Asset-Based Lending: Flexible Financing to Fuel Growth
Asset-based lending, lending based on the assets owned by the business, is an excellent option if your company is in high-growth mode and is working-capital intensive.
Asset-based lending, lending based on the assets owned by the business, is an excellent option if your company is in high-growth mode and is working-capital intensive.
Even the most successful business can find itself with limited borrowing capacity. Perhaps you are going through substantial growth, considering acquisitions, emerging from a rough patch or your business is highly seasonal, to name just a few potential reasons for tight liquidity. Asset-Based Lending (ABL) is a flexible financing option that can be used to support growth and success for companies with less traditional credit profiles.
ABL refers to financing that is based on the assets owned by the business. It may be an excellent option if your company is in high-growth mode and is working capital intensive. Primarily collateralized by accounts receivable and inventory, ABL financing can increase as sales grow or if additional capital is needed. ABL financing packages can include secured working capital lines of credit and fixed asset or real estate-based term loans.
ABL can enhance a tight cash flow position by offering borrowers higher advance rates, less stringent covenants and more flexibility than is typically available through a standard commercial lending structure. It also generally offers greater access to liquidity via working capital. The ABL relationship is typically very high-touch, with lenders working closely with borrowers to ensure that they stay on track to achieve their goals.
For businesses considering ABL, it is important to look for a lender that has diverse expertise to suit a variety of clients’ needs and works closely with its internal partners to bring the full capabilities of the bank to you. This collaboration will be beneficial when structuring solutions to your capital and credit needs to grow your business.
