Commercial Asset-Based Lending

Who ABL is for

• Distributors, wholesalers, and importers with revolving inventory and trade receivables
• Manufacturers converting raw materials and work-in-process into finished goods
• Logistics, transportation, and marine-adjacent service companies with billed receivables
• Companies in growth, seasonality, turnaround, or ownership transition where EBITDA covenants would be brittle
• Sponsors seeking a working-capital facility that can sit beside term debt

Facility types

Borrowing-base revolving credit

A senior revolver whose availability is the lesser of the commitment and the borrowing base. The borrowing base typically applies advance rates to eligible accounts receivable and eligible inventory, less reserves. Reporting is periodic—often weekly or monthly—supported by accounts-receivable agings, inventory certificates, and, where the structure requires it, field examinations.

ABL term loans against machinery and equipment

Amortizing term debt secured by appraised M&E, sometimes combined with a revolver. Advance rates reflect orderly-liquidation or fair-market value, age, specialization, and how easily the equipment can be redeployed.

Hybrid ABL / cash-flow structures

For borrowers with both a strong collateral book and measurable cash flow, a portion of the facility may be underwritten to cash flow, with the remainder governed by the borrowing base. These structures are used sparingly and only when monitoring can support them.

First-in / stretch and special-situation ABL

Selected transactions involve ineligible reserves, concentration, or a recent credit event. These files require tighter dominion, lower advance rates, and a clear path to a conventional borrowing base. They are not distressed-debt investing; they are senior lending with enhanced control.

Eligible collateral — typical treatment

Accounts receivable. Eligible accounts are generally unsecured trade receivables owing by creditworthy account debtors, not aged beyond an agreed period, free of dispute, contra, and prohibited jurisdictions. Concentration limits apply.
Inventory. Eligible inventory is typically finished goods and, in some cases, raw materials, that is owned, properly located, insured, and readily marketable. Work-in-process, consignment, and specialized goods carry lower advance rates or are excluded.
Machinery and equipment. Appraised M&E may support a term tranche. Title, serial-number schedules, and landlord waivers or mortgagee consents are required where the equipment sits on leased or mortgaged real property.
Other assets. In limited cases, selected intellectual property, rolling stock, or real-estate-lite interests may be taken as additional collateral. They rarely drive the borrowing base on their own.

Controls we commonly require

• First-priority perfected security interest under the Uniform Commercial Code
• Deposit-account control agreements on collection accounts
• Lockbox or springing dominion depending on facility size and risk
• Landlord waivers, bailee acknowledgements, and customs/broker arrangements where inventory is third-party held
• Insurance endorsements naming the lender as loss payee and additional insured
• Periodic borrowing-base certificates, agings, and inventory reports
• Field exams and appraisals at intervals set by the credit agreement

Uses of proceeds

Working capital, refinancing of existing secured debt, growth in receivables and inventory, selected acquisitions of asset-rich companies, and, in appropriate cases, a modest dividend or sponsor recapitalization that leaves the collateral and liquidity intact.