Asset based lending or asset based financing refers to loans secured by a wide variety of assets. Businesses can obtain asset based lending by using, current assets of the company as collateral, such as accounts receivable and/or inventory or the fixed assets of a business such as plant, property, and equipment.

Asset based lending relies on the value of the available collateral to minimise the risk profile of the loan. Asset based loans also can include funds raised on equipment and/or real estate. Commercial finance is the term most commonly affiliated with the industry group of asset based lenders that provides all types of asset based loans to business and commercial borrowers. Asset based lenders are referred to as secured lenders.

Also, asset lending can apply to the unencumbered equity relflected in your home or investment property. However, this type of borrowing has a lower loan to value ratio percentage than normal mortgage loans.

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