Getting a loan for any purpose can be challenging, especially when you have a bad or low credit score. But it’s not impossible when you go for asset-based lending. It’s simply a loan secured by an asset as collateral and removes the involvement of credit score. So, if you want personal asset-based loans or online fast cash loans in Detroit, MI, first, you need to know what can be used as collateral.
Types of Assets that can be used as Collateral
As an investor, you may have many assets that you can potentially use as collateral to secure a loan with convenience. These assets include real estate, accounts receivable, inventory, and equipment. Let’s discuss them all.
- Real Estate Financing: You can get a real estate loan by putting up the property you are buying as collateral. For instance, if you want to invest in an old & decayed home to redevelop it—you can apply for a personal asset-based loan in Detroit, MI. But if you fail to pay back to the lender and default, they can take over this newly developed property.
- Accounts Receivable Financing: A lender might give you an asset-based loan, also known as invoice factoring, that leverages your existing account receivable value as collateral. The lender, also called a factor in this case, will pay you a percentage of the value of your invoices. And, usually assume complete responsibility for payment collections.
- Equipment Financing: If you require new equipment for your business, you can go for equipment financing, which involves the equipment as collateral. In case you fail to pay back to the lender, they might repossess your purchases. You can easily get fast cash online loans in Detroit, MI, for your business, making the whole process convenient, transparent, and quicker.
- Inventory Financing: It’s a popular financing method for purchasing goods to sell later on. In this form of financing, inventory will serve as collateral, much like equipment in equipment financing. If you fail to make payments within the deadline, all the goods purchased will be subjected to the lender’s repossession.
- Advantages of Asset-Based Loans in A Nutshell
The primary advantage of asset-based lending is that it’s easier to acquire than conventional loans from banks or other financial firms. It does not matter how low your credit score is or how healthy your financial history and depth-to-income ratios are. Another advantage of this lending option is that your loans are approved fast, and you get the capital much quicker than other loan methods.
The faster funding and more flexible approval associated with asset-based lending make them an excellent option for businesses looking toward large expansions.