solutions with Cornerstone Capital

Cornerstone Capital Advisors Inc. logoAt Cornerstone Capital, we recognize that every business is unique, with its own set of financial goals and challenges. Whether you’re seeking to leverage your existing assets or plan for future growth through other methods, we offer tailored financing solutions to meet your needs. Our experienced team is here to guide you through the process, helping you navigate the complexities of asset-based lending and cash flow lending to unlock the full potential of your business. Learn more about how we can support your growth journey with flexible and innovative financing options today at 954-434-1296!

Equipment Financing

For some businesses, the largest barrier to entry is acquiring the right equipment. There can be a huge difference between cheap equipment right now and the right equipment when you need it. Cornerstone providing different solutions to help your business.

Schedule A Consultation To Discuss Our Financing Options To Help Your Business.

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