Often businesses looking for commercial lines of credit will try to make use of “no-collateral” loans to get capital for their business needs. Unfortunately, these loans are usually restricted by the lender to those businesses which can get a collateralized loan anyway, rendering the option useless for many businesses. Fortunately, alternative lenders offer a choice when it comes to commercial lines of credit, to make sure businesses have access to the capital they need.
Here are three different ways alternative lenders can get you capital based on their needs.
Accounts Receivable Factoring.
One of the most common commercial lines of credit of credit available is AR Factoring. This is designed for businesses whose clients have a long payment rate (30 to 60 days). Alternative lenders will take care of the accounts receivable to ensure repayment while your business has the cash on hand it needs to cover expenses.
Purchase Order Financing.
One of the more popular commercial lines of credit for companies with big orders is purchase order financing– this bases repayment on the size of a company’s purchase orders, and is often helpful to cover for supplier expenses throughout the process of delivery. This method is immensely popular because it’s very close to a guaranteed loan: the lender does the work in making sure the order can be covered and is covered while the business gets the capitalization needs.
Asset based financing.
Asset based financing is one of the best commercial lines of credit to consider for successful businesses. By having enough capital to work with on the table, this is popular for businesses that are looking to cover the cost of expansion. The lender will usually deal with repayment through a percentage of income or a bank debit on a regular basis. This is common for businesses looking to ratchet up their expansion while keeping capital flowing normally.