What is Asset Based Lending?
Asset Based Lending (ABL) is a form of secured lending that is based principally on the quality, value and adequacy of the collateral that an issuer pledges. ABL loans are typically less costly than invoice factoring but may be more restrictive as well. If your business has grown to the next level, Triumph Commercial Finance could be your next stage of working capital finance.
As leading asset-based lending consultants, we specialize in asset-based lending services for small to mid-size companies that require working capital financing to meet cash flow needs. With years of experience working with over 5,000 businesses like yours, we have the knowledge and expertise to meet your goals and put your business back on track.
How does ABL work?
Asset based loans are generally granted to small- to mid-sized companies that have acquired a certain level of stability and an asset base that can be used as collateral against the loans. These assets need to be fully owned by the applying company i.e., not financed or pledged as collateral to anyone else. There also need to be no accounting or financial issues that might encumber the assets.
The collateral that is most often used in asset based lending is the company’s accounts receivable. However other assets will be considered, including inventory, equipment, or even real estate. The value of the assets that the company can offer as collateral determines the loan amount, or the borrowing base.
It is important to remember that ABL is not the same as factoring, although the two are often confused with one another. The main difference is that factoring does not involve a loan at all, but rather the sale of accounts receivable to the factoring company.
Are you ready to learn more about applying for an Asset Based Loan?
There are primarily three criteria used to determine if your business is ready to graduate from invoice factoring to asset-based lending.
1
Size
Minimum loan utilization is typically $1 million.
2
Financial Reporting
ABL borrowers typically submit collateral reports to determine loan eligibility. Additionally, borrowers are required to present CPA reviewed, and preferably audited, financial statements.
3
Capacity
Financial criteria, such as favorable earnings and tangible net worth, are generally considered in the loan underwriting process.
Would you rather just talk to someone?
We get it, sometimes you just want to ask a few questions and get on with it. Turns out, we like your style… let’s have a chat about it.
Give us a call! (866) 368-2482
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