What is a primary benefit of asset-based lending for borrowers?

Asset-based lending allows borrowers to secure loans by leveraging their existing assets, such as inventory, accounts receivable, or real estate. This approach offers a primary advantage in that the amount of the loan is often directly correlated to the value of the assets pledged as collateral. As a result, borrowers can access larger loan amounts compared to traditional lending methods that primarily focus on the borrower's creditworthiness. This aspect can be particularly beneficial for businesses that may have substantial assets but lack strong credit histories. The ability to draw on the value of these assets can enhance liquidity and provide crucial funding for operations, expansion, or other financial needs.

In contrast to the other options, asset-based lending does not inherently guarantee lower interest rates, faster approvals, or more flexible repayment terms, which can vary widely depending on the lender and the specific terms of the loan agreement. While some of these features might be present in certain scenarios, they are not defining characteristics of asset-based lending.