Learn More About Asset-Based Financing (ABL)

ABL Loan Structures

Asset-based borrowing can be structured as a revolving line of credit, a term loan or a combination.

Revolving line of credit – You’re able to borrow based on acceptable collateral at each line of credit draw. You can borrow as much as the lender will lend based on the collateral, or you can borrow very little or even none.

This is perfect for volatile, temporary or seasonal liquidity needs. You could view this as “liquidity insurance.”

Term Loan – You borrow a fixed amount for a fixed period of time. Asset-based term loans are typically structured for longer-life assets such as machinery and equipment.

What types of security will lenders accept? Lenders will often agree to a term loan secured by Machinery & Equipment (M&E) and to a line of credit secured by accounts receivable and inventory.

Questions? Call or text 203-247-4358

Recently Funded ABL Deals by Speritas Capital

Check out more of our recently funded deals.

7 Types of Asset-Based Loans & the Collateral Used to Secure Them

• Accounts Receivable Financing: Sell or pledge your accounts receivables and use your customers’ credit to generate liquidity. Smaller deals generally require a true sale while larger deals can be structured as a collateralized line of credit.

• Purchase Order Financing: PO financing provides financing early in the fulfillment cycle.

  With purchase order finance, you borrow money secured by the your customer’s purchase order. A PO finance company steps in and pays your suppliers. This is another way to borrow using your customers’ credit.

• Inventory: Many lines of credit are secured by accounts receivable and inventory.

  Raw materials and finished goods are generally accepted as eligible inventory collateral, usually at a discount to the book value. Revolving lines of credit can be structured to allow funding for seasonal increases in inventory.

• Machinery and Equipment (M&E): Almost all new and used equipment can be financed either as an equipment financing or an equipment lease. Soft costs can be wrapped into the lease. Start-ups can often qualify for equipment finance.

• Commercial Real Estate Financing: A company’s commercial real estate is usually financed separately from an asset-based credit facility but some lenders will include this asset class in their facility, either as bootstrap collateral for a line of credit or as a term loan.

• Intellectual Property: Many companies have invested heavily in product or service development and have a substantial IP asset on their balance sheets. IP can be added to a collateral pool in cases where the IP is commercialized and can be independently valued.

• Contracts: Contracts that represent monthly recurring revenue (e.g., for SaaS-based companies) can be used as collateral for a line of credit or term loan.