Asset-Based Lending (ABL)

Asset-based lending facilities allow companies to borrow against eligible business assets.

Typical collateral may include:

• Accounts receivable
• Inventory
• Equipment or machinery
• Purchase orders or contracts
• Other qualifying business assets

Lenders determine an advance rate based on the asset type and risk profile.

Example:

• Accounts receivable: 70–90% advance rate
• Inventory: 40–70% advance rate
• Equipment: varies based on market value

As assets grow, the available borrowing base can increase, creating a flexible credit facility that scales with business activity.

ABL financing is commonly used when companies need working capital but may not qualify for traditional bank loans or require more flexibility than conventional credit structures.

Common scenarios include:

• Rapid revenue growth creating working capital gaps
• Seasonal inventory purchases
• Large customer contracts with extended payment terms
• Operational expansion
• Business acquisitions or restructuring
• Liquidity needs during transitional periods

Because the financing is secured by assets, businesses often gain access to larger credit facilities and more flexible structures than unsecured lending options.