If you have contracts with a reliable source, you may be able to obtain money using those contracts as collateral. This day and age, many business have trouble finding working capital loans. The days of unsecured credit lines at the bank have "gone the way of the dinasaur" as they say.
Often when a business is just getting started or growing rapidly, they out grow their capital. Let's say they are plodding along manufacturing widgets and all of a sudden they get a giant order for a million widgets. They need money to buy the supplies, hire the additional personel, acquire additional equipment and maybe even expand their space. Where are they going to get the capital to expand their operation so they can accept the contract? Monetize the contract, that's where.
Most lenders do not look at contracts as an asset, however new products are being created everyday. We have been fortunate enough to have a relationship with a funding source that sees the value, especially if the contract is with a highly rated company, and if the client is willing to enter into a contract for your product or service for a duration of at least two years or more.
It is pretty simple actually, although it may seem complex. Leveraging off of the contracts gives a small business an opportunity to compete with the big boys.
For more information visit R & R Commercial Lending, Inc.
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Author: Robbie Hopkins
R & R Commercial Lending, Inc.
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