Financing Accounts, Inventories & Equipment
       For those in the growth and operational stages of their business, asset-based lending can provide the necessary capital for financing your accounts receivable, inventory, and equipment.  While Aegis Factors is a true factor and purchases its clients accounts receivable, asset-based lenders provide a "borrowing base" often in the form of a revolving line of credit which is related to the value of the client's assets (accounts, inventory, and equipment).
 

For our manufacturing and distribution clients, asset-based lending offers "next-stage" financing as they grow beyond the capabilities of simple accounts factoring.

How It Works
        Asset-Based Lending is, for all purposes, the big brother of factoring and there are several major differences.  These include:

• Credit:   Most factors will care little about the credit history of a business owner.  Not true in asset-based lending.  While you won't have to have spotless credit, the asset-based lender will look at personal credit since a personal guarantee of the loan will be required.

• Financials:  Asset-based lenders are not financial statement lenders but will look at the profitability of a company prior to providing a line of credit.  This means that you must supply periodic financial statements and meet certain financial "health" requirements.

• Audits:  Asset-based lenders will require periodic audits of accounts and inventory to verify that the "lending-base" is correct and not under-collateralized.

          Asset-based lenders will require periodic sales reports (often weekly) from which the borrowing base will be adjusted.  Many will require that payments made from customers are remitted to either a lockbox or to a special bank account that only the asset-base lender can access.  

What It Costs
       Since asset-based lending is an actual loan rather than the purchase of accounts, it is generally slightly less expensive than factoring.  Asset based lines of credit have an index (usually the published prime rate of interest or Libor rate) and a markup from that index which can be from 4 to as much as 8 points over.  Typically, the costs of asset-based lending are somewhere between a typical normal loan from a commercial bank providing financial statement lending and a factor providing a factoring facility. 

 Who Should Apply to Aegis Factors
        Asset-based lending is attractive to manufacturers and distributors that require inventory and/or equipment financing in addition to financing of accounts accounts.  A typical asset-based lending client will also have current receivables of $750,000 or more with $1 million to $5 million being more the norm.  Aegis Factors is not an asset-based lender.  We do, however, maintain strong working relationships with over a dozen of the largest and most flexible asset-based finance specialist both nationally and internationally and can assist you in finding the best source of financing for your company.