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Are All Trailer Financing Solutions Through Banks? No, Choose Asset-Based Lending

Once a business reaches a specific size—several locations or a certain amount of capital—it can elect to leverage that size and future growth against a loan, in other words, access asset-based lending. Using accounts receivable, inventory, or other collateral, lenders can perform value assessments on the companies and loan back 50% to 80%, according to Entrepreneur Media. Further, asset-based loans allow businesses to invest in future growth with favorable payment terms.

Asset-based lending is a type of financing offered by lenders to support logistics companies expanding their business. Unlike traditional lending practices that are often slow and drawn-out processes, asset-based lending offers a fast and flexible lending solution that enables businesses to address their current needs. With the rising demand for delivery providers and logistics companies in North America, many companies are using asset-based lending to quickly expand their equipment and fleets.   

In 2020, 10.23 billion tons of freight were transported by trucks in the US. To keep up with the rising demand for faster-than-ever logistics, delivery providers and logistics professionals need ways to expand their fleets quickly, without the slow processes of traditional lending. That’s where asset-based lending comes in: a fast, flexible lending solution that enables businesses to address real-world logistics challenges in real-time. 

Unlocking the Potential of Asset-Based Lending

Partnering with a reputable and experienced team of asset-based lending professionals can save businesses the time and money needed to thrive while still retaining ownership of vital assets. Using past successes to endure a complex present helps companies to stay strong through periods of low cash flow while preparing for future endeavors. 

Benefits of Asset-Backed Trailer Financing

Leveraging asset-backed financing offers several core benefits that go well beyond traditional banks, including:

  • Easy, flexible loans. Unlike traditional financing, asset-backed lending trailer financing moves at the scale of days and weeks, getting businesses the cash they need when they need it. 
  • It helps owned assets do double duty. The earning potential of a specific asset is limited to the work it can perform. By using an owned asset as collateral in asset-based loans, businesses can ensure that their most expensive assets are doing double duty: earning their keep through work while helping to finance new equipment. 
  • Flexible financing. Traditional financing deadlines fail to reflect the reality of today’s logistics environment. Opting for asset-based loans with remarketing options allows businesses to set their own deadlines, allowing greater bottom-line freedom. 
  • A cost-efficient solution. Priced through an annual percentage rate (APR), asset-based loans eschew traditional lending institutions’ overcomplicated pricing formulas. 

Possible Concerns Over Asset-Backed Trailer Financing

Still, a few disadvantages exist before making a final decision. 

  • Not all assets are created equal. A vital step in the asset-backed lending process is asset appraisal. As such, an appraiser might find that the support offered as collateral isn’t worth as much as a business might have hoped. Working with an experienced team can help avoid problems like this. 
  • Different assets, different values. With the inevitable fluctuations in value from one asset to the next, it can be difficult for businesses to predict loan terms and amounts. 
  • Up-front expenses. Though asset-backed lending can be more affordable than traditional financing over time, the initial costs of assessment and underwriting can be steep.
  • Collateral risk. Nobody wants to lose valuable assets, but if businesses fail to meet the terms of their asset-based loans, they risk some of their most vital assets. 

How Long Does It Take to Get Trailer Financing With Asset Lending?

On average, asset-based loans’ underwriting processes take 30 to 45 days. During this time, an asset-backed lending company performs an appraisal on any collateral. This appraisal consists of a thorough inspection of the collateral and research into its potential value. Often, these appraisals are run alongside an audit, typically performed in the company’s headquarters to provide easy access to the fullest scope of financial records available. Once the audit and appraisal have been completed, the loan can be quickly negotiated and distributed. 

Get Help and Guidance for Trailer Financing Solutions With the Industry Experts

Asset-based lending can be intimidating. Partnering with Finloc, a reliable asset-based loan provider, and their network of broker partners means businesses can harness the power of 45 years of asset-based lending expertise. Finloc can determine what financing options are best to help companies get to the next level. Schedule a call with Finloc today, and find out how asset-based lending can help your business grow.