Fixed asset lending is a type of financing in which an organization borrows money using its fixed assets as collateral. Fixed assets include physical assets such as land, buildings, machinery, and equipment that have a long-term value and are not intended for sale in the normal course of business.
Fixed asset lending typically involves the following steps:
Fixed asset lending can be a useful tool for organizations that need to finance large investments in fixed assets but do not have the necessary capital on hand. It can provide access to capital at lower interest rates than other types of financing, such as unsecured loans or lines of credit. However, it is important to carefully evaluate the terms and conditions of the loan agreement and to ensure that the organization has the ability to repay the loan in full. Failure to repay the loan can result in the loss of the fixed assets used as collateral.