Asset-Based Lending (ABL)

Asset-based lending (ABL) is a loan or line of credit for a business, secured by collateral such as inventory, equipment and accounts receivable, with advances limited to a percentage of eligible collateral. Commercial Finance Partners transforms your existing resources — like inventory, equipment or receivables — into accessible capital for immediate and strategic needs.

Customer Testimonials

The financing solutions provided by Commercial Finance Partners were exactly what I needed. Their team was professional and helped me every step of the way

Matthew Rodriguez Business Owner

I highly recommend Commercial Finance Partners for any business financing needs. Their team is dedicated and knowledgeable, and they truly care about their clients’ success.

Karen Gonzalez CEO

The financing process with Commercial Finance Partners was smooth and efficient. Their team was knowledgeable and helped me find the right solution for my business. I highly recommend them.

Charles Jackson Business Owner

Commercial Finance Partners Asset-Based Loan Services

Asset Based Lending (ABL) allows businesses to borrow against tangible resources that already exist on their balance sheet. Rather than depending on credit scores or lengthy loan approvals, this approach ties funding capacity to the value of accounts receivable, equipment, or stock. Companies with fluctuating revenue or seasonal demands can benefit from the flexibility of ABL, adjusting borrowing limits as asset values change. This way, you maintain day-to-day liquidity, prevent cash flow shortfalls, and avoid heavy reliance on unsecured lines. Ultimately, leveraging your own resources ensures more stable operations and fosters a proactive stance for growth.

Commercial Finance Partners customizes ABL solutions by examining the nature of your inventory cycles, outstanding invoices, or capital equipment. We deliver a term sheet in 24 to 48 hours, so you can address pressing obligations or jump on emerging opportunities. Transparency lies at the heart of our method: we outline interest rates, advance rates, and collateral requirements upfront, giving you a clear picture of costs. Once funded, we remain in close contact to update valuations or adapt the structure as your asset base shifts. This dynamic alignment between assets and credit ensures you’re never stuck without funds when you need them most.

Why Choose Commercial Finance Partners:

Asset-Centric Insight:

We assess the true worth of your receivables or stock to optimize funding.

Speed to Capital:

Term sheet in 24 to 48 hours; same-day funding on verified invoices.

Flexible Drawdowns:

We tailor borrowing levels to asset fluctuations or seasonal peaks.

Clear Fee Structures:

We disclose costs and timelines so you can budget effectively.

Continuing Partnership:

We regularly adjust loan parameters to match your evolving asset profile.

Asset-Based Services & Products

Equipment Finance

Modernize Operational Capabilities:

Inventory Finance

Maintain Optimal Stock Levels:

Receivables Finance

Turn Unpaid Invoices into Cash:

How to Leverage Asset-Based Loans

First, audit your assets to determine which can serve as reliable collateral. Are your receivables typically paid on time? Does your inventory move fast enough to maintain strong valuations? These insights guide you in deciding how much capital to request. Detailed records of sales patterns, turnover rates, and buyer creditworthiness give lenders confidence and speed up approvals. By mapping out each asset’s liquidity, you sharpen your borrowing strategy for maximum benefit.

Next, align the timing of drawdowns with operational triggers—like new orders, production runs, or seasonal cycles. If your inventory surges ahead of a holiday rush, for instance, ABL can furnish the funds to stock up without draining cash reserves. Regularly compare actual asset values against your initial forecasts to refine the loan structure or request additional credit lines. This ongoing, data-driven management ensures that each borrowed dollar is used efficiently, fueling profitable initiatives rather than tying up capital.

Key Benefits of Leveraging Asset-Based Loans:

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It links financing directly to tangible items, reducing delays tied to strict credit evaluations.

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Flexible draws help you fine-tune capital deployment for each business milestone.

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Lower reliance on unsecured debt can keep interest rates manageable.

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As assets grow in value, your potential borrowing capacity expands in tandem.

How Asset-Based Loans Are Sized

An ABL facility is sized by its borrowing base: the collateral base, agreed between borrower and lender, that limits how much the lender will advance, set by collateral type, eligibility and advance rates. You can draw up to the lesser of the available borrowing base or the commitment amount. Typical advance rates:

Accounts receivable: commonly 70% to 85% of eligible receivables, and up to 90% at some banks for eligible business-to-business receivables. Commercial Finance Partners advances 90%+ on eligible receivables, funded from our own balance sheet.
Inventory: typically up to 65% of the book value of eligible inventory, or 80% of its net orderly liquidation value (NOLV) as determined by a qualified appraiser. Finished goods and commodity-like raw materials usually receive the highest rates; work-in-process is frequently excluded.
Machinery and equipment: First Citizens Bank lists a typical advance rate of 80% of machinery and equipment NOLV. Term loans commonly finance capital expenditures, secured by the financed assets.
Real estate and intellectual property: less-liquid collateral is generally limited to a small percentage of the borrowing base, and advance rates for intellectual property are generally lower than for receivables.

