Liquid Capital of Arizona is part of an international finance company. President Joel Gottesman explains that, in addition to its factoring service, the company offers a loan service for larger, well-established companies—Asset Based Lending.
Gottesman explains that the companies who are prospects for the asset loan product are often fast growing companies that don’t qualify for bank loans “for any number of reasons.” Lack of capital or lack of profitability in the recent past can make a company like that a good prospect for an asset based loan.
In considering an asset loan, Liquid Capital looks at a company’s level of receivables, inventory, equipment, and other assets the company has. A growing company will generate more receivables and will need more inventory to make the business work. That’s where an asset loan comes in. It provides a company with a borrowing base geared to their level of receivables and inventory.
Gottesman says that the asset loan program is a new financial product for Liquid Capital, just introduced in 2015. Several companies who are currently using factoring services are likely prospects for the new loan program. “An asset based loan is more cost effective than factoring as a working capital solution.” A bank loan would be the most cost effective solution, but bank loans are not always available to businesses that are not well established. The asset based loan fills the niche.