Asset Based Lending For Commercial Real Estate

Asset Based Lending for Commercial Real Estate: Unlocking Opportunities

Are you ready to turn your real estate dreams into reality? Spoiler alert: asset based lending for commercial real estate is your golden ticket! No downtime, just pure financial wizardry. Let’s dive into this intriguing world together.

Asset-based lenders typically lend against assets, including real estate, equipment, vehicles, inventory, receivables, and intellectual property. Depending n the type of collateral they choose, they may offer loans ranging from $5 million to $1 billion.

Sbi Asset Backed Loan For Commercial Real Estate
Sbi Asset-Backed Loan For Commercial Real Estate

Asset Based Lending For Commercial Real Estate:  How Asset-Based Lending Works

Business owners can use asset-based financing as an alternative source of capital when traditional bank funding is not available or appropriate. The loan proceeds to purchase fixed assets such as land, buildings, machinery, furniture, fixtures, computers, software, office supplies, etc. Cash flow is generated in this way, allowing business operations to continue uninterrupted.

The process begins with identifying potential borrowers with access to liquid assets but need additional working capital to fund their businesses. These companies often lack credit history because they haven’t had enough time to build a good customer base and track record.

Business assets include tangible items like cars, trucks, boats, planes, heavy equipment, tools, computer systems, office furnishings, building materials, inventory, accounts payable, accounts receivable, prepaid expenses, and other current assets. Businesses also own intangible a sets, such as patents, trademarks, copyrights, licenses, franchises, goodwill, brands, and websites. According to experts, a company’ intangible assets are worth 10% and 20% of its value.

Asset Based Real Estate Private Lenders
Asset-Based Real Estate Private Lenders

Why It’s Ideal For Commercial Property: Advantages of Asset-Based Lending in

This form of financing might serve a variety of business needs. Some examples include:

  • Acquiring new pro erties – Business purposes could range from buying raw land to purchasing existing structures. In either case, financing the acquisitio through an asset-based lender would make sense. This way, you don’t have to worry about payi g interest while your project is still under construction. You will have to pay back only the remaining amount after you pay off all the project-related costs.
  • Purchasing existing properties – The business borrower will likely want to acquire another piece of real estate before he starts using his newly acquired funds. If so, then why not get the money needed to uy the property? An asset-based lender makes perfect sense too.
  • Financing construction projects – Making the business decide to invest in a large-scale development requires a significant upfront investment. A good example is a shopping center where there are man different components involved in its completion.

It is necessary to purchase each component separately. To complete any one part of the project, the developer as to raise the necessary funds first. Upon completion of the project, the owner receives rent l income. However, if the developer could not secure adequat financing, the whole project could fail.

  • Securing debt lines of credit – Business financing resources may come from several sources, including banks, venture capitalists, private equity firms, family members, friends, and even wealthy individuals. But sometimes, those options aren’t available. That’s w en asset-based lenders step into the picture. They provide short-term loans to qualified borrowers.
  • Buying out partners – A business entity can purchase shares or interests in another firm. When done properly, this type of transaction allows investors to participate in ownership without putting cash on hand. Instead, they lend the required amount to the buyer. Then, onjce the deal closes, the investor gets repaid along w th everyone else.
  • Paying off other debts – Business growth often means more borrowing. And because most companies need access to capital quickly, t ey turn to their bank for help. Unfortunately, banks usually require collateral which limits how much they’re willing to loan.
  • Refinancing current liabilities – Expenditures of business assets exceed expectations. As a result, owners find themselves needing additional fundi g sooner rather than later. Fortunately, asset-based lenders offer flexible terms that a low them to refinance outstanding obligations.
  • Raising equity through public offerings – Business strategies include raising capital by selling stock to shareholders. Typically, these transactions involve offering shares at dis ounted prices. Investors who agree to take advantage of such deals receive mmediate financial returns as well as future dividends. However, some businesses choose to go the traditional route nstead. By issuing bonds, they borrow money from creditors. These ty es of arrangements typically carry higher rates of eturn but also more extended repayment periods.
  • Obtaining bridge loans while waiting for more favorable terms – Business success depends on financing new ventures before profits start rolling in. This is especially true for startups that lack sufficient re enue streams. To keep operations going until things improve, entrepreneurs rely on temporary financing solutions like term loans.  

When you apply for an asset-based loan, your lender will evaluate the fair value in the collateral pledged to secure the loan. If so, it will then determine how much money is needed to co plete the transaction.

Asset Based Loans Real Estate
Asset Based Loans Real Estate

Asset-Based Lending for Real Estate Investors

Real estate investors typically look for ways to increase profits. One method involves raising rents on the properties being ma aged. Another option is to sell a property and use that money to p rchase another one, thereby maximizing profit potential. However, there are many other options available as well.

