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The truth about Asset Based Financing for Small Business

Business owners should not do math in their head.


Here is an example of dialogue regarding asset-based financing rates:

Lender: “Your rate could be 2%/mo.”

The business owner: “That’s 24%! My profit margin is only 20%! I would lose money by borrowing!”


Unfortunately, this knee-jerk reaction blinds them from understanding how it ACTUALLY works.

Here is a common example of a borrower and how the math actually works out:

Revenue is $200k/mo; COGS (cost of goods sold) are $120k/mo; SG&A (fixed costs) are $40k/mo; net income is $40k/mo (“20% profit margin”)

They borrow $120k/mo to cover COGS each month at 2%/mo: Total fee: $2,400, or 1.2% of revenue.

This is WAY different than their first impression!

Since EVERY one of our clients are using the borrowed money to GROW their company, this monthly cost of $2,400 is directly increasing their revenue, and since their fixed costs are usually remaining the same, their net income GROWS from borrowing, rather than decreases.  It just takes the business owners taking a pause and understanding the math.


Acrius Capital sources asset-based funding for business-to-business companies that are post-revenue but do not currently meet the credit guidelines of traditional bank lending. Acrius Capital can provide companies with Lines of Credit and Factoring using Accounts Receivable, inventory and equipment as collateral.  We take the time to not only provide the best rates and structures for our clients, we take the time to work through the numbers to determine if it actually makes sense to borrow or not.

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