Asset-based lending

• Asset-based loans are faster and easier to secure compared to other credit options – if you are eligible, you could have your money within four weeks.
• They usually come with lower interest rates and can be a more affordable alternative to other lending options.
• Asset-based loans can support business growth and fixed repayment terms can allow for proactive business planning.
• Asset-based lending offers greater flexibility around what businesses can spend the money on.

• If you are unable to make repayments, you risk losing assets that could be crucial to the running of your business.  
• When you apply for asset-based lending, the lender is likely to run a hard credit check to determine your eligibility – this could affect your credit score.  
• If you want to pay off the loan early, or you default on payments, you could be charged extra.  
• Asset-based lending is not the most effective option for longer term funding.  

To be eligible for an asset-based loan, your business needs to have both assets and a trading history. Assets must be of value and present on your balance sheet.  

According to the British Business Bank, asset-based lenders base their decision on a business’s:  

• financial performance  
• trading history  
• value and type of assets 

You must provide a prospective lender with detailed and accurate financial statements which prove your ability to repay the finance.  

For more information, see British Business Bank.  

To access asset-based funding, you must apply with an approved lender. When you apply, you’ll need to identify the assets you will offer as collateral and any further documents the lender requests. Your lender will then review your application, and, if they think you are eligible, they will present you with a preliminary offer for you to review and commit to. They will then review your assets and once satisfied, will submit an approval and you will receive your loan.