Asset-Based Finance

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Asset-Based Finance

The practice of making a loan secured by an asset. While, in theory, many loans are asset-based mortgages, the term most commonly applies to loans secured by something unusual, such as accounts receivable or intellectual property. Businesses take out most asset-based loans and pledge something used in the conduct of their businesses as collateral, such as inventory. As with all secured loans, asset-based loans have lower interest rates than unsecured loans. The practice is also called asset-based lending.
References in periodicals archive ?
Invoice discounting remains the most popular form of asset based financing, with the number of companies using it increasing to well over 18,500, up from just over 17,300 in the same period last year.