Asset-based financing

Asset-based financing

Methods of financing in which lenders and equity investors look principally to the cash flow from a particular asset or set of assets for a return on, and the return of, their financing.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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