Menu

Zaidwood Capital

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

Written by

in

In asset-based lending (ABL), financing is secured by specific tangible assets on a company’s balance sheet. Lenders focus on the liquidation value and quality of these assets to determine borrowing capacity. The four primary types of business assets typically accepted as collateral include:

  • Accounts Receivable: These are considered the most liquid and preferred collateral class. Because they convert into cash through normal collection cycles, they typically command the highest advance rates (70%–90%). Lenders evaluate them based on aging reports and customer concentration.
  • Inventory: This includes finished goods, raw materials, and work-in-progress. Inventory is subject to third-party appraisals to account for obsolescence and turnover velocity, with typical advance rates ranging from 40%–60%.
  • Equipment: Machinery and vehicles are valued based on their orderly liquidation value. Lenders generally extend 50%–80% of the appraised value depending on the age, condition, and secondary market demand for the equipment.
  • Real Estate: While this is the slowest asset class to fund due to the need for title searches and environmental assessments, it offers substantial long-term value. Typical advance rates for real estate fall between 60%–75% of the appraised value.

In some complex transactions or M&A scenarios, certain structures may also accommodate intellectual property as a specialized form of collateral.

Related FAQs

More posts

Book A Call
Securities are offered through Finalis Securities LLC, Member FINRA / SIPC. Zaidwood Capital LLC (dba Zaidwood Capital / Zaidwood) (“Zaidwood Capital”) is not a registered broker-dealer, and Finalis Securities LLC and Zaidwood Capital are separate, unaffiliated entities. Finalis Securities LLC, Office of Supervisory Jurisdiction is located at 450 Lexington Ave, New York, NY 10017, 800-962-0418.
Finalis Privacy Policy | Finalis Business Continuity Plan | FINRA BrokerCheck | Finalis Form Customer Relationship Summary (“Form CRS”)
‍https://www.zaidwoodcapital.com (the “Zaidwood Capital Website”) is a website operated by Zaidwood Capital. This website is for informational purposes only, is not an offer, solicitation, recommendation, or commitment for any transaction or to buy or sell any security or other financial product, and is not intended as investment advice or as a confirmation of any transaction. Products and services on this website may not be available for residents of certain jurisdictions. Please consult with a Finalis Securities’ registered representative regarding the product or service in question for further information. Investments involve risk and are not guaranteed to appreciate. Any market price, indicative value, estimate, view, opinion, data, or other information herein is not warranted as to completeness or accuracy, is subject to change without notice, and Zaidwood Capital along with Finalis Securities LLC accepts no liability for its use or to update it or keep it current.
Investing in private placements involves a high degree of risk. These investments may be illiquid, speculative, and subject to substantial restrictions on transferability. Investors may lose all or part of their investment and should only invest capital they can afford to lose. Prospective investors should conduct their own due diligence and consult with their legal, tax, and financial advisors prior to making any investment decision. For your reference, Finalis’ Form CRS describes the services that we provide, how we are compensated, and other important information about Finalis Securities LLC.
Disclaimer: Corporate logos do not represent endorsements.
‍
Copyright © 2026 Zaidwood Capital. All Rights Reserved.