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
Eligible collateral is commercial & investment real estate only. The following do not qualify under any PeerSense program, regardless of equity or credit: owner-occupied primary residences, second homes, and single-family homes you live in (or plan to vacate at closing); and properties in active foreclosure. Pre-foreclosure is considered case-by-case. If it's a home you live in, a residential mortgage broker is the right starting point.
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
- • The major bank ABL platforms
- • $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
Are you the lender? Capital to fund your originations.
If you run an ABL, factoring, or specialty finance platform and your constraint is capital rather than deal flow, PeerSense connects proven originators with institutional capital: forward flow agreements, warehouse and lender-finance credit facilities, and whole-loan purchases from $10M.
Explore forward flow & lender capitalIndustries 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, a read on 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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