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
-
What is Series a Funding and how does it Work?
Read More »: What is Series a Funding and how does it Work?Series A funding is the first institutional investment round for startups that have validated their product-market fit and are ready to transition into scalable growth. Typically involving raises between $2 million and $15 million, this capital is used to expand…
-
What Services do Energy Mergers and Acquisitions Advisory Firms Provide?
Read More »: What Services do Energy Mergers and Acquisitions Advisory Firms Provide?As a Boutique M&A and Capital Advisory Firm, we provide a comprehensive suite of services designed to guide energy companies and institutional investors through complex buy-side, sell-side, and capital-structure transactions. We apply a Full-Cycle M&A methodology that covers every phase…
-
How do I Choose the Right M&a Advisor for my Energy Company?
Read More »: How do I Choose the Right M&a Advisor for my Energy Company?Selecting the right advisor for an energy company requires a partner who possesses deep sector fluency and a comprehensive understanding of both traditional oil and gas mergers and the evolving renewable energy landscape. As a Boutique M&A and Capital Advisory…
-
How Much do M&a Due Diligence Services Cost?
Read More »: How Much do M&a Due Diligence Services Cost?While we provide premium, boutique M&A and capital advisory services, the total cost of due diligence depends on the complexity, scope, and duration of the transaction. Because we take a comprehensive approach to Full-Cycle M&A, the investment required reflects the…
-
What does M&a Due Diligence Typically Involve?
Read More »: What does M&a Due Diligence Typically Involve?As a Boutique M&A and Capital Advisory Firm, we approach M&A due diligence as a rigorous, three-phase process designed to mitigate risk and uncover hidden value. Our Full-Cycle M&A advisory ensures that every transaction is supported by data-driven confidence. Typically,…