Asset-based or Collateral Based lending are loans that are primarily secured by an asset. These types of loan should only be considered when more conventional lines of credit that are based on your creditworthiness cannot be achieved.
In truth all mortgages are asset based to some extent, as every lender, bank, credit union, or private lender will want to have a security interest in the property you are buying or refinancing. The difference in an asset-based loan is the priority given to the credit worthiness of the borrower.
Asset-based lenders generally will not care about your credit score, payment history, defaults, or bankruptcies. Their primary reason for granting the loan is the fact that if you can not repay the loan, the assets can be sold to recoup the lenders loan.
A Hard Money Loan is a type of collateral or asset-based loan in which the equity in a piece of real estate is the primary factor for granting the loan. Other types of asset based loans not offered by Northwest Private Lending include Business lines of credit and Factoring of receivables.