ABL (Asset-Based Lending)
Corporate Credit Analysis glossary · Capital Structure & Debt Mechanics
Definition
A secured loan where the borrowing base is a function of eligible receivables and inventory, with advance rates typically of 85% on eligible receivables and 50-65% on inventory.
ABL (Asset-Based Lending) in plain English
Asset-based lending is a loan where the lender sizes how much you can borrow off the stuff your business already owns — mainly money customers owe you (receivables) and goods sitting in your warehouse (inventory). Because the lender could seize and sell those things if you don't repay, they feel safer, but they don't lend the full value in case things sell for less. So they might let you borrow up to 85% of your receivables but only 50-65% of your inventory — think of a pawn shop that lends you $85 against a $100 phone but just $50 against $100 of less-certain goods.
Also called: Asset-Based Lending
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