Asset
Based Lending
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In the simplest
meaning, asset-based
lending is any kind of lending secured by an asset. More
commonly however,
the phrase is used to describe lending to business and large
corporations using
assets not normally used in other loans. Typically, these loans are
tied to
inventory, accounts receivable, machinery and equipment, but they can
also
include exotic things like the value of pharmacy script files, a
trademark, or
whole assets of intellectual property.
This type of
lending is usually done when the
normal routes of raising funds, such as the capital markets (selling
bonds to
investors) or normal unsecured or mortgage secured bank lending is not
possible. This is usually because the company is in dire financial
status.
Thus, asset based lending can be compared to subprime lending.
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Eastern Equipment Associates
2114 14th Street,
Hammonton, NJ 08037
Phone
609-704-2966 Fax
866-459-2295