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 sources ABL capital for established borrowers through a curated network. The sources underwrite the collateral, not just the financials.
Institutional capital advisory · PeerSense sources AR, inventory, and equipment backed capital through a curated network · Updated October 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 to 85% on AR and 50 to 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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Indicative only, as of October 1, 2026. Not a quote, commitment or offer of credit. Final pricing, leverage and terms are determined by the lender at underwriting, after full transaction materials are reviewed. PeerSense sources the file. The lender sets pricing. What these terms mean.
Asset Based Lending Products
Factoring from $20 million a month. Operating company ABL from $10 million and up. Talk to PeerSense.
Accounts Receivable Factoring
Sell approved B2B invoices after the factor is on the book. This desk works files from $20 million a month. Trucking, staffing, manufacturing, distribution, government contractors. Advance on the customer, not your FICO.
- Cash after setup
- 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. Public floor is $10 million and up. Loss tape required. Files below that sit.
- Revolving credit structure
- Secured by AR and inventory
- Flexible draw schedule
- Public floor $10 million and up
Purchase Order Financing
Fund confirmed purchase orders before you produce or ship. Works for domestic and international orders. Public floor is $10 million and up. Thin POs sit.
- Fund confirmed POs
- Domestic and international
- Public floor $10 million and up
- Follows the book
Supply Chain Finance
Supply chain finance on a real book. Public floor is $10 million and up. Revenue based underwriting. Files below that sit.
- Public floor $10 million and up
- Revenue based underwriting
- Loss tape required
- Follows the book
Two ABL lanes, don’t confuse them. The products above are operating company ABL: receivables, inventory, and purchase orders for B2B working capital. Factoring from $20 million a month. Operating ABL from $10 million and up. The commercial real estate ABL lane is a different product: a property loan from $10 million and up, cash in about 35 percent, 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 to 85% | >90 day past due, foreign, intra company, gov, single customer concentration above 20 to 25% (40% for investment grade), retainage, contras, billed not shipped |
| Finished Goods Inventory | 50 to 60% | Slow moving, obsolete, branded customer specific, consigned out |
| Raw Materials Inventory | 40 to 55% | Specialty / hard to liquidate, perishable, off spec |
| Work in Process | 0 to 40% | Often excluded; included only on engineered to order with documented value |
| Equipment (OLV appraisal) | 50 to 75% | Of orderly liquidation value (not original cost). Refresh appraisal every 1 to 3 years. |
| Real Estate (FMV) | 65 to 75% | Stretch ABL component; not standard pure ABL |
| − Reserves (blended) | 10 to 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 to 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 to 1, sub-$3M revenue): 20 to 48% APR equivalent
- Stage 2, Whole ledger factoring (Year 1 to 4, $1M to $10M revenue): 12 to 30% APR equivalent
- Stage 3, Specialty ABL revolver (Year 3 to 7, $5M to $25M revenue): 9.50 to 13.50% APR
- Stage 4, Bank ABL revolver (Year 5+, $20M+ revenue): 7.50 to 10.50% APR
- Stage 5, Bank line of credit (Year 7+, $50M+ revenue + audited financials): 6.50 to 9.00% APR
- Manufacturer fast track, SBA MARC (NAICS 31/32/33): 9.50 to 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 | Personal credit and full docs |
| 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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