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that fluctuates based on the actual accounts-receivable balances that the company has on an ongoing basis. This requires the lender to monitor and audit the company to evaluate the accounts receivable size, but also allows for larger limit lines of credits and can allow companies to borrow that which
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An asset-based business line of credit is usually designed for the same purpose as a normal business line of credit: to allow the company to bridge itself between the timing of cashflows of payments it receives and expenses. The primary timing issue involves what are known as accounts receivables—the
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or sell the collateral the borrower used to secure the loan from the lender. In this instance, the borrower continues to recognize the receivables as an asset on its balance sheet, and the lender only records the liability associated with the obligation to return the asset.
74:(selling bonds to investors) and normal unsecured or mortgage secured bank. This is often because the company has exhausted other capital raising options or needs more immediate capital for project financing needs (such as inventory purchases,
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Lines of credit may require that the company deposit all of its funds into a "blocked" account. The lender then approves any withdrawals from that account by the company and controls when the company pays down the line of credit balance.
160:
A non-asset-based line of credit will have a credit limit set on account opening by the accounts receivables size, to ensure that it is used for the correct purpose. An asset-based line of credit however, will generally have a revolving
142:
Asset-based lending, once considered a last-resort finance option, has become a popular choice for companies and individuals that do not have the credit ratings, track record, or patience to pursue more traditional capital sources.
166:
it normally would not be able. Generally, terms stipulating seizure of collateral in the event of default allow the lender to profitably collect the money owed to the company should the company default on its obligations.
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is required to indicate these receivables are used as collateral for debt. The debt is reported as a liability on the borrower's balance sheet and as an asset (specifically, a receivable) on the lender’s balance sheet.
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54:
financing. Asset-based lending in this more specific sense is possible only in certain countries whose legal systems allow borrowers to pledge such assets to lenders as
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in 2008. Within Europe in 2008, over 710 billion euros worth of bonds were issued, backed largely by asset-based loans, such as home and auto loans.
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181:). The lender mitigates its risk by controlling with whom the company does business to make sure that the company's customers can actually pay.
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Many financial services companies now use asset-based lending package of structured and leveraged financial services. Many banks, both national
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is an example of an asset-based loan. More commonly however, the phrase is used to describe lending to business and large
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377:"Structural causes of the global financial crisis: a critical assessment of the 'new financial architecture'"
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using assets not normally used in other loans. Typically, the different types of asset-based loans include
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Asset-based lending is usually done when the normal routes of raising funds is not possible, such as the
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of receivables is a subset of asset-based lending (which uses inventory or other assets as
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322:(2nd ed.). Hoboken, New Jersey: John Wiley & Sons, Inc. pp. 117–126
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82:, and debt purchasing). Asset-based loans are also usually accompanied by lower
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delay between selling something to a customer and receiving payment for it.
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Managing Credit Risk: The Great
Challenge for the Global Financial Markets
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Caouette, John; Altman, Edward; Narauanan, Paul; Nimmo, Robert.
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shrank to an all-time low after the collapse of investment bank
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27:
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An example of asset-based loan usage was when the global
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is not repaid, the asset is taken. In this sense, a
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193:Still another subset of a collateralized loan is a
464:"Pledging vs. Factoring of Accounts Receivable"
58:for loans (through the creation of enforceable
1165:List of housing markets by real estate prices
518:
120:Asset-based lenders are known for taking out
117:, offer these services to corporate clients.
8:
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241:In some situations, the lender can actually
209:are transferred to the lender when they are
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344:Encyclopedia of American business history
466:. Murry State University. Archived from
213:as collateral. When the receivables are
435:"The Ins and Outs of Asset-Based Loans"
277:
221:with the condition that the lender has
22:is any kind of lending secured by an
7:
1192:
498:"The rebirth of asset-based lending"
1150:Undergraduate real estate programs
205:for the debt. In these instances,
14:
948:Investment rating for real estate
225:in the event the receivables are
1204:
1191:
1179:
1178:
1105:Graduate real estate education
550:Tertiary sector of the economy
381:Cambridge Journal of Economics
347:. Facts On File. p. 380.
