Asset-Based Lending: Capital Secured by Your Business Assets
ABL provides working capital secured by accounts receivable, inventory, and equipment — a working-capital lane distinct from property-based asset-based CRE financing at a conservative 50% LTV, which underwrites commercial real estate as the standalone collateral. PeerSense matches established borrowers to ABL capital sources in our network — lenders who understand the industry and underwrite the collateral, not just the financials.
Institutional capital advisory · PeerSense matches AR + inventory + equipment-backed deals to a curated asset-based-lending network · Updated May 2026
What is asset-based lending?
Asset-based lending (ABL) provides lines of credit secured by accounts receivable, inventory, and equipment — not personal guarantees or tax returns. Typical facilities range from $1M to $100M with advance rates of 80–85% on AR and 50–65% on inventory, giving businesses immediate liquidity tied to real collateral.
— PeerSense Capital Advisory · Written by Ed Freeman, Founder. Updated May 2026.
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Asset-Based Lending Products
Turn your receivables, inventory, and purchase orders into immediate working capital.
Accounts Receivable Factoring
Sell your outstanding invoices for immediate cash. Non-recourse options available (lender takes the credit risk, not you). Works for staffing, manufacturing, transportation, construction, healthcare billing.
- Immediate cash on invoices
- Non-recourse options available
- No debt on balance sheet
- Scales with revenue
Asset-Based Lines of Credit
Revolving credit line secured by AR and inventory. Advances against eligible collateral as you invoice. Common for manufacturers, distributors, and businesses with irregular revenue cycles.
- Revolving credit structure
- Secured by AR and inventory
- Flexible draw schedule
- Lower rates than factoring
Purchase Order Financing
Get funded on confirmed purchase orders before you produce or ship. Works for domestic and international orders. Used by manufacturers, distributors, and importers.
- Fund confirmed POs
- Domestic and international
- No collateral required
- Fast approval
Supply Chain Finance
Unsecured supply chain finance. No personal guarantee on select programs. Faster than traditional lending. Revenue-based underwriting.
- Unsecured options available
- No personal guarantee (select programs)
- Revenue-based underwriting
- Fast deployment
Two ABL lanes — don’t confuse them. The products above are operating-company ABL — receivables, inventory, and purchase orders for B2B working capital. The commercial real estate ABL lane is a different product: a property loan at 50% max LTV, no tax returns, no FICO floor, secured against the asset itself rather than receivables. For a clean head-to-head of the property-ABL lane versus a bank, see asset-based vs. bank financing.
How ABL Lenders Actually Size Your Facility
Asset-based lenders run a borrowing-base formula against your collateral, not a financial covenant against your balance sheet. Knowing the formula before submission saves weeks of late-process surprises.
The Borrowing-Base Formula (May 2026)
| Collateral Type | Advance Rate | Common Ineligibles / Reserves |
|---|---|---|
| Eligible Accounts Receivable | 80–85% | >90 day past due, foreign, intra-company, gov, single-customer concentration above 20-25% (40% for investment-grade), retainage, contras, billed-not-shipped |
| Finished Goods Inventory | 50–60% | Slow-moving, obsolete, branded-customer-specific, consigned-out |
| Raw Materials Inventory | 40–55% | Specialty / hard-to-liquidate, perishable, off-spec |
| Work-in-Process | 0–40% | Often excluded; included only on engineered-to-order with documented value |
| Equipment (OLV appraisal) | 50–75% | Of orderly liquidation value (not original cost). Refresh appraisal every 1-3 years. |
| Real Estate (FMV) | 65–75% | Stretch-ABL component; not standard pure ABL |
| — Reserves (blended) | 10–15% | Dilution + chargeback + concentration adjustments |
| = Net Borrowing Base | → | Facility cap = MIN(net borrowing base, stated commitment) |
- • $20M+ revenue typical floor
- • Audited financials
- • EBITDA positive
- • Wells Fargo Capital, JPMorgan, BofA Business Capital, BMO ABL
- • $5M+ revenue floor
- • Reviewed (not audited) OK
- • Turnaround / recent loss accepted
- • Institutional credit funds + regional specialty operators
- • Acquisition + LBO senior debt
- • Recap with growth capital
- • Term tranche supported by EV or IP
- • $10M+ facility size
The Working Capital Graduation Curve
Most companies move from one product to the next as they grow. Each stage drops 200-600 bps in cost. On $5M average AR balance, moving from factoring (30% APR) to bank LOC (8% APR) saves $1.1M per year.
- Stage 1 — Spot factoring (Year 0-1, sub-$3M revenue): 20-48% APR-equivalent
- Stage 2 — Whole-ledger factoring (Year 1-4, $1M-$10M revenue): 12-30% APR-equivalent
- Stage 3 — Specialty ABL revolver (Year 3-7, $5M-$25M revenue): 9.50-13.50% APR
- Stage 4 — Bank ABL revolver (Year 5+, $20M+ revenue): 7.50-10.50% APR
- Stage 5 — Bank line of credit (Year 7+, $50M+ revenue + audited financials): 6.50-9.00% APR
- Manufacturer fast-track — SBA MARC (NAICS 31/32/33): 9.50-10.25% APR with 20-year term
When Asset-Based Lending (ABL) Beats SBA
Asset-based lending isn't always the right choice — but when speed, flexibility, and asset-driven underwriting matter, it often wins. The ABL lane on this page secures against operating-business collateral (A/R, inventory, equipment); the parallel lane for commercial property is no-doc CRE at a conservative 50% LTV, where real estate is the standalone collateral and tax-return underwriting is off the table.
| Factor | Asset-Based Lending | SBA Loans |
|---|---|---|
| Speed | Days to weeks | Months |
| Personal Guarantee | Not required on some programs | Always required |
| Credit Requirements | Flexible — asset-based | Strict — 680+ FICO typical |
| Scalability | Scales with revenue | Fixed loan amount |
| Collateral | AR, inventory, POs | All business assets |
| Cost | Higher rates | Lower rates |
When to Choose ABL Over SBA
- You need capital in days or weeks, not months
- You need asset-driven underwriting where collateral quality matters more than traditional metrics
- You want capital that scales with your revenue
- You prefer not to pledge all business assets
Industries We Serve
Asset-based lending works across industries — anywhere there are receivables, inventory, or purchase orders.
Manufacturing
AR factoring, inventory financing, PO funding
Staffing
Payroll funding, non-recourse factoring
Trucking & Logistics
Freight factoring, fuel advances
Healthcare
Medical billing factoring, AR financing
Distribution
Inventory lines, PO financing
Construction
Progress billing factoring, contract financing
Frequently Asked Questions
Asset-Based Lending Sources & References
- FDIC — Quarterly Banking Profile — Aggregate C&I and asset-based loan balances at U.S. banks — sector temperature.
- Federal Reserve — Senior Loan Officer Opinion Survey (SLOOS) — Quarterly bank lending-standards tightness on commercial and ABL credit lines.
- Federal Reserve — Selected Interest Rates (H.15) — Prime + SOFR benchmarks used to price ABL revolvers.
- Secured Finance Network — Industry Research — Quarterly ABL industry confidence index and credit-cycle origination data.
External links are provided for informational and verification purposes. PeerSense is not affiliated with and does not endorse any third-party site. Information was current at the time of publication.
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