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Is the Bank Your Only Option?

Mark E. Battersby March 2011 issue of Skin Inc. magazine

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Usually, well-established spas with good credit records are able to take advantage of affordable financing. For the most part, however, many banks find it more profitable—and safer—to invest funds borrowed from the Federal Reserve System into government securities rather than risk lending to small businesses. Not only are loans often hard to come by, they are also expensive. This slows down economic recovery because businesses that can’t borrow often can’t expand. Therefore, lawmakers have responded with a number of proposed funding programs to boost small-business lending. However, the bank isn’t your only option when it comes to financing your spa. It may be worth your while to look into alternatives such as asset-based loans and local funding.

Asset-based loans

While they aren’t cheap, asset-based loans are a proven, effective financing strategy that cash-strapped spa owners can employ to meet their short-term cash needs. Why an asset-based loan rather than a traditional, cash-flow loan? The truth be known, asset-based lenders often advance funds when funds from more traditional sources are not available.

In general, commercial finance companies are often willing to lend to businesses that cannot, for various reasons, secure credit from a bank. The credit is secured by assets of the spa, such as receivables, inventory, equipment and sometimes real estate.

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