What is Asset Financing ?

Stock Market Terms, Definition, Share Market Glossary, Share Bazar Terminology

Asset Financing This converts particular assets of a company into liquid cash in exchange for a security interest to be paid to a bank or a financing company. Distinct from borrowing from banks. Usually it take the forms of loans against accounts receivable (which is an asset). But increasingly a company’s inventories and fixed assets are being mortgaged to raise loans.

Asset financing is typically structured as a line of credit secured by a specific asset or across a combination of existing assets. Usually this includes: accounts receivables, finished goods inventory, real estate, and/or equipment. With asset financing, a company uses its assets as collateral to obtain capital. The financing institution does not own the companies’ assets, but the assets can be seized if the business does not make its required payments on the loan. Besides working capital, asset financing can be used for many other purposes.

Asset Financing

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