Asset-based financing is an efficient means of borrowing because the business only pays for the capital it actually needs and uses.

Question

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Asset-based financing allows businesses to obtain financing based on the value of their assets, such as accounts receivable or inventory, and only pay for the capital they actually use. This can be more efficient and cost-effective than traditional forms of borrowing, such as taking out a loan with a fixed amount and interest rate, which may require the business to pay for funds it does not need or use.

Asset-Based Financing Is an Efficient Means of Borrowing Because the Business