What is an Example of Asset-Based Lending?
Let’s say that your company wants to take out an $80,000 loan to fund growth. The company can pledge a commercial property worth $100,000 that it owns outright. If the lender is willing to grant a loan with an 80% LTV, the company can obtain a loan by offering this single asset as collateral
What Types of Lenders Offer Asset-Based Loans?

Asset-based loans aren’t available through all lenders. But you can find them through:

     Commercial banks: Many large commercial banks offer asset-based pans for clients with extensive assets. Consider asking your financial institution if they offer this type of loan.

     Non-bank lenders: Some commercial lenders offer asset-based loans. Typically, this option is more readily available. But you may pay a higher interest rate.

Is positive cash flow needed to receive an asset-based loan?
No, positive cash flow isn’t necessary for an asset-based loan. Most non-bank lenders are more concerned with the value of your collateral assets. Although cash flow is helpful, it’s not a requirement.
What documents are needed to get approved for an Asset-Based Loan?

When pursuing an asset-based loan, be prepared to provide the following documents:

     A recent appraisal reflecting the property’s value

     Balance sheet

     Accounts receivable aging report

     Business tax returns

     Debt schedule

     Inventory report

Do asset-based lenders require a senior secured position?
In most cases, asset-based lenders will need to be in the senior secured position on the asset in question. Essentially, this position ensures that the lender is repaid first if the asset is sold. Lenders will often file a UCC-1 form to secure this senior position. In some cases, the lender will forgo this requirement for real estate collateral.
What are the audit requirements for asset-based lenders?
The audit requirements will vary based on the collateral type. But in most cases, an on-site assessment is required for inventory, real estate, and equipment.


Asset-based lending presents an opportunity for business owners to tap into the value of their existing assets without giving up control of the asset. The type of collateral and its value will have a big impact on your interest rate. Take a minute to explore all of your loan opportunities before deciding if asset-based lending is the right option for you.

About the Author

Sarah Sharkey

Sarah Sharkey

Personal Finance Writer

Sarah Sharkey is a personal finance writer who enjoys helping people make better financial decisions.

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