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You Bet Your Assets

Are you losing money and amounting to a negative net worth? No problem . . . now there's a loan out there for you.

This story appears in the February 2000 issue of

Like a locomotive or a crowbar, asset-based lending (ABL) may not be very pretty, but it gets the job done. In today's risk-averse lending carnival, putting it all on the line is often the only way to borrow the money you need for your first or next business deal. That could mean the equity in your home or any other asset you swore you'd never, ever touch--and it often does.

The best way to describe asset-based lending is by describing what it isn't. Let's compare it to typical national bank financing. Unlike banks--which prefer borrowers with high earnings, excellent credit histories, strong balance sheets and predetermined debt service ratios--asset-based lending attracts companies with high leverage, negative net worth, recent losses, and fast growth and expansion needs. ABL packages are offered mainly by nonbank financial institutions.

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