Asset-based loans are an expensive method of financing because of the cost of originating and maintaining them and the higher risk involved.

Question

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Asset-based loans typically involve higher fees and interest rates due to the additional work involved in analyzing and valuing the collateral. Additionally, these loans may carry a higher risk because they are secured by specific assets which may fluctuate in value or may not be easily liquidated in the event of default.

Asset-Based Loans Are an Expensive Method of Financing Because of the Cost