Asset-Based Loans to Fund Your Next Office Building Construction—Yay or Nay?

Dollar Bills

 

If you’re a property owner, asset-based loans can be a great way to fund your next office building construction. That said, it’s important to know how asset-based loans work before applying for one. The following are some of the ins and outs of asset-based loans that you should understand before making your decision.

What Are Asset-Based Loans?

Asset-based loans, such as an asset-based line of credit (ABL), are commonly used by businesses looking to finance projects where the collateral being put up for the loan is in the form of assets. In this case, those assets would be equipment, inventory, and receivables from clients who are involved in the construction process.

Say your business has $1 million in collateral that qualifies for financing and a $500,000 debt against those assets. With an asset-based loan, the lender might be willing to provide up to 75% of the equity in the collateral—in this case, $750,000—to cover the outstanding debt plus additional funds for your project.

Benefits of Asset-Based Loans

Quick funding

Asset-based loans are best for property owners who need to get a loan fast since the application process is much quicker than commercial real estate loan applications. With asset-based financing, borrowers can receive their money within weeks or days rather than having to wait months at a time. Another benefit of these types of loans is that they are nonrecourse, meaning the lender cannot go after any other assets if the borrower defaults on the loan.

Less Paperwork

Asset-based loans may be funded quicker than traditional bank loans because they do not require as much paperwork. With traditional loans, lenders will usually require extensive financial statements and projections for your business for a certain period. Asset-based loans are primarily concerned with collateral rather than financial statements.

More Flexibility

Since asset-based loans are primarily focused on collateral, there is more flexibility when it comes to repayment terms based on how quickly you can convert your assets back into cash. This means that you will have more control over making payments based on how busy your business is at any given time.

Contract signing for asset-based financing

 

Get Asset Based Loan Today

Construction of an office building can be a simple or complex affair depending on the size, location, and use. The funds required to undertake this type of project are often substantial and may take the form of asset-based loans. If you wish to apply for any type of commercial real estate loan for your construction project, then Global Capital Partners Fund is highly recommended. They have a great track record of helping small businesses with asset-based financing.  Check out their recent deal here.

Contact them now to learn more about commercial lending in NY. 

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