Asset-based lending is a type of loan where the lender (LandMark Funding) opens a line of credit for the borrower, and the borrower puts up collateral in exchange. The amount of funding depends on a few factors, but a major factor is the value of the collateral, as well as the performance history and financials of the company requesting the funds.
Asset-based loans commonly take the form of a line of credit, and a company can increase its credit availability with pledged assets in accounts receivable and inventory. Companies may be able to finance anywhere from 75% to 85% of their commercial accounts receivable. Inventory and equipment usually see a borrowing base of around 50%. The borrowing base can change regularly when accounts receivable increase or decrease.