What is comprehensive asset-based financing?
Comprehensive asset-based financing is senior debt provided and secured against all the assets of a business in a single structured funding package. Assets can include land and buildings, plant and machinery, in addition to the traditional loan collateral of stock (inventory) and debtors (accounts receivable). In some cases, intangible assets such as brands or goodwill may also be taken into account. Comprehensive asset-based finance is therefore more akin to a multi-asset borrowing base facility and differs from single-asset finance such as invoice discounting, or stock finance.
This approach allows companies with a strong asset base to provide a greater level of security to the lender. As a result, financing can be raised in excess of that which would normally be advanced by conventional lenders, and at generally more attractive terms. In turn, as the comprehensive asset-based lender is usually secured across all aspects of the business, they will be interested in its success as a whole, rather than just concentrating on cash flow or ease of realisation of a specific asset.