It is more or less undeniable that there can always be a mismatch between your cash flows and expenses. However, to continue to run your business you have to strike a balance between these two. For this purpose, you may have to take full advantage of asset based lending and bridge the gap. Furthermore, if you extend credit terms to your customers then it is even more important for you to opt for this type of lending. The good news is that this type of lending does not have too many prerequisites and just requires you to have some accounts receivables.
Nevertheless, if you own a large-sized business then you can think about raising funds through capital markets. However, it is not one of the easy ways and may not be helpful. If you fail at this attempt, you may consider approaching a bank for loan. Interestingly, the bank will not only consider the size of your business but may also show interest in knowing more about your financial history. Therefore, if you have had credit problems in the past then you should not expect much when applying for a bank loan. Furthermore, if your financing needs involve purchase of equipment and replenishment of inventory then you cannot rely on bank loan as it is unlikely to be approved immediately.
On the other hand, asset based lending and its various forms including factoring of receivables can help you when your requirement for cash flow cannot be delayed any further. Furthermore, your credit history is unlikely to have an impact on your prospects, whatsoever, when you approach a company that factors receivables. In fact, if you are lucky, even your tax problems may not bother the company. However, to be able to make the most out of this type of lending it is important that you disclose all your credit related problems to the company.
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