Asset Based Loans
Asset-based loans are a type of financing where a borrower secures a loan by pledging assets as collateral. These assets can include inventory, accounts receivable, equipment, real estate, or other tangible assets owned by the borrower. The loan amount is determined based on the value of the pledged assets.
Asset-based loans are commonly used by businesses that may have valuable assets but limited cash flow or credit history. By using their assets as collateral, these businesses can obtain financing to fund various operational needs, such as working capital, expansion, or restructuring.
Lenders typically assess the value of the assets being pledged and may advance a loan amount based on a certain percentage of that value, known as the loan-to-value ratio. This ratio can vary depending on the type and liquidity of the assets, as well as the lender's risk assessment.
Asset-based loans can be structured in different ways, including revolving lines of credit or term loans. In a revolving line of credit, the borrower can borrow, repay, and re-borrow funds up to a predetermined credit limit, while in a term loan, the borrower receives a lump sum amount upfront and repays it over a specified period.
One of the advantages of asset-based loans is that they may be more accessible to businesses with weaker credit profiles since the focus is primarily on the value of the collateral rather than the borrower's creditworthiness.
Asset-based loans are commonly used in industries such as manufacturing, distribution, retail, and construction, where businesses have significant tangible assets that can be leveraged to secure financing. It's important for borrowers to carefully consider the terms and conditions of asset-based loans and assess their ability to repay the loan to avoid the risk of losing pledged assets through foreclosure in case of default.
Genesis Commercial Loans offers loans across the entire USA, including St. Lucie County, Martin County, Broward County and Miami-Dade County.