Lender Asset Management - Benefits Of Asset Based Lending

March 20, 2011 - PRLog -- Lender Asset Management

Asset Based Lending refers to the loans that are secured by any collateral security such as account receivables, inventory and other assets in balance sheets. Synonyms of these loans are commercial financing and asset based financing. Most of the time, these loans are availed to satisfy cash flow requirements of the company.

Lower Rate of Interest;
Assets based lending has several advantages. The biggest advantage is the less rate of interest as compared with an unsecured loan. Lower interest rates are because the lender's money is always safe. In case of a default by the borrower, lender can recoup his money by seizing these assets.

When Asset Based Lending is Helpful?
Asset based lending is ideal for financial expansion. Some other purposes for which one can use asset based lending are management buy-outs and buy-ins, business acquisition and mergers, refinancing existing business loan and turnaround financing. The highest amount one can borrow, determined by the borrowing base. Latest applicable rates of liquidation value of inventory, accounts receivables and fixed assets determine the borrowing base. You get revolving credit and term loan against the security of these assets. Get Internet #1 - Lender Asset Management @ http://realestatecure01.webs.com and change your financial life forever!

In asset based lending, you may get term loan up to 40 % of the total value of assets. The term loan ends in 5 to 15 years again depending on the life of assets. Several features distinguish asset based lending from traditional commercial financing. Asset based lending concentrate more on collateral and liquidity. Cash flow and leverage comes after in the priority list. It provides more liquidity to the borrower while requiring less formal financial agreements.

In today's competitive market conditions every business need more resources to survive. In lack of sufficient resources, a company heading towards growth and successful future may destine to face major setbacks and failure. Here, asset based lending comes to help you and can provide enough resources. Many seasoned financial executives are opting for these loans because they are more versatile, cost competitive and flexible than other debt instruments. However, many people still have the misconception that asset based loan should be used as only last resort because they are expensive and require more reporting. The truth is just opposite to it. These loans help in the every stage of business by making operations more flexible. As far as burden of reporting has concerned, the ubiquitous computers have made it easier than any other point of time in the past.

Factors Affecting the Asset Based Loan Market

Although there are several factors affecting market but here are the three main factors.

1. Drawbacks in the strategies of cash flow loan providers.

2. Economic slowdown since the year 2001.

3. Steadiness and competitiveness of asset based lending.

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