ASSET BASED LENDING
What is Asset Based Lending?
Asset based lending is a type of alternative financing that can be structured as a loan or line of credit and is collateralized by the assets you own.
The amount of an asset based loan will be based on the total appraised value of the collateral, with liquid assets being more highly valued. Therefore, liquid assets such as accounts receivable is a commonly pledged asset. Less liquid assets such as equipment, real estate, and inventory can also be used as collateral but will offer less appraised value.
Although your company assets are offered as collateral, your creditworthiness is still considered. An asset based loan also has flexibility in terms of how the loan proceeds can be used, provided they are used for business expenditures.
What are the best industries for Asset-Based Lending?
Asset Based Loans are generally best for business to business (B2B) industries because B2B companies tend to have significantly more assets to pledge as collateral than do business to consumer (B2C) companies.
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