asset-based financing

Asset-based financing is a type of loan or credit offered to a business that is secured by its assets, such as inventory, accounts receivable, equipment, or other valuable property. Instead of relying solely on the company’s creditworthiness or cash flow, the lender assesses the value of these assets to determine the borrowing limit. This approach provides businesses with access to capital using their existing assets as collateral, enabling growth, operational needs, or bridge financing without risking overextension. It's commonly used by companies with significant tangible assets but limited access to traditional loans.