---
title: "What is asset-based financing?"
description: "Asset-based financing (ABF) is a type of financing in which a company gets a loan by using its own assets as collateral or as a guarantee to the lender. This could be unpaid customer invoices (accounts receivable), inventory, machines, or…"
url: "https://yazodo.com/help/business-loan/what-is-asset-based-financing/"
updated: "2025-12-03"
category: Business Loan
tags:
  - Business Loan
  - "Collateral & Security"
  - "Loan Amounts & Interest Rates"
  - Types of Business Loans
---

# What is asset-based financing?

Asset-based financing (ABF) is a type of financing in which a company gets a loan by using its own assets as collateral or as a guarantee to the lender. This could be unpaid customer invoices (accounts receivable), inventory, machines, or buildings. If the company defaults or fails to repay the loan amount, then the lender can use those assets to recover the money.