Collateral based loans are nothing new. Banks and other lenders have been demanding collateral as a form of security against the capital borrowed by businesses since time immemorial. For new and small businesses, collateral based loans present a much bigger risk. Quite often, these entrepreneurs do not have the business assets to put up against loans and have to put personal property on the line as collateral. What if we could rethink the traditional funding model in a way that favors business owners?
Collateral Based Loans Hinder Businesses
Our country is currently in an economic upswing. In order to maintain momentum, businesses need to be able to grow and thrive. Small and emerging businesses cannot sustain operations or become more competitive if they are required to put up large amounts of collateral for loans. Add to this the recent hikes in interest rates, and the traditional funding model works against a healthy and competitive business landscape.
Funding without Collateral
Many business owners view anything outside the traditional model of collateral based loans with a degree of skepticism. After all, collateral based loans have been used for a long time, so why rock the boat? Newer entrepreneurs, as well as those who survived the Great Recession a decade ago, understand the need for something better. What was once considered “creative financing” has become a mainstay, and allows entrepreneurs to be agile without placing business and personal assets on the line for loans. Risking collateral while simultaneously taking on debt is not a recipe for guaranteed success. More than loans, new and small businesses actually need a reliable source of working capital and a strong cash flow to gain a stronger foothold in today’s economy. As a means of sidestepping collateral based loans, businesses are using receivables to get quick and efficient access to funding. Instead of dealing with staggered payment schedules which can place revenue out a minimum of 30 days, businesses are using accounts receivable financing. Accounts receivable financing converts receivables to cash without the wait. This allows businesses to boost cash flow and get access to the working capital needed to grow in a strong economy.
Accelerate Your Business
FSW Funding specializes in working capital solutions focused on accounts receivable financing. Our team works with businesses across all industries to accelerate cash flow and give entrepreneurs the ability to thrive and grow without the need for collateral based loans.