Lenders monitor the borrowing base with borrowing base certificates — as often as daily, depending on the borrower’s risk profile — plus field audits and lockbox arrangements, and most ABL agreements let the lender establish reserves against the borrowing base. Source: OCC Comptroller’s Handbook, “Asset-Based Lending”.

When Does Asset-Based Lending Fit?

ABL borrowers may need funding for seasonal working capital, growth, acquisitions or turnaround financing, and the borrower may be a healthy company seeking more liquidity or a business that cannot qualify for traditional commercial credit. Wholesalers, distributors and retailers frequently use revolving ABL credit, and service companies use it to fund accounts receivable.

Cyclical or seasonal businesses use ABL for liquidity during slow sales periods and inventory buildup.
Rapidly growing companies use it to finance increases in receivables and inventory.

The trade-offs: an ABL facility is often more expensive than other commercial lending — interest rates and loan fees are generally higher, and frequent reporting adds cost — and loan agreements typically let the lender take control of your cash if the borrowing base no longer supports the loan. In return, ABL facilities are typically underwritten with a limited number of financial covenants.

How to Compare ABL Lenders

When you compare ABL term sheets, look beyond the interest rate:

Advance rates and eligibility: they vary with the quality of the collateral and the lender’s risk appetite.
Reserves: the deductions the lender can establish against the borrowing base.
Fees: charges typically include field audits, lockbox arrangements and appraisals.
Pricing triggers: the spread can vary with line availability and your financial leverage.
Covenants: typically a minimum fixed charge coverage ratio, sometimes springing only when excess availability falls below a threshold.
Tenor: ABL revolvers are typically short term, though some now extend to five years.

Commercial Finance Partners outlines interest rates, advance rates and collateral requirements upfront, giving you a clear picture of costs.

ABL Lending for Equipment-Heavy Businesses

Companies that own significant machinery or other capital equipment can include it in an ABL lending facility alongside receivables and inventory. Equipment is sized by the same borrowing base as other collateral, so the amount available depends on how the equipment is valued. First Citizens Bank lists a typical advance rate of 80% of machinery and equipment NOLV (net orderly liquidation value). Commercial Finance Partners outlines interest rates, advance rates and collateral requirements upfront, giving you a clear picture of the cost of asset based equipment financing. For equipment-backed funding on its own, see our equipment finance page.

Asset-Based Lending Solutions

Receivables finance — borrowing against eligible accounts receivable.
Inventory finance — borrowing against finished goods and raw materials.
Equipment finance — financing for capital expenditures, secured by the financed equipment.
Asset-based loans in structured facilities — ABL combined with other secured or unsecured debt in a larger structured transaction.

Businesses that sell on terms can also compare accounts receivable financing and factoring.

Asset-Based Lending FAQs

What is an ABL loan?

An ABL loan is a loan or line of credit issued to a business and secured by collateral such as inventory, equipment and accounts receivable. The most common type is a revolving line of credit that lets you draw, repay and redraw funds, with advances limited to a percentage of eligible collateral. ABL lenders may also provide term financing for longer-term needs.

How much can you borrow with asset-based lending?

You can borrow up to the lesser of your available borrowing base or the lender’s commitment. The borrowing base applies advance rates to eligible collateral: commonly 70% to 85% of eligible accounts receivable, and typically up to 65% of the book value of eligible inventory or 80% of its net orderly liquidation value, according to the OCC’s Comptroller’s Handbook. Commercial Finance Partners advances 90%+ on eligible receivables, funded from our own balance sheet.

What is the difference between asset-based lending and factoring?

With asset-based lending you do not sell your assets; you borrow against them. In factoring, a company sells its accounts receivable, traditionally without recourse, to a factor that assumes the risk of collection.

What is an ABL revolver?

An ABL revolver is a revolving line of credit secured by working capital assets such as accounts receivable and inventory, and it is the most common type of ABL. You can draw as often as needed up to the lesser of the borrowing base or the commitment. Collections are applied to the balance, commonly through a lockbox, and availability is restored as collateral is replenished.

What do asset-based lenders look for?

Asset-based lenders focus on collateral quality: the strength of your customer base, customer concentrations, delinquency trends and dilution in your receivables, and whether your inventory is salable. Field audits confirm the quality of your financial data, receivables, inventory and internal controls, because repayment comes primarily from converting the collateral to cash.