The availability of working capital is vital to the operations of any business enterprise. Lack of sufficient capital has been identified as the most common factor that contributes to the collapse of businesses. More money is also required for taking advantage of expansion opportunities but with Asset based lending the business loan is secured by collateral. When a company applies for an asset based loan, the assets of the company have to be valued. This valuation is used to determine the size of the loan that can be approved for the company. The assets of the company are simply use as collateral for the amount of money that is borrowed.
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