Asset-based funding is where the funding outlaid to a third-party is secured by an asset. For example, Capital Corp Merchant Banking would disburse funding to a group and secures an asset with a mortgage till the funding is paid in full. Should the company default on its obligations during funding then the asset would be foreclosed.
Asset-based lending is commonly offered by a variety of sources, from banks to investment groups. There would, of course, be difference in the level of collateral expected, interest rate due, and so forth.
The type of collateral secured by an asset loan can also be wide-ranging. Many believe this would only be tied to hard assets such as land or buildings. However, other accounts of the balance sheet could serve as a form of security (ex: receivables in the practice of factoring).