What is Asset Financing ?

The term asset financing is basically used to obtain or loan or borrow money using balance sheets. In this type of financing, the borrower provides a security interest in the assets to the lender. This method of financing is different from traditional financial methods such as issuing debts or equity securities as the company simple pledges some of its assets in exchange for a quick loan in cash. Asset financing is mainly used for short term borrowing or working capital. Although companies using asset financing mainly uses their accounts receivable, but recently, the use of inventory assets is also becoming very frequent. Obtaining lending against inventories such as finished goods that are on hand is also a good option. Another option is to use a piece of property or equipment that has a value which is approximately equal to the amount of working case required in the asset financing strategy.

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Edited and Updated 31st May 2014

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