• Home
  • Asset Based Lending

Asset Based Lending

Asset based financial services play the vital role in funding the economy and dedicated to the growth and well being of the clients. They provide the borrower with the money in against of the fixed assets and stretch their arms for domestic and commercial banks, big and small companies, factoring organizations, provide financial subsidy to the major industrial sectors.

Most of the private lender is highly experienced and know how to form the proper financing strategy for the borrowers. Most of this financial business involved the wide range of services both for the domestic and international purposes.

Normally they provide Equipment financing, Operating cash, Debt consolidation, Bankruptcy/reorganization financing, Turnaround financing, Inventory financing, Floor plan financing, export/import trade financing, Factoring services, Growth financing, Equipment leasing, Growth Money and Funding for an acquisition for the merger or a leveraged buyout.

Some different types of Asset Based Financing

Secured lending – The lender of the fund, finance in against of the assets of the borrower. The collateral securities could be the fixed and other kinds of assets whose value should be determined.

This type of lending helps the borrowers to use the fund to buy more materials, expansion of the marketing, and improvement of the productivity and sells of the resultant products. The increasing and decreasing of the loan balance is cyclical, therefore revolving the nature of the loan.

Full-recourse financing – The financial institutions recognize the task of the accepting the credit risk. The client maintains the responsibility for organizing the receivable of portfolio. Normally, the lender would finance the invoices or the bill up to 90 days from the delivery of the goods or the services then charge them back to the borrower.

Floor plan financing – Some particular types of industries needed high priced financial goods inventory. For example: washing machines, televisions, refrigerators, automobiles and stereo systems. Retailers usually don’t purchase the costly inventory directly rather than a financial company would provide credit to purchase the inventory.

Leasing – The lease giver buy the equipment required to fulfill some responsibility and the equipment remains the property of the lease giver even after all the borrowed funds are repaid or the existing assets are sold to and leased from a leasing company to release capital needed for working capital purposes.

Purchase order financing – The working capital financing is secured by the security interest in surviving purchase orders and the carry on the purchase orders. Normally the security interest is formed by the lender taking ownership of the inventory or raw materials.

Leave A Comment