Asset Based Lending

Asset Based Lending (ABL) is a business loan secured by an asset (collateral). Asset-Based Lending is utilized by companies that need working capital to operate or grow. These businesses may have reached the limit on their bank line of credit, have cash flow problems from rapid growth, or may not be able to qualify for traditional financing. Asset based lenders, such as ClearCoast, help companies manage their cash flow issues in order to put them in a favorable position for future growth. 

Asset Based Lending allows a business to access working capital through the value of their asset(s). Typical assets are such things as accounts receivable, inventory, and equipment. Asset-Based loans can be structured as revolving credit facilities, allowing a company to borrow from assets on an ongoing basis to cover expenses or investments as needed. 

With Asset-Based Lending, company’s assets are used as collateral to secure a loan or gain access to a revolving line of credit. ABL can use receivables as collateral, which is not typical for other loan types. Asset Based Lending can also use other types of assets, such as equipment, machinery, real estate, inventory, and raw materials. 

The higher the risk, the more collateral that will be required to make the loan. The collateral involves the creation of enforceable security interests to protect the lender. Every loan is evaluated separately to assess the amount of collateral required to complete the final terms. 

ClearCoast verifies the value of the assets that are used as collateral to determine the amount of money a company can borrow. ABL provides a loan to value ratio (LTV), which can range from 75%-90% for receivables, and up to 50% on other forms of collateral. If the value of your company’s assets increase or decrease, it will affect how much money your business can borrow through an asset-based loan. 

Since collateral protects ClearCoast’s financial exposure, one major consideration is how easy will it be, in the case of a loan default, to liquidate the assets in a timely manner to recover the loss. Estimating the true value of an asset requires expertise and time. Since ClearCoast is a direct lender, the final loan decision is based on the company’s set of guidelines. 

Opportunity

Asset Based Lending offers another form of financing, by providing working capital based on a business’s assets.

Solution

ClearCoast can convert your assets into the working capital you need to operate and grow your business.