Asset lending is an alternative source of working capital for small to mid-sized companies that are temporarily unable to meet or continue to meet the credit quality standards for bank financing. As direct lenders they extend lines of credit typically ranging from $25,000 to $1,000,000. Loans are primarily structured based on the company’s accounts receivable and other assets. Asset lending helps businesses meet their credit needs until they satisfy bank credit quality standards and can return to traditional financing. Asset lenders usually focus on certain industry sectors and assist start-ups, turnarounds, workouts, companies in Chapter 11, highly leveraged companies, acquisitions and even some companies with tax lien problems.

Information required by these financing companies includes accounts receivable, accounts payable, agings, balance sheet, income statement and personal financial statements on the principals.

Companies seeking this source of financing typically pay for out of pocket costs for performing due diligence. Interest rates for the loan would be 1% to several percentage points over the prime interest rate. In addition, there would be a service charge based on volume.

This article is provided by Presidential Financial Corporation through the efforts of Nicole Persons. Senior Vice President. For more information go to Presidential Financial Corporation’s web site at www.presfin.com.