Each year, more than 627,000 new small businesses open across the United States — and no matter the industry, they nearly all share a common challenge: access to reliable working capital to fund growth and maintain cash flow. When traditional bank loans are difficult to qualify for, especially for startups or fast-growing companies, business owners often need a more flexible financing alternative.
Asset-based lending (ABL) allows businesses to borrow money based on the value of their assets — such as accounts receivable, inventory, equipment, or commercial real estate — rather than relying solely on credit scores or financial history. This can provide fast access to capital without the long approval timelines, loan restrictions, or strict collateral requirements associated with traditional working capital.
In this guide, you’ll learn what asset-based lending is, how it works, which businesses qualify, and how to apply for funding.
Ready to see how much funding you qualify for? Apply today — decisions in as little as 24–48 hours.
What Is Asset-Based Lending?
Asset-based lending is a type of business financing where a company secures a revolving line of credit or term loan using its assets as collateral. Instead of evaluating only credit history and profitability, lenders approve funding primarily based on the value and quality of your business assets.
ABL financing is commonly used to:
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Manage cash flow during growth or seasonal fluctuations
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Cover payroll or operating expenses
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Purchase equipment, inventory, or materials
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Support acquisitions or expansion
Unlike traditional commercial loans — which are based heavily on credit strength and lengthy financial history — asset-based loans rely on your business assets, not just your credit score or revenue performance. This makes ABL a strong option for companies experiencing rapid growth, limited credit history, slow customer payments, or temporary cash flow gaps.
How Does Asset-Based Lending Work?
Here’s a step-by-step look at how the ABL process typically works:
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Submit a loan application with financial documentation (asset list, AR aging report, inventory report, etc.)
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Lender evaluates asset value & customer payment reliability
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Funding approval & collateral valuation
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Receive a revolving line or term loan based on a percentage of asset value
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Draw capital as needed and repay based on usage
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Funding availability adjusts as assets fluctuate
ABL credit lines often provide:
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70–90% of accounts receivable
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50–70% of inventory value
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Up to 85% of equipment value
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Up to 75% of commercial real estate
What Types of Collateral Qualify for Asset-Based Loans?
Commonly accepted collateral includes:
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Accounts receivable financing (ideal for invoices aging 30–90+ days)
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Inventory
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Equipment or machinery
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Commercial real estate
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Purchase orders or contracts (in some cases)
Which Businesses Benefit from Asset-Based Lending?
Asset-based loans are frequently used by industries with large asset portfolios, slow customer payments, or long billing cycles, including:
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Manufacturing & distribution companies
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Wholesale and import/export suppliers
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Construction suppliers & contractors
Asset-Based Lending vs. Traditional Bank Loans
| Feature | Asset-Based Lending | Traditional Bank Loans |
|---|---|---|
| Approval criteria | Based on asset value | Based on credit & financial strength |
| Speed to fund | Fast (often days) | Weeks or months |
| Flexibility | Revolving line based on asset levels | Fixed & restrictive |
| Best for | Rapid growth & cash flow gaps | Established companies with strong credit |
Pros & Cons of Asset-Based Lending
Benefits
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Fast approval & access to capital
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Flexible line structure that grows with your business
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Easier approvals than traditional bank loans
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Helps convert invoices & assets into immediate cash
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Protects personal assets (business-secured, not personally guaranteed)
Considerations
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Working capital is required
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Audit or reporting may be needed
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Not ideal for companies without strong assets
Is Asset-Based Lending Right for Your Business?
ABL may be the best funding option if:
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You have reliable customers but slow payment cycles
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You need fast access to cash for payroll or growth
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You want flexible financing that scales with revenue
If you’re unsure whether ABL, invoice factoring, or a business line of credit is the best choice, our advisors can review your goals and help match you with the best funding solution.
Apply for Asset-Based Lending Today
If you’re ready to improve cash flow, secure additional working capital loans, or fund expansion, asset-based lending may be the smartest choice for your business.
Apply today to explore your funding options and see how much you qualify for. Funding decisions can happen in as little as 24–48 hours.
Call us at 704-904-0774
Get started now: Apply Today!
Most ABL facilities use accounts receivable, inventory, equipment, or commercial real estate as collateral. Some lenders may also accept purchase orders or contracts depending on the business model.
ABL credit limits typically range from $1,000,000 to $50 million+, depending on your receivable quality, inventory value, and overall asset strength.
No. ABL lenders focus primarily on the quality and value of your assets, not your credit score. Even businesses with fair credit can qualify if collateral is strong.
Traditional banks rely more heavily on credit scores, financial history, and strict documentation. ABL is more flexible and provides faster approvals because it is secured by your business assets instead of your credit profile.
Yes. ABL is frequently used by companies with slow customer payments, long billing cycles, or seasonal revenue swings that need a steady supply of working capital.
Industries like staffing, manufacturing, wholesale, distribution, trucking, and service companies with strong receivables or inventory are often ideal candidates.
Many lenders can approve an ABL facility in 24–48 hours, with initial funding soon after collateral verification is completed.