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.
Related FAQs
-
How do I Assess a Target Company’s Ai Infrastructure?
Read More »: How do I Assess a Target Company’s Ai Infrastructure?Assessing a target company’s AI infrastructure involves a meticulous technical review that moves beyond surface-level capabilities to evaluate the core assets underpinning the business’s value. According to the strategic framework used by Zaidwood Capital, the assessment focuses on three critical…
-
How does Ai Impact Valuation in Middle Market M&a?
Read More »: How does Ai Impact Valuation in Middle Market M&a?In middle-market M&A, AI impacts valuation by shifting the paradigm from traditional manual reviews to a data-driven approach that enhances accuracy and depth. This transformation occurs across several critical dimensions: Related FAQs
-
What is Ai Due Diligence and Why is it Critical in 2026?
Read More »: What is Ai Due Diligence and Why is it Critical in 2026?AI due diligence is a specialized technical and strategic review of a company’s artificial intelligence assets, infrastructure, and risks during a merger or acquisition. Moving beyond traditional financial audits, it evaluates the core components that underpin an entity’s modern value,…
-
What are the Risks Associated with Acquiring Ai Companies?
Read More »: What are the Risks Associated with Acquiring Ai Companies?Acquiring AI companies involves unique technical, legal, and operational risks that differ from traditional business acquisitions. According to Zaidwood Capital, these risks primarily center around the integrity of the technology and the legal standing of the assets. Key risks associated…
-
What is Nav Financing and how is it Used?
Read More »: What is Nav Financing and how is it Used?Net Asset Value (NAV) financing is a sophisticated form of fund-level leverage secured against the combined appraised worth of a private equity fund’s portfolio companies. Unlike traditional debt that may rely on guarantees, these asset-backed credit facilities use the fund’s…