Asset-Based Lending Goes Mainstream (Business Finance)

According to the Commercial Finance Association, the total outstanding monthly average of asset-based loans jumped from $117 billion to $362 billion between 1994 and 2004.

Some finance executives prefer asset-based loans because they lack the financial performance covenants imposed by cash-flow loans.

Asset-based financing also provides flexibility for businesses in a growth spurt, because the loan amount can increase along with the borrower's inventory and receivables.

As the value of many companies' intangible assets has skyrocketed, a growing number of asset-based loans have been secured by trademarks, patents and other forms of intellectual property.