property collateralBrand new and small businesses typically find it hard to get approval when applying for conventional bank loans. Asset-based lending is the ideal solution for these businesses.

Asset-based lending allows borrowers with less than stellar revenue histories and credit ratings to access business financing. These loans use your business assets as loan collateral. Here are the main assets most asset-based lenders look for when considering your loan application.


Retailers, wholesalers, and manufacturers have a lot of stock on hand. They can save the inventory for rainy days and prove valuable when applying for an asset-based loan. Lenders typically appraise the resale value of your inventory and use the amount as your loan collateral.

The stock remains in your possession, but your lender has a right to repossess it should you default the loan.

Equipment and Machinery

Almost any piece of machinery owned by a business is eligible for collateral when taking asset-based loans. If you can sell the equipment and get cash, then it can be a loan collateral. However, the business should own all the equipment for it to qualify as loan collateral.

Real Estate

In terms of in asset-based loans, lenders consider land owned by a business a fixed asset. Independent appraisal of your land is first needed to determine your property’s market worth and appreciation.

If you are paying off a loan on the property you intend to use as collateral, you should have paid off a substantial loan amount for it to be eligible.

Service-based industries that invoice their clients can use any receivables that are due within 30–90 days as loan collateral. The more the amount of your invoice, the higher the loan amount you qualify to borrow.

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Asset-based lenders, unlike factoring companies, consider the sum of your receivables and not delinquent and past due invoices when reviewing your loan application.