For example, an investor can take out a mortgage against their own home to finance a new investment.

This type of financing has become known as asset-based lending for real estate because it allows you to borrow from your assets rather than cash or business credit cards.  Using the financials of a business instead of collateral is ossible if an accountant has meticulously prepared them.

The advantage of this approach is that it does not require any additional equity beyond what it already requires for traditional mortgages. Therefore, most people who wish to invest their savings in r al estate can qualify for these types of loans.

In addition, since the loan amount is tied directly to the underlying asset’s value, interest rates tend to be lower than those associated with conventional mortgages. As such, borrowers often find themselves paying less per mon h than would otherwise be expected.

Asset Based Lending For Rental Property
Asset Based Lending For Rental Property

Asset-Based Real Estate Private Lenders:  What to Look for in an Asset Based Loan Provider

Business lending solutions from a trusted partner can establish co-working business models, fund commercial business growth opportunities, provide working capital, and help build wealth portfolios.

Many companies offer asset-backed loans to small businesses looking to expand their reach. They do this by providing funding for equipment purchases, i ventory expansions, and even construction projects.

These lenders usually work within specific industries. For instance, certain banks specialize in helping restaurant grow their customer base. Other firms focus exclusively on assisting medical practices to obtain necessary supplies. Still, others cater specifically to manufacturers seeking ex ansion funds.

Other dedicated business advisors associated with the Online Business Line of Credit website operate nationwide.

Asset Based Lending For Real Estate
Asset Based Lending For Real Estate

How To Use Asset-Based Loans From Non-Bank Lenders To Solve Business Challenges

Asset-based borrowers must meet strict criteria before receiving approval. Only about seventy percent of all applicants receive favorable decisions. The rest either fail to submit sufficient documentation or p ssess enough collateral to support the requested loan amounts.

However, once approved, asset-based loans allow borrowers to access up to 90 days’ worth of short-term unsecured debt at competitive interest rates. These loans also come with flexible repayment terms.

As long as the borrower maintains a positive net worth, they should repay the entire balance without penalty.

Borrowers who need more time to pay back the entire sum might opt to extend the payment period.

Asset Based Commercial Real Estate Loans
Asset Based Commercial Real Estate Loans


Your business needs capital. The bank refuses to lend you money. Assets? You’re sitting o valuable real estate, equipment, v hicles, tools, inventory, accounts receivable, or other valuable assets worth more than $100k.

Solution? Asset-based lending (ABL) allows you to borrow against the v lue of these assets at rates ranging from 6-15%. Your business can continue to operate while you get the capi al you need.

To learn more about these options, please give us a call at (888) 653-0124 today!

FAQs for Asset Based Lending For Commercial Real Estate

Is It Difficult To Obtaining Financing With Asset-Based Lending?

Real estate asset-based lenders are very selective when approving applications.  They look closely at each applicant’s finances, including i ome statements, profit margins, and other relevant data points.

Once an application passes muster, the lender then determines whether adequate collateral is available to secure the proposed loan during the approval process. If so, the company approves the request and sends out paperw rk detailing how much money the client needs to borrow.

What Is A Good LTV For Commercial Real Estate?

Asset-based real estate loans typically have higher borrowing limits than traditional bank financing.  For example, some providers will lend clients $1 million wh e others may approve requests for up to $5 million. 

Generally, the size of these loans depends upon the property type financed.

A hotel that has been vacant for several years could require significantly more cash flow than one currently occupied.  To get the best deal, it pays to shop around.

What Types Of eal Estate Collateral Are Problematic For Asset-Based Lending?

The underwriting process involves reviewing many aspects of the borrower’s financial situation.  One crucial factor includes determining if the borrower can afford to ake monthly payments over the life of the loan.  It is often necessary to verify this information using the previous m th’s bank statements.

A key component is the value of any assets pledged by the borrower as security for the loan.  In addition, the lender wants to ensure that any assets pledged as se rity aren’t subject to seizure.

That way, they won’t lose control of the property until it has fully repaid the loan.

When Do Commercial Real Estate Investors Turn Towards Asset-Based Lending?

Traditional lenders like banks and credit unions tend to focus their attention on residential mortgages.

In contrast, companies offering asset-based loans specialize in funding businesses and properties.  These projects include shopping centers, office buildings, hotels, industrial parks warehouses, apartment complexes, and strip malls.

Commercial real estate investors turn towards asset-based lending because it allows them to tap into new markets where demand exists but supply isn’t readily available.

Gerry Stewart
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