Benefits of Asset-Based Lending to Turn Your Prospects into Long-Term Clients
March 19, 2021
Your clients may not always qualify for traditional funding. That’s when the benefits of asset-based lending can offer additional options and keep your client’s cash flowing — and your relationship strong.
If you’re a commercial lender, finance professional or business advisory firm, you might have clients who need to access capital to scale their operation or react to new business opportunities. Asset-based lending (ABL) may be the option they’re looking for — whether they realize it or not — to move their company forward.
Below, we’ll cover how finance pros like you can position the benefits of asset-based lending to clients, along with the steps you’ll need to take to help your partners access the working capital they need.
Give them reasons to choose
In the past, businesses may have been more comfortable with traditional lenders that provide loans based on a predictable cash flow. However, in uncertain times like these, the balance has shifted.
Industries hardest hit by the pandemic, such as retail, manufacturing, warehousing and distribution, among others, are looking towards alternative lenders to access funds. (If you work with clients in these areas, you’ve likely been very busy!)
In some cases, traditional funding isn’t possible, and you may need to refer them to a capital partner. Here are a few benefits you can communicate to steer them towards asset-based lending.
- Accessible: The qualification requirements are relatively straightforward, and the process is often no more rigorous than getting a business loan or line of credit
- Flexible: There are usually fewer restrictions placed on how you use the funds
- Secure: The process doesn’t require equity to access capital
- Scalable:The ABL partner can often help businesses access additional funding opportunities as a business grows
When opportunity knocks, help them answer
The appeal of asset-based lending is the use of inventory, equipment, real estate and accounts receivable as collateral to secure a loan. By leveraging future revenue to support immediate needs, businesses can infuse cash into their company to help with seasonality shifts or expansion plans.
“It can open a lot of possibilities, as long as you’re a well-established company,” says Vince Mancuso, Co-President of Blacksail Capital Partners USA. “Over the years, we’ve helped hundreds of businesses access capital. For business owners and CFOs, these funds allow them to scale their operations and take advantage of opportunities that they wouldn’t be able to pursue.”
This type of lending, traditionally seen as a support mechanism for business challenges, is in fact a powerful tool for businesses in various growth stages. As companies emerge from the pandemic and economic activity accelerates, your funding partners can access funds to help these businesses realize the next step in their growth.
Related: See recent asset-based lending deals
Working with the right funding partner
There are a variety of factors that go into asset-based lending, such as the amount of funding needed, collateral held and funding duration. But working with the right partner is key.
The strongest partners are those who support you and your client with a collaborative and consultative mindset, so make sure you do your due diligence by researching their approach. Just as you and your prospect are a team, you’ll want to ensure that the lender you work with is a good fit and not just the lowest cost option or fastest to deliver capital. Communicating these points with your client will help you turn more prospects into long-term clients.
“We’re entrepreneurs at heart and want to help the businesses we work with,” Mancuso continues. “If you’re able to show that you have a sightline to profitability and your collateral is readily marketable, then we’re starting on good footing. From there, we like to get to know the client’s three-year picture and get you where you want to go.”
How to get started with ABL
Getting started to leverage Blacksail Capital Partners as a partner is as easy as filling out a form or giving us a call. Once you refer a prospect, the approval process can move quickly, depending on the complexity of the deal.
The first steps usually include getting appraisals on collateral in tandem with a financial audit. Generally, lenders are focused on high-value assets, good credit and solid documentation. By working closely with your funding partner and prospect, gathering this information will deliver a clear financial picture for the ABL process.
If you have a client you think could benefit from asset-based lending and want to learn more about our process, we’re happy to chat. We can explain how we’ll partner with you to help your prospects access the working capital they need.
Contact us today to see how we can help.