How Borrowers Are Affected By the Difference in Factoring Vs. Asset Based Lending

There is a difference between factoring and asset based lending and that difference can matter dramatically to the borrower. The following are the main ways in which typical factoring and asset based lending differ:

Factor Asset Based Lender
  • Purchase Agreement
  • Loan Agreement
  • Lends Against A/R Only
  • Lends Against A/R, Inventory and Equipment
  • Often Doesn’t Limit Concentrated Accounts
  • Concentrated Account in Excess of Established Limits are Ineligible
  • Verification Required Before Funding
  • Monthly Random Verification Required
  • Onerous Administration
  • Less Onerous Administration
  • Lockbox or Notification Required
  • Neither Lockbox nor Notification Required

Celtic Capital only does asset based lending which is more similar to bank financing than is factoring. Asset based lending is less intrusive on the business, is less expensive than factoring and has a seamless process. It’s a great stepping stone back to bank financing in that it gives a business the opportunity to improve by fixing the issues that got it into trouble in the first place, and be stronger for it.

The next time you’re faced with referring a business for some much needed financing, take stock of the differences listed above and then choose the type of financing that’s best for the borrower’s needs. And whenever you have a business that needs asset based financing from $500,000 to $5 Million, contact us to learn how Celtic Capital can help.

About Celtic Capital
Companies looking for working capital to cover operating expenses, fund growth, increase buying power and take advantage of vendor discounts and rebates turn to Celtic Capital. With an appetite for the more complex transactions, Celtic Capital has a history of success in crafting creative, flexible asset based financing solutions from $500,000 to $5 million with no financial covenants.

As an independent lender, working with companies nationwide, Celtic Capital is willing and able to alter price and deal structure and expand lines of credit to handle its clients’ increased revenues; and when cash flow is an issue, will look toward providing an inventory facility to help offset lost cash flow.

If you know of, or are, a business in need of non-traditional financing, contact Mark Hafner at 800.742.0733 or, or visit us at