What does asset-based lending mean?

asset-based lending meaning in Business Dictionary

types of funding when the asset becoming purchased (such inventory, land, or device) is employed as a collateral. In asset based lending, the caliber of the collateral rather than the economic strength regarding the debtor is of prime significance. The financial institution bases the quantity of loan on the worth of the asset being funded, additionally the ease with which it might be sold off if debtor defaults. It is a type of 'off balance sheet' financing, and it is called asset based funding, asset funding, or commercial finance. See also discounting of records receivable and factoring.