Asset-based
Loans

Asset-based loans allow businesses access to working capital through a loan secured by assets that the business has. This means that for this type of loan, the lender is collateralized with an asset (or assets) of the business borrower. Ultimately, this can allow for lower rates as this type of financing is considered less risky compared to unsecured lending. It is important to note that the more liquid the business asset is, the less risky the loan may be considered which can possibly mean lower rates.

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Since businesses have to have collateral in order to secure an asset-based loan, lenders will lend funds based on the secured assets’ value and type of asset. Please note, the financing available may vary from lender to lender and also depends highly on the type of collateral that the business has. An asset-based loan is a secured business loan which differs from unsecured business loans. The biggest advantage for borrowers is that this type of financing is considered less risky for lenders and therefore can have bigger benefits than unsecured loans