Loan Types

What Is Asset-Based Lending?

Financing secured by your business assets—equipment, inventory, accounts receivable, or real estate.

Asset-based lending is financing secured by business assets (equipment, inventory, accounts receivable, or real estate) rather than your credit score or cash flow alone. The assets serve as collateral, making it easier to qualify and often providing better rates than unsecured loans. Loan amounts are based on the value of your assets (typically 50-80% of asset value). It's ideal for businesses with valuable assets but lower credit scores or inconsistent cash flow.

How Asset-Based Lending Works

Asset-based loans use your business assets as security:

Asset Appraisal

Lender evaluates your assets (equipment, inventory, receivables, real estate) to determine value and loan amount. Typically 50-80% of asset value.

Loan Approval

Approval is based primarily on asset value, not just credit score or cash flow. This makes it easier to qualify than unsecured loans.

Asset Monitoring

Lender may monitor asset value over time (especially for inventory or receivables) and adjust credit limits accordingly.

Repayment

Make regular payments. If you default, lender can seize and sell assets to recover the loan amount.

Types of Assets Used as Collateral

Equipment

Machinery, vehicles, technology, tools. Learn about equipment financing.

• Loan-to-value: 50-80% of equipment value
• Terms: 3-7 years
• Best for: Equipment-heavy businesses

Accounts Receivable

Unpaid invoices from customers. Learn about invoice financing.

• Loan-to-value: 70-90% of invoice value
• Terms: Until invoices are paid
• Best for: B2B businesses with slow-paying customers

Inventory

Products ready to sell or raw materials.

• Loan-to-value: 30-50% of inventory value
• Terms: 6-12 months (revolving)
• Best for: Retail, wholesale, manufacturing

Real Estate

Commercial property, land, or investment real estate. Learn about real estate lending.

• Loan-to-value: 60-80% of property value
• Terms: 5-30 years
• Best for: Property investors, commercial real estate

Benefits of Asset-Based Lending

Easier Qualification: Based on asset value, not just credit score. Businesses with 600+ credit and valuable assets can qualify.
Better Rates: Secured loans typically have lower rates than unsecured loans because assets reduce lender risk.
Larger Amounts: Loan amounts based on asset value, not just revenue, allowing access to more capital.
Flexible Use: Use funds for working capital, expansion, or other business needs.

When to Use Asset-Based Lending

Asset-based lending is ideal when:

You have valuable assets but lower credit scores (600-650)
Cash flow is inconsistent but assets are stable
You need larger loan amounts than unsecured options provide
You want better rates than unsecured loans offer
Assets aren't generating revenue (idle equipment, unsold inventory)

Frequently Asked Questions

What's the difference between asset-based lending and equipment financing?

Equipment financing is a type of asset-based lending specifically for equipment purchases. Asset-based lending is broader and can include equipment, inventory, receivables, or real estate. Learn about equipment financing.

Can I use multiple types of assets as collateral?

Yes, many lenders allow you to combine assets (equipment + inventory + receivables) to increase your loan amount and improve terms.

What happens if asset values decrease?

Lenders may reduce your credit limit or require additional collateral. For inventory and receivables, lenders monitor values regularly and adjust accordingly.

Can I still use my assets while they're collateral?

Yes, you continue using equipment, selling inventory, and collecting receivables. The assets just serve as security for the loan. You only lose them if you default.

Have Assets? Get Financing

Use your business assets to secure financing with better rates and easier qualification.

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Asset-based options • Better rates • Easier qualification