Typical Asset Based Financing Includes:

• Financing for Growth
• Mezzanine Financing
• Additional Working Capital
• Financing for Leveraged Buyouts
• Term Loan Financing
• Trade Financing

• Debt Restructuring
• Turnaround and Bankruptcy Financing
• Bridge Loans
• Financing for Acquisitions
• Accounts Receivable and Inventory Financing
• Purchase Order Financing

It looks like a loan, but it is not. It's actually called asset-based financing. Asset-based lending, and a practice called Factoring, are specialized financing techniques to help fast growing or highly leveraged companies.

Asset-based financing is flexible, working-capital financing. It can be used to manage cash flows, to funding mergers and acquisitions. It is an excellent solution to companies facing challenges such as refinancing, growth, re-capitalization, acquisition and buyouts.

The concept behind asset-based lending (ABL) is that a business with tangible, saleable assets can use those assets as collateral for loans. The collateral is usually inventory and accounts receivable, and sometimes fixed assets like equipment and real estate.

The lender obtains first right to the assets, and the amount of the loan is based on how much they would receive if they sold the assets.

ABL is more complicated than factoring, and requires independent audits and lengthy legal agreements.

This is also known as Accounts Receivable financing. It is a form of asset-based financing, but it is not a loan, it is an actual sale.

Once you have sold your product to your customer and are waiting for payment, you can sell your interest in the accounts receivable to a factoring company. You will receive immediate payment, minus a fee. The factor later recovers the entire receivable.

There are two types of factoring: full-recourse and non-recourse. In full-recourse, the factor purchases the receivable for a period of time, but you must collect the receivable (and maintain relations with your customers). In non-recourse, the factor takes over all contact to your customer, and is responsible for collecting the receivable.