Asset Based Lending

A company can raise funds against its stock, equipment or commercial property. This type of financial product is called asset based lending.In the case of borrowing against stock, detailed inventories are needed of materials, unfinished stock and stock ready for sale. Retentions are made for aging stock, out-of-date stock, damaged stock and obsolete stock. The percentage of the stock total value that the asset based lender is willing to lend is lower than with invoice finance because of the difficulties inherent in selling stock if there is a payment default.In the case of borrowing against company equipment and property, a terms loan is offered. This is subject to regular checks; updates in value; fees for making changes to the Land Register and at Companies House; and to making the lender the beneficiary of any applicable insurance policies.A large manufacturing operation will often use both asset based lending as well as invoice finance to fund its operation.