Asset Financing

AAA

DEFINITION of 'Asset Financing'

Using balance sheet assets (such as accounts receivable, short-term investments or inventory) to obtain a loan or borrow money - the borrower provides a security interest in the assets to the lender. This differs from traditional financing methods, such as issuing debt or equity securities, as the company simply pledges some of its assets in exchange for a quick cash loan.

INVESTOPEDIA EXPLAINS 'Asset Financing'

This type of financing is typically used for short-term borrowing or working capital. Companies using asset financing commonly pledge their accounts receivable, but the use of inventory assets is becoming more frequent.

RELATED TERMS
  1. Working Capital

    This ratio indicates whether a company has enough short term ...
  2. Asset

    1. A resource with economic value that an individual, corporation ...
  3. Corporate Finance

    1) The financial activities related to running a corporation. ...
  4. Loan

    The act of giving money, property or other material goods to ...
  5. Bridge Loan

    A short-term loan that is used until a person or company secures ...
  6. Asset-Conversion Loan

    A short-term loan that is typically repaid by liquidating an ...
Related Articles
  1. Will Corporate Debt Drag Your Stock ...
    Investing Basics

    Will Corporate Debt Drag Your Stock ...

  2. Uncovering Hidden Debt
    Bonds & Fixed Income

    Uncovering Hidden Debt

  3. What is the difference between asset-based ...
    Investing

    What is the difference between asset-based ...

  4. Analyzing A Bank's Financial Statements
    Fundamental Analysis

    Analyzing A Bank's Financial Statements

comments powered by Disqus
Hot Definitions
  1. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  2. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  3. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
Trading Center