An Overview of Asset Finance

By on April 12, 2021

Asset financing is one of the useful means of financing that is provided to natural and legal persons when they need funds to restart or develop a business. What is asset finance and how does it work? Balance sheet assets, such as inventory receivables and short-term investments, are used to obtain loans or borrowings for a specified amount of money, and the borrower provides a guarantee to the lender on the assets. The loan operates under the traditional laws of loans and institutions and the company or the borrower simply promises some assets in exchange for money.

What is asset-based loans?

When you visit Money Morning, you will learn that any type of loan secured by an asset pledge is known as asset-based loans, and the terms generally mean that the asset remains with the lender if the borrower defaults on the loan within an agreed period and terms. We can say that a mortgage is also a type of asset-based loan. However, the term “asset-based loans” applies only to companies large and small and to individuals who obtain a loan by pledging assets to a bank or financial institution.

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They attract short-term financing

People can also use this type of financing to attract short-term financing, and the small business sector tends to benefit more from such financing. Sometimes luxury cars, wine collections, or antiques are pawned to give a person access to asset-based financing. Most of these loans are processed without a special scan, such as a credit check, and the loans are usually paid by the asset finance company within a day or two. Asset-based truck financing is an excellent financing model, very beneficial for the vehicle fleet or the individual owner, as it will help to make a good profit and the borrower has no chance of not making a loan, because the trucking companies have excellent tools to earn money.

How asset finance companies act as a savior?

When all doors are closed to the borrower, asset finance companies act as a savior, as they don’t ask a lot of questions or review their past records. You will most likely receive a loan in a very short period of time, sometimes as little as 24 hours, and you can continue your business without blocking your progress. Asset financing companies are not traditional, so they do not need to ask other people for permission to provide asset-based financing to entrepreneurs. If you are in the SME sector and you need financing, you will not find a better way than asset financing because it is easy to obtain, without complications and you agree to repay the loan on your terms and according to your income cycle.

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