Elements of this set of strategies may also be referred to as asset-based lending. It frequently involves the purchase of small to middle market debt that provides high security and premium rates of return. Investments are typically high yielding, secured, short-term senior positions in seasoned, healthy companies. Specific investment sectors may include factoring receivables, asset-based loans, trade finance, collecting on charged-off consumer debt, and other specialty finance situations. Opportunities in these sectors have risen due to the dramatic consolidation of banks and specialty finance companies. Larger financial institutions cannot economically make the loans that the borrowers in this market segment require.
