Asset-backed loans

With a line of credit, you only take out the cash you need, when you need it, and you’ll only pay interest on the funds you draw. That’s opposed to a term loan, which you must repay in full, plus interest, whether you use those funds or not.

Plus, you can use those funds for a whole host of reasons. Here are just a few ways you can use your asset-backed loan:

For working capital (this is the most common use of asset-based loans)

Expanding your business

Buying another business

Refinancing an existing line of credit

You’ll probably need to indicate your intended use of funds on your loan application, and eligible loan uses are dependent upon the lender’s own guidelines. Generally speaking, though, asset-backed loans are much more flexible than other loans—especially bank loans, which are often more restricted in their allowed use of funds.