Baby Boomer Lifeboat   

    Tips for Comfortably Retiring on a Tight Income

Baby Boomers can still retire, even on a tight income, by taking steps to stretch their dollars! 

Tips, ideas and advice for making Baby Boomer retirement income go further!

 

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Alternative Credit Line for Small Businesses

Most small business owners have heard of the traditional methods of acquiring commercial line of credit, such as approaching their bank for a business or SBA-backed loan. However, situations do occur when commercial credit has been exhausted or is tied up and, for example, a small business experiences a �cash crunch� because customers are slow to pay.


These lenders give business owners the opportunity to secure business credit lines that might normally be outside their reach. Wikipedia defines asset based lending as:

In the simplest meaning, asset-based lending is any kind of lending secured by an asset. This means, if the loan is not repaid, the asset is taken. In this sense, a mortgage is an example of an asset-backed loan. More commonly however, the phrase is used to describe lending to business and large corporations using assets not normally used in other loans. Typically, these loans are tied to inventory, accounts receivable, machinery and equipment.


This type of lending is usually done when the normal routes of raising funds, such as the capital markets (selling bonds to investors) or normal unsecured or mortgage secured bank lending is not possible. This is often because the company has exhausted other capital raising options or needs more immediate capital for project financing needs (such as inventory purchases, mergers, acquisitions and debt purchasing). Asset based loans are also usually accompanied by lower interest rates, as in the event of a default the lender can recoup their investment by seizing and liquidating the assets tied to the loan.

Simply put, asset-based loans are based on assets, generally accounts receivable and inventory which are used as collateral. A small business is putting its future revenue on the line to gain access to money right now. Asset-based lenders will advance funds based on an agreed percentage of the secured assets' value.


Is an asset-based loan for everybody? No. But when a small business needs cash now and has already exhausted existing credit options, it can be a godsend.
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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