Asset Based Lending

What is Asset Based Finance?

Asset-based Finance is a method of providing companies with working capital and term loans. Companies seeking short- and long-term loans and lines of credit are usually required to secure these loans with collateral. Business and personal assets such as accounts receivable, equipment, inventory, machinery, patents and proprietary formulas, and real estate are typically used as collateral to secure a business loan. Asset Based Finance is a key factor for companies across all industry sectors to access capital for expenses when there are gaps in a company's cash flow. Asset Based Finance is also used to refinancing existing debt, financing organic growth, and mergers and acquisitions.

Asset Based Financing vs. Traditional Financing

Asset-based financing differs considerably from traditional financing, the borrowing company offers some of its assets as security in the form of collateral to obtain a loan. A traditional financing arrangement, such as a project loan would involve a longer process including business planning, financial projections, license and permits, and other lender requirements. Asset financing is most often used when a borrower needs a short-term cash loan or working capital. In most cases, the borrowing company using asset-based financing pledges its accounts receivable; however, lenders usually reserve the right to review and choose which asset is best suited to secure the loan.

How can K-WAM help with Asset Based Financing?

K-WAM Financial Solutions asset based lending provides companies with greater liquidity and flexibility than a traditional commercial bank loan. We understand that in businesses that grow, cash does not always flow (the way we would like). Thatís why K-WAM Financial Solutions underwrites asset based loans primarily on collateral, not on cash flow. We provide a bridge to the future and help our clients that need alternative to traditional banks. Our team provides small-business financing that works for fast-growing, under-capitalized middle-market companies.

K-WAM Client Characteristics:

  • Companies with revenue between $5 million and $100 million
  • Have credit needs of $2,000,000 to $10,000,000 million of capital available
  • Lendable assets include accounts receivable, raw/finished inventory and machinery & equipment
  • Private or public U.S. company
  • Service, manufacturing and distributor businesses in all sectors

Our asset based funding clients have some combination of these attributes:

  • Have seasonal peaks and valleys in their revenue
  • Are acquiring another business
  • Are looking to refinance their existing lender
  • Are going through a recapitalization or restructuring
  • Are at the beginning, middle or end of a turnaround (including DIP and exit financing)