What is asset-based financing?
Asset-based financing lets a business borrow against what it already owns, such as equipment, accounts receivable, inventory or commercial real estate. The lender advances a percentage of the assets’ value, so it can suit businesses with strong assets but modest cash flow.
See the full glossaryAsset-Based Financing Canada
Your Assets = Your Capital
Asset-based financing allows Canadian businesses to use their equipment, accounts receivable, inventory, or commercial real estate as collateral to access capital. It's often more accessible than unsecured loans — even with imperfect credit.
Types of Assets We Finance Against
Qualification — Asset-Based Financing
FAQ — Asset-Based Financing Canada
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The most commonly used assets include: equipment and machinery, accounts receivable (B2B invoices), inventory, commercial real estate, and fleet vehicles. The value and liquidity of the asset determine the financing amount available and the rate obtained.
Generally yes. Because the lender has concrete collateral, credit requirements can be more flexible than for unsecured loans. Businesses with imperfect credit or fluctuating revenue can often access more capital through asset-based financing.
The amount depends on asset value and type. In general: 70–90% of accounts receivable value, 50–80% of equipment value, 50–75% of commercial real estate value. Through lendflo, amounts range from $25K to $2M.
Yes. Equipment refinancing (also called sale-leaseback) lets you use equipment you already own as collateral to access cash. Equipment can be up to 10 years old and must be in good working condition.
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Quick answer
How does asset-based financing work?
Asset-based financing lets a business borrow against what it already owns, such as equipment, accounts receivable, inventory or commercial real estate. The lender sets how much it will advance against the value of those assets, so borrowing capacity can grow as your assets and sales grow.
Who it suits
Asset-based lending works well for established businesses with significant assets but uneven cash flow: distributors, manufacturers, wholesalers and contractors that wait weeks to be paid. Because the loan is secured, lenders can often offer larger amounts than an unsecured product.
What can be used as security
- Accounts receivable from creditworthy customers
- Inventory and raw materials
- Machinery and vehicles
- Commercial real estate
What to expect
Lenders typically review a schedule of assets and receivables, and may re-check them periodically. Amounts range from $25K to $2M, and lendflo returns options quickly so you can compare structures before committing.
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Common uses of working capital
Everyday costs that come due before customers pay.
- Payroll — in a slow month.
- Inventory — ahead of a busy season.
- Rent and utilities — while revenue catches up.
- Supplier bills — when customers pay late.
- A large order — that needs money up front.
- A bridge — after a dip in revenue.
People also ask
Not always. Many alternative lenders make unsecured loans based on revenue and credit, though the cost can be higher and a personal guarantee may be requested. Equipment loans use the equipment itself as security, so no other collateral is usually needed.
It covers day-to-day costs such as payroll, rent, inventory and supplier bills while you wait for customers to pay. Borrow only what expected revenue can repay, and compare the total amount repaid across offers rather than the headline rate.
A term loan pays out a lump sum that you repay on a fixed schedule, so payments are predictable. A line of credit is revolving: you draw what you need up to a limit and pay interest only on the balance. Term loans suit one-time purchases such as equipment or expansion; lines of credit suit ongoing swings in cash flow.
It depends on revenue, time in business, credit and the product. Through lendflo, term loans run from $25,000 to $2,000,000, equipment financing from $10,000 to $500,000 and working capital from $5,000 to $250,000. Lenders size an offer to what your revenue can repay.
Terms explained
What is asset-based financing?
Asset-based financing lets a business borrow against what it already owns, such as equipment, accounts receivable, inventory or commercial real estate. The lender advances a percentage of the assets’ value, so it can suit businesses with strong assets but modest cash flow.
See in the glossaryWhat is collateral?
Collateral is something of value, such as equipment, property or inventory, that a borrower pledges so the lender can claim it if the loan is not repaid. A loan backed by collateral is called secured; one that is not is called unsecured and relies on revenue and credit instead.
See in the glossaryWhat is invoice financing?
Invoice financing, also called accounts receivable financing, lets you borrow against unpaid customer invoices while you keep collecting from your customers. In factoring, you sell the invoices instead, and the factor collects the payment. Both release cash that would otherwise wait 30 to 90 days.
See in the glossaryTopic guide
Part of the guide: Working capital and cash flow
Covering everyday costs: working capital, lines of credit, invoices, seasonal gaps and cash-flow planning.