What is Asset-Based Lending?

Asset-based lending (ABL) is a type of loan that uses collateral, like accounts receivable, inventory, equipment, or real estate, to secure the loan. Unlike traditional bank loans that are based on predictable cash flow, ABL focuses on the value of your assets. This makes it a great option for businesses that may not qualify for regular bank loans.

Why Use Asset-Based Lending?

Asset-based loans often work as revolving lines of credit, meaning you can borrow what you need and repay it on an ongoing basis. These loans provide steady cash flow for operations, expenses, and investments, helping your business bridge gaps between spending and receiving payments.

Key Benefits of Asset-Based Loans

• Flexible Borrowing: as your assets grow, your borrowing capacity also grows.
• Fast Approval: ABL lenders often approve loans more quickly than traditional banks.
• Better Cash Flow: Smooths cash flow by giving you access to funds when you need them.
• No Strict Restrictions: Funds can be used for a variety of business purposes.
• High-Debt Businesses Welcome: ABL is suitable for companies with high debt-to-worth ratios.
• Custom Loan Structures: Loan terms can be tailored to your assets and business needs.

How Do Asset-Based Loans Work?

The process is simple. The lender evaluates your assets and assigns a borrowing base, which determines how much credit you can access. You can draw funds as needed, as long as the value of your assets supports the loan amount.

Who Should Consider Asset-Based Loans?

Asset-based loans are ideal for businesses that are growing fast, have seasonal cash flow needs, or face gaps between spending and receiving payments. They’re also helpful for companies with limited operating history, significant debt, or undergoing transitions like turnarounds or acquisitions.

Example industries that frequently use ABL include:

• Manufacturing
• Logistics
• Distribution
• Staffing
• Transportation
• Business Services

For instance, a manufacturing company can use an ABL loan to purchase raw materials without waiting 30-90 days for customers to pay. This helps reduce cash flow issues and keeps operations running smoothly.

Why Choose Asset-Based Loans?

Asset-based lending can provide the working capital your business needs to thrive. By leveraging your assets, you can improve cash flow, fund growth, and handle financial gaps with ease.

If your business needs immediate and flexible funding, an asset-based loan might be your perfect solution.