black and white business building business owner walking up stairs black and white hand on desk for underwriting services from LQD Business Finance small business owner standing under bridge black and white black and white business meetings for working capital financing solutions Contact Us Header

Transforming the Retail Industry with Asset-Based Lending

Over the past few years, retail businesses have continued to expand across America. While some were compelled to close their doors long before the pandemic, those that transitioned into online space continued to do well. When the 2020 economic crisis hit, companies such as Walmart weathered the storm with relative ease. Unfortunately, most retail stores do not have the resources at their disposal that Walmart or Amazon does. The good news is they can rely on asset-based lending to fill the gap.

Why Retailers Should Capitalize on Asset-Based Lending

When retail companies close their doors, they often end up selling off inventory at rock-bottom prices, and they may never make that money back. Instead, companies can use the inventory to secure asset-based retail financing.

Restructured Finances

Retail companies have been taught to view sitting inventory as a bad thing. It is in some ways, but it doesn’t change the fact that unsold items are still assets. As long as those items have an adequate shelf life, they may be viable options for securing capital. This provides retail companies with the opportunity they need to restructure debt and overhaul finances.

Improved Positivity

Changing the way business owners think about inventory can revive the business. Managers who felt bogged down by the business’s impending failure may once again feel inspired to pursue pivoting options. This may lead to an influx of unprecedented creativity at all business levels.

Better Agility

There is much talk about reforming old businesses to meet changing consumer needs, but this requires money. Even if a retail business wants to move into an online space, it needs to restructure its logistics and build a whole new platform. Agility has its price, and a business loan can help make that possible.

Enhanced Flexibility

Traditional business loans cherry-pick the winners in the business world. This cherry-picking often leaves profitable businesses off the table because they don’t meet outdated criteria. Digital lenders tend to rely on more flexible data and provide competitive online business loan terms.

How Retail Businesses Can Remain Relevant

Once business owners have the money in hand, the next step involves making the right moves. Every business will need to conduct a thorough evaluation to determine which action is suitable for its customer base. Here are some suggestions to consider:

Develop an Omni-Channel Approach

Many retail companies rushed to go from brick-and-mortar outlets to online-only companies. In some instances, this made perfect sense. However, for some people, visiting the actual store was part of the experience. Online shopping is also not the only pandemic solution consumers are interested in. Try-before-you-buy, drive-through purchases, and curbside pickup have all become more popular.

Offer Multiple Payment Systems

When you open multiple business channels, it’s also important to make adequate allowances for processing different payment methods. Say, for instance, that a business primarily serves seniors. Some seniors never transitioned out of paying by cash and check. How will they complete payments for online or other contactless purchases? If you serve an underbanked or unbanked population, the issue once again arises. Integrating all your payment options takes creativity, time, and money, so plan ahead.

Borrow Early in the Recovery Process

Companies often wait until they are no longer able to fund expansion or operations to borrow independently. This may seem like the most sensible thing to do, but opportunity waits for no one. Borrow early in the retail life cycle, so you have all the resources you need to move swiftly. Should you determine you do not need the money you borrowed, you can always give it back or use it for something else.

How To Determine the Type of Business Loan

Asset-based lending is not a type of loan, per se. Instead, it is just another creative way small businesses can secure loans. Because of this, you still need to determine what type of loan you need. This depends on cash flow and the specific purpose of the loan. These are a few of the most common business loans:

Equipment Financing

If you need a loan to pay for software and equipment for widening your retail channels, you may need an equipment financing loan. This can also pay for your delivery trucks or other significant changes.

Working Capital Loan

If you need money to fund current operating expenses, a working capital loan can help. Use this to cover payroll, utilities, and everyday expenses on your balance sheet.

Short-Term Business Loan

If you feel confident that an influx of funding will drastically improve how you do business and bring in more sales, consider a short-term business loan. These are similar to working capital loans, but you can use them for any purpose.

Secure an Asset-Based Business Loan

Ultimately, the lender you choose determines the financing options available to you. Choose wisely based on financial products and trust. LQD Business Finance has served businesses throughout the pandemic and beyond. See what we have to offer by applying for an asset-based loan today.

  • Blog