What is Asset Financing?
Asset financing is a means of obtaining a line of credit by using one or more assets as the security for the extension of the credit. Because the assets have to be free and clear of any indebtedness, as well as subject to quick liquidation, they may not be sold or transferred while the line of credit is in effect. Here is some information on asset financing, and how companies may choose to use this method of financing. While just about any type of tangible assets can be used in structuring an asset financing line of credit, there are several types of assets that tend to be widely used. Accounts Receivable balances are often considered a great asset to use as security interest. Obtaining lending against inventories, such as finished goods that are on hand, can also be a viable option, since this type of asset is easily salable. Another example is to use a piece of property or equipment that has maintained a value that is approximately the amount of working case requested in the asset fi
