An asset-based loan is defined as

An asset-based loan is defined as

• A. A loan with a personal guarantee
• B. A loan secured by real estate
• C. A loan with no collateral
• D. A loan secured by collateral that can be seized

Answer: (D)

Asset-based lending is defined by securing the loan with assets that can be seized if the borrower defaults. The lender takes a lien on collateral—such as accounts receivable, inventory, equipment, or other movable assets—and the loan amount is tied to the value of those assets. This setup means the lender has a claim on specific assets to recover the debt, rather than relying solely on the borrower's promise to pay or on real estate alone. A loan with a personal guarantee relies on the borrower's or guarantor’s promise to pay, not on seized assets, so it isn’t asset-based. A loan secured by real estate is secured, but asset-based lending often involves a broader set of assets beyond real property. A loan with no collateral is unsecured, which again is not asset-based.

Asset-based lending is defined by securing the loan with assets that can be seized if the borrower defaults. The lender takes a lien on collateral—such as accounts receivable, inventory, equipment, or other movable assets—and the loan amount is tied to the value of those assets. This setup means the lender has a claim on specific assets to recover the debt, rather than relying solely on the borrower's promise to pay or on real estate alone.

A loan with a personal guarantee relies on the borrower's or guarantor’s promise to pay, not on seized assets, so it isn’t asset-based. A loan secured by real estate is secured, but asset-based lending often involves a broader set of assets beyond real property. A loan with no collateral is unsecured, which again is not asset-based.