What is a common misconception about asset-based lending?

A common misconception about asset-based lending is that it only applies to wealthy borrowers. This perspective overlooks the fact that asset-based lending focuses primarily on the value of the assets offered as collateral rather than solely on the borrower's income or creditworthiness.

In asset-based lending, various types of assets, such as real estate, inventory, accounts receivable, or other valuable items, can be leveraged to secure a loan. This type of financing is accessible to a range of borrowers because it relies more on the borrower's ability to provide collateral than on their overall wealth or income level.

This misconception can lead potential borrowers to believe that they may not qualify for such loans if they do not consider themselves wealthy, when in reality, even individuals or businesses with moderate asset holdings can benefit from asset-based lending. Understanding this aspect helps demystify the availability of financing options based on assets rather than just financial status.