• Accel Business Funding

Basics of Asset-Based Lending

What is Asset-based Lending?

Asset-based lending is a financing option that can be structured as a loan or a line of credit and is collateralized by the assets you own. Assets such as accounts receivable, inventory, and equipment, are pledged as collateral. You put your future revenue on the line to gain funding immediately.

The asset-based loan amount is based on an agreed percentage of the collateral’s value and this percentage depends on the liquidity of the pledged assets.

How to get it

To secure an asset-based loan, it is imperative that you provide your lender with accurate and detailed financial information. Your business must have comprehensive financial statements, liquid assets, and creditworthy customers. Asset-based lenders will want to see that your business has long-term viability.


Asset-based loans are a great source of additional funding for businesses that are rapidly growing, undergoing turnaround, or are highly leveraged. An asset-based loan also has flexibility in terms of how the loan proceeds can be used, provided that they are used for business expenditures.

Manufacturers, distributors, and service companies are especially well-suited for asset-based loans given that their cash flow is often hampered by their seasonal demands and industry cycles.

You can also use asset-based loans to finance acquisitions and it can help companies weather financial droughts.


One of the downsides to asset-based lending is that not all assets qualify as collateral. Lenders have certain terms that an asset must meet before it can be used as collateral for a loan or line of credit. This can make securing an asset-based loan or line of credit difficult.

Asset-based loans can also be costly, and this can be further exacerbated if your company does not have the kind of assets that the lender requires or prefers. Some lenders may also charge additional fees for due diligence and additional audits.

There is also the risk of losing your pledged assets if you are unable to make payment.

Accel Business Funding has provided business loans and business lines of credit through asset-based lending and has funded many businesses for more than $380 million. When banks say NO, we say YES to funding in 24 hours!


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California's Loans made or arranged pursuant to a California Finance Lenders Law license

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