Which of the following best describes a potential risk of asset-based lending?

A potential risk of asset-based lending is that the borrower may lose their assets if they default. This form of lending is secured against specific assets such as inventory, receivables, or equipment. Should the borrower fail to meet the terms of the loan, the lender has the right to seize these assets to recover their losses. This risk emphasizes the importance for borrowers to consider their ability to repay the loan, as defaulting can lead to significant financial loss, including the loss of critical operational assets that are necessary for business continuity.

The other options point out various concerns related to asset-based lending, such as valuation difficulties that lenders might encounter, the possibility of higher interest rates, and potential delays in loan approval. However, these do not emphasize the immediate risk to the borrower as losing their assets does, which is a fundamental consideration when evaluating the implications of this type of financing.