Asset-Based Loans

An asset-based loan is a financing option that primarily relies on your business’ assets, instead of cash flow and credit. The loan amount is based on the value of your collateral, such as inventory, accounts receivables, or equipment. However, if you default on the loan, lenders have the right to repossess pledged assets to recover the losses.

If your business processes a considerable number of invoices, you can apply for invoice financing.

Why Consider Asset-Based Lending?

Asset-based lines of credit provide operating capital to growing businesses with valuable assets. Its revolving nature allows you to access the funds anytime to complete big orders, purchase equipment, or fund day-to-day operations. 

The terms and rates of the loan depend on the value of your assets. This makes asset-based loans an ideal solution for small businesses with insufficient business history and low credit scores.

Ultimately, asset-based loans are used for two purposes:

  • Raising capital against existing assets
  • Funding that enables the purchase of new assets
business-1

Types of Assets You Can Use to Secure an Asset-Based Loan

There are different types of assets you can pledge as collateral. Lenders generally prefer liquid assets (or assets that can be easily converted into cash) to secure the loan. You can usually find the liquid assets at the top of your balance sheet, like accounts receivables and marketable securities. Lenders can give you up to 85% of the face value of liquid assets.

On the other hand, non liquid assets like equipment and real estate can still be used as collateral. However, expect to receive around 50% of their total value as these assets are less liquid.

business-2

Ultimately, asset-based loans are used for two purposes:

  • Accounts receivable (A/R)
  • Inventory
  • Machinery and equipment
  • Purchase order
  • Marketable securities
  • Intellectual property

Working with Invoice Financing USA

At Invoice Financing USA, we know that every business is unique, so we offer financing solutions tailored to your needs and objectives. Our financial experts will work with you to simplify the entire process.

To know more about the asset-based lending options that we have for your business, get in touch with one of our asset-based consultants today!