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Cashflow vs Asset-Based Lending

In the last five years or so, I have noticed a strong bias toward cashflow-based lending, or at least the cashflow analysis of guarantors even when the loan itself is asset-based.

This is true even if the main strength of the guarantor is their personal balance sheet and net worth.

For a quick explanation of the difference between asset-based and
cashflow-based loans, and some interesting hybrids, read this article on
Asset-based loans can offer attractive financing option.

The author, Glenn Burroughs, is senior vice president with PNC Business Credit and one of the presenters at the Association for Corporate Growth Financing conference in Seattle on Aug. 7.

About the Author
Linda Keith CPA is an expert in credit risk readiness and credit analysis. She trains banks and credit unions throughout the United States, both in-house and in open-enrollment sessions, on Tax Return and Financial Statement Analysis. She is in the trenches with lenders, analysts and underwriters helping them say "yes" to good loans. Creator of the Tax Return Analysis Virtual Classroom at, she speaks at banking associations on risk management, lending and director finance topics.
  1. moinul islam

    Good to know