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 are the Trends in Bank M&a for 2025?
Read More »: What are the Trends in Bank M&a for 2025?Based on the provided content from Zaidwood Capital, the banking sector is experiencing a surge in merger and acquisition (M&A) activity expected to continue through 2025 and 2026. Key trends driving this landscape include: Strategic Consolidation: Banks are increasingly using…
-
How do I Advise on Bank Mergers?
Read More »: How do I Advise on Bank Mergers?Advising on bank mergers requires a structured seven-step framework to navigate the evolving U.S. banking landscape. Based on Zaidwood Capital’s expertise, the advisory process includes: Preparation and Evaluation: Start with pre-consolidation assessments and scan current bank consolidation trends to identify…
-
How do You Navigate the Bank Merger Regulatory Approval Process?
Read More »: How do You Navigate the Bank Merger Regulatory Approval Process?The regulatory approval process for bank mergers involves navigating requirements from major authorities like the FDIC and the Federal Reserve. This process generally follows a structured timeline of four to six months and includes several critical steps: Application Preparation: This…
-
What are the Latest Bank Mergers in the Us for 2026?
Read More »: What are the Latest Bank Mergers in the Us for 2026?Current bank consolidation trends indicate a surge in merger activity within the U.S. banking landscape heading into 2026. This trend is largely being driven by economic pressures and the need for financial institutions to enhance stability. Key factors influencing these…
-
How do You Measure Success in Post Merger Integration?
Read More »: How do You Measure Success in Post Merger Integration?Measuring success in post merger integration relies on a combination of financial metrics, operational tracking, and ongoing evaluation. Financial metrics are considered the primary tools for success measurement, focusing on tracking key performance indicators such as cost savings, revenue growth,…