How does asset-based lending generate working capital for companies?
Our lines of credit are formula based, lending up to 90 percent of A/R and 50 percent against your inventory and equipment. Ultimately, Hitachi Business Finance provides an advance against the value of the receivables (less a service fee), providing you with cash quicker, which shortens your overall payment cycle.
Which companies are good candidates?
If your company has an asset-heavy balance sheet and a strong management team, your company is an excellent candidate for asset-based lending. We lend against your collateral and enjoy getting to know and understand your management team.
What is the difference between A/R financing and asset-based lending?
The most significant difference between the two types of financing is the level of support. A/R financing provides an additional layer of assistance through credit, collection, and A/R management services. With A/R financing, the lender is directly involved with the clients in the monitoring of invoices and payments. Asset-based lending more closely resembles a traditional bank loan in its level of reporting and support. With an asset-based line of credit, the lender relies on the client to provide reporting of its accounts receivable, as well as its overall financial performance, and the lender has limited involvement with the customers.
How can A/R financing help my business?
By converting your accounts receivable into cash, your company can get paid faster and use that money for working capital, payroll, new inventory, and more.
Can a line of credit help my company grow?
Yes! An asset-based line of credit allows a business to refinance their current lender, increase available working capital, leverage value in current assets, and more.
What type of companies can benefit most from Hitachi Business Finance’s services?
Business-to-business service, manufacturing, and distribution companies in the following industries: manufacturing, industrial services & supply, engineering services, staffing, IT consulting, transportation services, security services, and government suppliers.
Which type of businesses are not ideal candidates for financing from Hitachi Business Finance?
Real estate, insurance-funded health care programs, construction, and any type of consumer-based businesses do not complement Hitachi Business Finance’s working capital offerings.
Can a start-up company qualify for asset-based financing?
We work with clients that have sales, but do not yet qualify for traditional bank financing. If your company is relatively new and has receivables and/or purchase orders, Hitachi Business Finance can help. We look beyond the limited credit history of new businesses and examine the ability for the company to produce their product and/or service and the credit strength of the business’s customer base.
Our funding solutions are best suited for second stage companies that are post-revenue (has sales) and pre-bankable (does not yet qualify for traditional bank financing). However, Hitachi Business Finance is happy to help entrepreneurs and connect them to an early-stage investor that may be able to assist.
Will my customers be concerned about my need to fund my invoices with you?
No. A/R financing is very common for financing a very wide range of companies. Sophisticated customers routinely assign their vendors payments and asset-based lenders. It helps if you inform your customer before they receive the request from the factoring company.
Can working capital from Hitachi Business Finance help a small business secure bank financing?
Yes. Companies can establish a sound financial track record after working with us and can use that when pursuing bank financing. We also have a vast network of relationships in the banking community to connect companies with a lender and loan officer to meet their needs.