What Is Asset-Based Lending and How Does It Work?
In the world of real estate financing, traditional bank loans are not always the best—or fastest—option. That’s where asset-based lending comes in. At Wilshire Quinn Capital, we specialize in providing short-term asset-based loans that help investors and business owners unlock opportunities when time is of the essence.
In this article, we’ll break down what asset-based lending is, how it works, its key benefits, and who can benefit from this type of financing.
What Is Asset-Based Lending?
Asset-based lending is a type of financing where the loan is secured by a real estate asset. Unlike traditional loans that rely heavily on the borrower’s income, credit score, or long approval processes, asset-based loans are primarily underwritten based on the value of the collateral.
The asset acts as the lender’s security, giving the borrower access to capital quickly without jumping through the usual financial hoops.
How Does Asset-Based Lending Work?
Asset-based loans are structured around the current market value of the property being used as collateral. Here’s a basic breakdown of how it works:
- Identify the Asset
The borrower presents a qualifying real estate asset—such as an investment residential or commercial property—to be used as collateral for the loan.
- Property Evaluation
The lender evaluates the property’s current market value to determine its eligibility and the loan amount, typically up to a set Loan-to-Value (LTV) ratio (e.g., 60%).
- Loan Terms Are Offered
Based on the asset’s value and borrower profile, the lender issues loan terms—typically 6–12 months, interest-only payments, with no pre-payment penalty. Terms can differ by lender—so be sure to confirm details directly.
- Funding & Closing
Once the terms are accepted and due diligence is complete, funding typically happens within days—unlike traditional financing, which can take months.
- Repayment or Exit
The borrower repays the loan either through a property sale, refinancing, or other liquidity event at or before the loan maturity date.
Assess the Speed of the Process
One of the biggest advantages of hard money lending is how quickly deals can close—often in just 5 to 7 business days. Speed matters when you’re competing on a hot property or working with a tight timeline.
Make sure the lender you choose is capable of acting quickly and has the infrastructure to process your application efficiently.
Flexibility and Custom Solutions
The right lender will take the time to understand your project and offer flexible loan structures. Whether you’re doing a cash-out refinance, purchasing a new property, or financing a renovation, the lender should adapt to your goals.
Communication and Transparency
A quality hard money lender will communicate openly and provide full transparency during the underwriting and funding process. Avoid lenders who dodge questions or are unclear about costs—it’s a red flag.
Why Wilshire Quinn Capital?
Wilshire Quinn Capital is a direct lender with a strong reputation for speed, service, and integrity. We provide hard money loans up to $20 million backed by real estate assets. Our experienced team works closely with investors to close quickly—without unnecessary roadblocks.
Need fast financing?
Give us a call at (619) 872-6000 to speak with a Wilshire Quinn loan officer today.
