Struggling with cash flow? It’s actually a very common scenario, particularly for businesses whose clients or customers pay on a 30, 60, or 90-day basis. You may appear flush on paper, but you lack the liquidity necessary to handle mission-critical aspects of your business, such as paying employees, building up your inventory, or taking advantage of growth opportunities. There are solutions to your challenges – both asset-based lending and factoring promise to deliver improved cash flow. How do they stack up to one another, though?

What Are They?

Asset-based lending is exactly what it sounds like – you obtain a loan based on an asset that your business owns, such as real estate. Factoring is different. You essentially sell accounts receivable invoices to a factor for a percentage of their face value.


When it comes to speed, factoring is the faster option. You can usually obtain cash within 24 to 48 hours. Lenders will take longer to approve your loan.

Information Security

If you’re concerned that your customers may learn about your cash flow challenges, then asset-based lending may be the better option. With factoring, the factor must contact your clients/customers during the billing and collections process.


You’ll find risk involved with both asset-based lending and factoring. Still, factoring generally carries greater risk, while loans backed by assets are usually more stable and secure.


Neither factoring nor loans based on assets revolve only around business credit. However, if you have no credit or bad credit, then factoring might be the better option, as your credit does come into play with loans made against assets.

Which is right for you? Both factoring and asset-based lending have their place and provide unique benefits. Get in touch with Commercial Capital to learn more about your funding options.