Explore commonly used personal finance terms.
Asset-based lending is a type of financing where a loan is secured by collateral, typically the borrower’s assets, such as inventory, accounts receivable, or equipment. This form of lending is common for businesses needing working capital. The asset value determines the loan amount and provides a safety net for lenders. If the borrower defaults, the lender can seize the assets to recover the loan, making it less risky for lenders and accessible to borrowers with sufficient assets.
