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What Assets can be Used as Collateral for Cash-flow Financing?

In asset-based lending and cash-flow financing, companies can leverage various balance sheet items to secure capital. These assets are evaluated based on their liquidity and quality to determine the company’s borrowing base.

According to the provided content, common qualifying assets include:

  • Accounts Receivable: These typically command the highest advance rates among asset classes.
  • Inventory: Used alongside receivables to bridge working capital gaps.
  • Equipment: Often financed as a separate term component of a debt facility.
  • Commercial Real Estate: Utilized as part of a well-documented collateral base.
  • Intellectual Property: Recognized as a qualifying asset for strengthening borrowing capacity.

Lenders assess these assets through regular audits and valuations, applying “haircuts” based on risk and liquidity to establish the final maximum loan amount available to the business.

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