Asset-based lending spikes

Asset-based lending’s basically putting up collateral for loans. For many business owners today, it has become a viable option to inject fresh capital into their business.

Credit-worthiness has become an issue for many small businesses today and with the state of the economy, many just don’t have the time and track record to negotiate with banks for fresh credit. Asset-based lending becomes a viable course of action to which they resort.

Commercial Finance Association said that asset-based lending (mortgages excluded) swelled by 8.3%. The 2009 data are still being gathered but initial findings indicate a jump in lending in general.

The thing is, these collaterals can range from equipment to future earnings. The rates are often higher than more traditional credit.

More lenders are also keen on getting into asset-based lending. With credit-worthiness and track record not really offering serious guarantees that loans will be paid, collaterals offer tangible means for them to recoup whatever they dole out.

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