Asset-Based Lending (ABL)
A senior secured lending structure where advances are sized against a borrowing base of receivables, inventory, equipment, or real estate, governed by a formal borrowing-base certificate.
How it works
Asset-based loans are sized as a percentage of eligible collateral. Typical advance rates are 80 to 90 percent against eligible receivables and 40 to 60 percent against inventory, with periodic field exams and borrowing-base reporting.
Pricing is generally lower than factoring or merchant-style structures because the facility is senior secured, governed by formal covenants, and underwritten as ongoing credit rather than transactional advances.
Fit profile
ABL fits established operators with diversified receivables, clean reporting, and the operational discipline to produce monthly borrowing-base certificates without straining the back office.
It is frequently the next step up from factoring as a business matures and as its lender relationships move from transactional to institutional.