What is an Asset Based Loan?
An asset based loan is a type of business financing that is secured by company assets. Most Asset based loans are structured to work as revolving lines of credit. This structuring allows a company to borrow from assets on an ongoing basis to cover expenses or investments as needed.
Who uses Asset Based Loans?
ABL’s are used by companies that need working capital to operate or grow. Often, companies that request an ABL have cash flow problems. However, many of these cash flow problems stem from rapid growth. The asset based lending facility helps companies manage the rapid growth issues and positions the company for growth.
Who qualifies for asset based lending?
Typically, Asset based financing is offered to small and mid-sized companies that have assets that can be financed. The company’s assets must not be pledged as collateral to another lender. If they are, the other lender must agree to subordinate its position. The company also must not have any serious accounting, legal, or tax issues which could encumber the assets.
- Most Asset Based Loans have a minimum of $750,000 to $1,000,000 in utilization requirements.