1:
147:Features of asset-based loans
1059:Real estate investment trust
664:Extraterrestrial real estate
137:Lehman Brothers Holdings Inc
1064:Real property administrator
1054:Real estate investment club
341:Geisst, Charles R. (2006).
1269:
721:Private equity real estate
1173:
669:International real estate
540:
199:assignment of receivables
124:in much the same way as
863:Real estate transaction
752:Real estate development
195:pledging of receivables
1253:Management cybernetics
963:Real estate derivative
923:Effective gross income
689:Healthcare real estate
375:Crotty, James (2009).
1238:Corporate development
1120:Industry trade groups
1024:Exclusive buyer agent
978:Real estate valuation
968:Real estate economics
928:Gross rent multiplier
757:Real estate investing
659:Corporate Real Estate
286:"Asset-Based Lending"
256:Asset-backed security
170:Factoring receivables
133:securitization market
26:. This means, if the
938:Highest and best use
904:Economics, financing
868:Real estate contract
762:Real estate flipping
731:Residential property
674:Lease administration
626:United Arab Emirates
493:ABF Journal Magazine
189:Pledging receivables
918:Capitalization rate
913:Asset-based lending
747:Property management
652:Commercial building
647:Commercial property
266:Debt-trap diplomacy
40:accounts receivable
20:Asset-based lending
1145:Real estate trends
1049:Real estate broker
1019:Chartered Surveyor
973:Real estate bubble
953:Mortgage insurance
786:Adverse possession
709:Luxury real estate
684:Garden real estate
470:on 7 November 2013
394:10.1093/cje/bep023
217:as collateral, or
60:security interests
1233:Corporate finance
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858:Property abstract
841:Land registration
801:Concurrent estate
726:Real estate owned
716:Off-plan property
694:Vacation property
679:Niche real estate
152:Asset-based loans
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943:Home equity loan
846:Leasehold estate
806:Conditional sale
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261:Revolving credit
126:investment banks
91:investment banks
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441:. December 2005
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1211:List of topics
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1014:Buyer broker
988:Rental value
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811:Conveyancing
621:Saudi Arabia
472:. Retrieved
468:the original
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358:. Retrieved
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324:. Retrieved
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293:. Retrieved
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163:credit limit
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80:acquisitions
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36:corporations
19:
18:
16:Form of loan
1155:Urban decay
1009:Buyer agent
831:Foreclosure
826:Encumbrance
699:Arable land
611:Puerto Rico
559:By location
534:Real estate
404:10419/64158
360:18 February
233:and only a
207:receivables
103:Wells Fargo
99:J.P. Morgan
52:real estate
46:financing,
42:financing,
1227:Categories
1110:Green belt
983:Remortgage
767:Relocation
566:Bangladesh
272:References
203:collateral
179:collateral
56:collateral
1095:Filtering
1085:Companies
1004:Appraiser
885:Severance
581:Indonesia
413:0309-166X
175:Factoring
48:equipment
44:inventory
1185:Category
1090:Eviction
1034:Landlord
836:Land law
601:Pakistan
545:Property
421:23601988
250:See also
243:repledge
235:footnote
223:recourse
219:assigned
32:mortgage
1243:Banking
1198:Commons
1115:Indices
997:Parties
796:Closing
740:Sectors
474:29 July
445:29 July
326:29 July
215:pledged
211:pledged
197:and an
76:mergers
1203:
1190:
1177:
1135:People
1069:Tenant
895:Zoning
616:Russia
606:Panama
591:Turkey
571:Canada
419:
411:
351:
295:29 May
93:(e.g.
1248:Loans
1078:Other
851:Lease
640:Types
596:Kenya
586:Italy
576:China
417:JSTOR
320:(PDF)
66:Usage
24:asset
816:Deed
476:2014
447:2014
409:ISSN
362:2014
349:ISBN
328:2014
297:2020
95:Citi
28:loan
777:Law
399:hdl
389:doi
201:as
62:).
1229::
455:^
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299:.
Text is available under the Creative Commons Attribution-ShareAlike License. Additional terms may apply.