Definition of asset-based lending

financing secured by a firm's balance sheet assets, such as inventory, receivables, or collateral other than real estate. The most common forms are accounts receivable financing, in which the lender advances funds against trade receivables, inventory lending, and equipment leasing. Asset-based lending covers a broad range of secured lending activities, and is used to support the credit needs of firms that cannot obtain bank financing on a fully unsecured basis. Also called "asset financing" or "asset-based financing".