Asset Based Lending...

Asset based financing is a straightforward concept - matching a company's assets to its borrowing needs. Unlike traditional bank debt that relies heavily on balance sheet ratios and cash flow projections as loan criteria, asset based lending uses a client's business assets as its primary focus for lending. The result is usually far greater borrowing power than can be achieved from a traditional cash flow banking approach.

An important aspect of asset based lending at Mahich Banc Inc. is that prospective borrowers do not have to be profitable or have a minimum net worth. A business with tangible assets and qualified management can use its assets to create additional working capital to help carry out its business plans.

Collateral Types

• Accounts Receivable
• Inventories
• Machinery and Equipment
• Real Estate
• Certain Intangibles

What is its function?

Asset based loan financing provides short term restructuring of a companies financial situation to facilitate maximum cash flow. It provides a period of recovery time and a financial operating environment where a company can demonstrate how it could perform with a long-term loan in place. This allows a company to demonstrate it is worthy of long term financing. An asset based loan does this by allowing a company to pledge its assets as collateral for a loan. The company still owns its assets, but they can easily be seized if payment are not made to the financial institution issuing the loan. It is very important to make loan payments on time.

What are the advantages?

When business opportunities appear in the market, access to conventional financing may not be executed in time to take advantage of the situation. There may also be the need to "stretch" the resources available to accomplish a companys’ objectives and conventional resources will not handle it. This is where an asset based loan becomes the mechanism of opportunity!

What does an asset based loan look like?

Some loans are based on a specific asset, while others function as a line of credit secured across a combination of assets.