Asset-based borrowing permits small businesses ________.
A)to borrow up to 100 percent of the value of their inventory or their accounts receivable for the money they need for long-term goals
B)to use normally unproductive assets such as accounts receivable and inventory
C)to obtain loans more easily but with less borrowing power than using unsecured lines of credit
D)access to a source of funds ideally suited for long-term financing needs

Question

Quizplus · Accepted Answer

Asset-based borrowing allows small businesses to use assets that are normally unproductive, such as accounts receivable and inventory, as collateral for loans. This enables them to access funds they might not have been able to obtain otherwise. However, the amount they can borrow will likely be less than if they used unsecured lines of credit. This type of borrowing is primarily useful for short- to medium-term needs rather than for long-term financing.

Asset-Based Borrowing Permits Small Businesses ________