An asset-based loan is a business loan that is based on a company's assets, usually inventory and accounts receivable, being used as collateral. You use your current financial revenue as leverage for borrowing. They are usually based on anywhere from 70-80% of receivables, and as much as 50% of finished inventory.
Not everyone is lucky enough to have a great credit rating or credit history, but that doesn’t mean that there aren’t ways to qualify for a home mortgage. Asset-based loan companies don’t require the same things that traditional lenders do.
The only requirement that asset-based loan companies have is that you have assets to cover the loan so that you have a lesser chance of defaulting on the mortgage loan. Asset-based loan companies often can get your mortgage approved when you need it because you don’t have to jump through the same hoops - all you need is proof of your assets to qualify!
An asset-based loan allows borrowers to qualify using assets such as bank accounts, investment portfolios, or retirement funds instead of traditional income documentation like pay stubs or tax returns.
Asset-based lending teams calculate qualifying income by applying a formula to eligible assets, typically spreading their value over a set period to determine a monthly income figure for approval.
These loans are ideal for retirees, high-net-worth individuals, investors, self-employed borrowers, and those with irregular income who have substantial assets but don’t show consistent income on paper.
Eligible assets often include checking and savings accounts, money market funds, stocks, bonds, mutual funds, and certain retirement accounts, depending on lender guidelines.
In most cases, assets are not liquidated—they’re used to demonstrate your ability to repay the loan while remaining in your possession.
Asset-based loans typically fall under the non-QM (non-qualified mortgage) category because they use alternative income verification methods outside traditional lending standards.
Key benefits of asset-based lending include flexible qualification criteria, reduced income documentation requirements, faster approval, and the ability to leverage wealth without disrupting investment strategies.
Asset-based lender rates may be slightly higher than conventional loans due to increased lender risk, but they’re often competitive—especially for borrowers with strong credit and substantial assets.
Asset-based financing may be available for primary residences, second homes, and certain investment properties, depending on the lender and borrower profile.
Minimum credit score requirements vary, but many programs look for mid-to-strong credit profiles, often starting in the mid-600s or higher.
Loan amounts depend on asset value, credit profile, and property type. Higher asset balances generally support larger loan amounts and better terms.
If you have significant assets but limited or inconsistent income on paper, an asset-based loan may be a strong option. Speaking with a loan professional can help determine the best structure for your financial goals.
Asset-based loans are ideal for companies who need working capital to grow or operate. When a company has cash flow problems, asset-based loans help them to manage things like daily operations so that they can continue to grow their business.
Asset-based loans are typically for small or mid-sized companies with a stable financial outlook and assets that they can use as collateral. Their assets, however, cannot be owed to another lender. They must also be in good financial standing without any pending legal, tax, or other serious issues.
The amount of money you are eligible to borrow is determined by the lender and is a percentage of the total amount of collateral that a company has.
Typically, lenders will set a maximum of anywhere between 75-85% of their accounts receivable balance. For inventory and equipment, the percentage is lower – somewhere around 50%. The limits are determined according to the assets, so the base will fluctuate both over time and between companies.
Due to the nature of asset-based loans, there is more risk involved than other traditional loans. Most asset-based loans are priced according to an annual percentage rate, but there are also other service costs associated. Usually, the APR for the loan will range anywhere from 7-17% or more.
The Biggest advantage that you get with an asset-based loan is that you can use your assets as collateral. Many small to mid-sized companies are not in a financial position to take out a large loan based on their financial credentials.
Using collateral to secure a loan is a way to get around other limitations to borrowing. And it is also a great way to have the capital necessary to grow your business.
