What is an ABL borrowing base?

Borrowing base = the maximum amount an asset-based lender will advance against eligible collateral. Calculated as: (eligible AR × advance rate) + (eligible inventory × advance rate) + (equipment × OLV advance rate) − reserves. The borrowing base fluctuates daily with collateral value. Total facility availability = borrowing base OR stated commitment, whichever is lower. Monthly borrowing-base certificate verifies collateral; annual field exam audits the certificate.

What are typical ABL advance rates?

Standard advance rates by collateral (May 2026): eligible AR 80-85% (deduct dilution + concentration ineligibles), finished goods inventory 50-60%, raw materials 40-55%, work-in-process typically excluded or 30-40%, equipment 50-75% of orderly liquidation value (OLV) appraisal, real estate 65-75% of FMV. Total borrowing base = sum minus reserves (typically 10-15% blended).

What makes AR ineligible in an ABL borrowing base?

Common AR ineligibles: invoices >90 days past due, foreign-customer AR, intra-company AR, government AR (some lenders), affiliated-party AR, single-customer concentration above limit (typically 20-25%, occasionally up to 40% for investment-grade obligors), retainage AR, contra accounts, disputed invoices, billed-not-shipped invoices. Cross-aging: if 25%+ of a customer's AR is >90 days past due, the customer's ENTIRE AR becomes ineligible.

How is inventory advance rate determined?

Inventory advance rates by category (May 2026 standards): finished goods 50-60% (deduct slow-moving + obsolete), raw materials 40-55% (deduct specialty inventory hard to liquidate), work-in-process typically 0-40% (lender-specific; often excluded entirely on engineered-to-order). Inventory advance rates lower than AR because liquidation values are uncertain and slower. Field-exam appraisal validates inventory classification + obsolete reserves at facility close + annually.

What is OLV (orderly liquidation value)?

OLV = orderly liquidation value. The estimated price equipment would sell for in an orderly auction or private sale within 90-180 days under typical market conditions (not forced/distressed sale). Performed by a third-party appraiser. ABL advance rate against equipment is 50-75% of OLV, meaning if appraiser determines OLV is $1M, ABL advances $500K-$750K. Equipment OLV declines with age; appraisals typically refreshed every 1-3 years.

What's the difference between bank ABL and specialty ABL?

Bank ABL platforms price 7.50% to 10.50% APR with strict requirements ($20M+ revenue, audited financials, EBITDA positive). Specialty / non-bank ABL prices 9.50-13.50% APR but accepts more challenging borrowers, turnaround situations, smaller revenue, recent losses, weaker covenants. Specialty ABL is the bridge between transactional factoring and bank ABL eligibility.

ABL Borrowing Base Calculator | Free Tool

Collateral & Advance Rates

Eligible AR

AR Advance %

Finished Goods

FG Advance %

Raw Materials

RM Advance %

Equipment OLV

Equipment Advance %

Reserves (% blended)

Requested Facility Commitment

Standard advances: AR 80-85%, FG 50-60%, RM 40-55%, Equipment 50-75% of OLV. Reserves 10-15% blended.

Borrowing Base

Component	Base
AR	$4.10M
Finished Goods	$825K
Raw Materials	$360K
Equipment	$1.20M
Gross Base	$6.49M
Reserves	−$649K
Net Borrowing Base	$5.84M

Facility Availability

$5.84M

Borrowing base BINDS at $5.84M (less than $8.00M commitment)

About these figures

Rate, spread, leverage and term levels shown here are indicative. They reflect general conditions across our lender network as of August 1, 2026 and describe what the market has recently supported, not an outcome available to any specific borrower.

Actual pricing, leverage and terms are determined by the lender through underwriting, once full transaction materials have been reviewed. Nothing shown here is a quote, a commitment, an offer of credit or a guarantee.

PeerSense is a commercial lending advisory. We do not lend, we do not fund and we do not set pricing. Every credit decision belongs to the lender.

Market conditions move. Figures may change without notice, and a level that cleared last quarter may not clear today. What these terms mean.

See Today's ABL Rates →

Indicative only. Actual ABL borrowing base varies by lender ineligibility definitions, field-exam findings, and dynamic dilution / chargeback / concentration adjustments.

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How ABL Sizing Works in Practice

Borrowing base = max amount the ABL lender will advance against eligible collateral, calculated daily. Standard formula: (eligible AR × 80-85%) + (finished goods × 50-60%) + (raw materials × 40-55%) + (equipment × 50-75% of OLV) − reserves.

Worked example: $20M revenue distributor with $5M eligible AR, $1.5M finished goods, $800K raw materials, $2M equipment OLV. Borrowing base = ($5M × 82%) + ($1.5M × 55%) + ($800K × 45%) + ($2M × 60%) − 10% reserves = $4.1M + $825K + $360K + $1.2M − $649K = $5.84M net borrowing base. If the requested facility commitment is $8M, borrowing base BINDS at $5.84M, that's the actual usable facility.

Field exam validates the borrowing-base certificate annually. Dilution + concentration + chargeback rates monitored monthly. Failed field exam = borrowing-base reduction or covenant default.

Need an ABL facility?

PeerSense pre-screens UCC senior filings, AR ineligibles, inventory classification, and equipment OLV before bank/specialty ABL submission. Pre-cleared files close 14-28 days faster.

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