What is an asset-based loan typically used for?
* Leveraged mergers and acquisitions * Turnaround/restructuring situations * Liquidity events for family-held businesses * Growth opportunities * Capital expenditures * Tight working capital * Seasonal or cyclical companies * Specialized industries * Stock repurchase * Public ownership to private ownership * Debtor-in-possession (DIP)/confirmation financing [back to top] 5. What’s the difference between asset-based lending and traditional bank financing? The primary difference between commercial banks and asset-based lenders is where they each look first for repayment: The bank looks to cash flow for repayment first, then collateral; while the asset-based lender looks to collateral first. Since banks underwrite cash flow as their primary repayment source, they typically require less collateral controls and monitoring but more financial covenants. For companies that are “asset heavy,” an asset-based credit facility may be able to make more funds available because the loan is not based s
