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This type of lending is usually done when the normal routes of raising funds, such as the capital markets (selling bonds to investors) or normal unsecured or mortgage secured bank lending is not possible. This is usually because the company is in dire finanical status. Thus, asset based lending can be compared to sub-prime lending . It is usually acompanied by high interest rates, and can be very lucrative for the parent company. For example, the bank Wells Fargo made more money from asset-based lending business then it did the rest of its corporate business (both lending and fee based services).

In fact, many financial services CEOs argue that normal lending to corporations can no longer be profitable in and of itself, because the interest rates involved are too low. This is because for most of the second half of the twentieth century, it has been possible for corporations to not borrow from banks but instead borrow from individual investors in the form of bonds. Thus, competition has made rates so low that many feel they do not adequately reflect the risk (see: risk based pricing). Most financial services companies now only lend as part of a package of services, or do asset based lending or other more lucrative businesses.

Asset based lenders are known for taking out tomb stone ads in much the same way as investment banks.