Asset-based lending is a secure type of lending. A small business owner has to put up some type of asset in order to get the loan. If the loan is not repaid the lender will then take possession of the asset. Many small businesses will take out this type of loan in order to stock up on inventory or to purchase equipment.
When a person goes to get an asset based lending form of a loan from a company they need to put up an asset. The asset has to be something of value that can be used as collateral.
For example, if a person is looking to get a large amount of money loaned to them, they may have to put up their home. If a person able to make their payments they will not lose anything. If the business fails to repay their loan they the lender has the right to seize the asset.
There are varying interest rates on this type of loan and it will depend on several factors. When a person takes this type of loan they can get the capital that they need and will be able to advance their business. As long as they pay back the loan they have nothing to worry about.