Factoring and Asset Based Lending Grows

With cash flow on the decline and commercial banks taking a bath on their real estate portfolios, more borrowers are turning to factoring and asset based lending solutions to meet their working capital requirements according to CFO.com.

Factoring, a trillion dollar industry worldwide, grew in the US to $135 billion in 2007 representing a six percent increase over 2006. Asset based lending in the US increased to $545 billion in 2007, an 11 percent increase over 2007.

In times of economic challenges, borrowers will utilize their purchase orders, accounts receivable, inventories, equipment and real estate to give lenders comfort to extend business loans. As is often the case when using factoring and asset based lending, borrowers should expect that the interest rates and terms will be more expensive and tighter.

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Tags : factoring , accounts receivable , asset based lending , working capital , cash flow