medium · Corporate Credit Analysis credit-metrics

In Asset-Based Lending (ABL), how is the 'borrowing base' conceptually different from a simple LTV on the total asset book value?

1. The borrowing base applies specific 'advance rates' only to eligible, liquid assets like receivables and inventory.
2. The borrowing base is always calculated using a going-concern EBITDA multiple applied to the entire asset book.
3. The borrowing base counts 'soft' intangible assets such as goodwill at their full unadjusted book value.
4. The borrowing base is fixed at loan origination and never changes for the entire remaining life of the facility.

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