Article excerpt

Asset based lending can be a fantastic form of finance for owner managed businesses, but beware of the small print. I have lost count of the number of business owners that I have spoken to, whose companies are locked into unsuitable long term agreements.

So, given the wide range of lenders in this sector, how does a business decide which funder to use? The first step for any business looking to use asset based lending is to take expert advice. This advice should be both practical and commercial, to help the directors choose the most appropriate form of facility from a well-matched lender.

So what are the key questions for business owners and directors considering asset based lending? At Select Business Finance we use a checklist of over 20 points to match borrowers with lenders, and the following four are a good place to start: 1. Insist on meeting your Relationship Manager. The sales person will doubtless have done a good job building rapport with you and selling the benefits of their company - that is their job. However they will have no ongoing input into your relationship once you have signed the agreement, and it is the relationship manager who will work with you in the future. You need to ensure you will get on with them and evaluate how much they might add value to your business. …