Understanding Asset-based Financing

Simply put, asset based financing is a method whereby the assets of a company are used as collateral. That is to say, it is a type of loan that’s secured by one of the company’s assets. Asset-based loans are generally more flexible than other financing methods.

Who uses asset-based loans?

This financing strategy is usually adopted by start-ups or companies that are experiencing gaps in cash flows. A company usually decides to opt for asset-based financing when it requires working capital for business growth.

As COVID-19 continues to bring unprecedented economic downturns, more companies are looking for effective strategies to recover from their financial losses. Besides, receiving unsecured loans during these times has become more difficult than ever.

Under these circumstances, a number of small-scale businesses are opting for asset-based financing. However, asset-based loans can also be secured by large companies such as distributors, retailers, wholesalers and other service providers.


Which assets can be used as collateral?

Although, lenders generally prefer accounts receivable as collaterals, a company can also choose to use other assets such as machinery,  inventory, equipment, and real estate.

How asset-based financing can help businesses

Entrepreneurs often find it difficult to break out of the persistent cycle of constrained cash flows and under investments. Especially, under the current economic recessions triggered by COVID-19, many business are failing to make financial investments because of insufficient cash.


The current economic circumstances have cast asset finance in a new light. Many entrepreneurs are opting for this method of financing to achieve their business goals.


Some important reasons of the unprecedented prevalence of asset-based financing include:


  • Asset-based financing can channel potential investments into your business. It’s affordable and comparatively more flexible than traditional bank lending schemes.
  • Asset-based financing allows companies to use their assets as collateral, thereby increasing their cash flow and productivity.



Are you looking to partner up with a reputable company for asset-based financing?


At Global Capital Partners Fund LLC, we offer numerous financing options to businesses such as asset-based lending, asset-based financing, bridge financing , mezzanine property financing solutions, permanent commercial financing, permanent financing and structured joint equity financing in New York.

Feel free to get in touch today and learn more about our products and services.

Categories: Assest Financing

Tags: ,,

Leave A Reply

Your email address will not be published.