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What Types of Company Assets are Typically Accepted as Collateral for Asset-based Lending?

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In asset-based lending (ABL), financing is secured by the tangible value of a company’s balance-sheet assets. The most common types of company assets accepted as collateral include:

  • Accounts Receivable: Businesses can borrow against unpaid invoices, typically receiving an advance rate of 80–90% (or up to 85% depending on the specific facility).
  • Inventory: This includes existing stock and is often used to manage seasonal demand. Lenders generally advance 50–70% of the inventory’s appraised value.
  • Equipment and Machinery: This category covers vehicles, technology, and medical equipment. Advance rates typically range from 70–85% of the appraised value.
  • Real Estate: Property can be used as collateral for structured asset-based finance or bridge loans.
  • Purchase Orders: Used specifically in purchase order financing to help businesses fulfill large orders when working capital is limited.
  • Specialized Assets: In certain scenarios, such as special situations or growth-stage transactions, collateral may include intellectual property, residential mortgage loans, or unconventional asset bases.

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