Can an asset-based loan be used to finance an acquisition?
Answer – Yes, this is a commonly used means to finance acquisitions. In fact, it is possible to use the assets of the company being acquired to finance the acquisition. This can be especially advantageous when the prospective acquisition has a high level of eligible receivables and/or inventory in relation to the purchase price of the company. Such companies are often excellent prospects for acquisition, and asset-based lending can provide a significant source of the acquisition capital.
