Flexible Business Loans Backed by Your Assets

Asset-based lending (ABL) is a form of alternative finance where businesses use their tangible assets as loan security to access funding. It is particularly helpful for businesses that have difficulty securing traditional financing, but possess valuable assets such as inventory, equipment, or accounts receivable.

Despite misconceptions around risk, ABL can be a smart, strategic tool—especially when used with guidance from a trustworthy lender. When implemented properly, it offers businesses quick access to cash without compromising ownership or operational control.

If your business needs quicker cash flow without taking on debt, explore our invoice factoring solutions.

Key Takeaways

• Asset-based lending uses business assets as collateral to secure a loan.
• ABL offers fast access to capital for businesses with poor credit or inconsistent cash flow.
• Ideal for businesses in manufacturing, distribution, construction, or retail.
• Borrowers maintain control of the asset while unlocking capital value.
• EBF provides transparent ABL solutions with flexible loan terms and expert support.

A Brief History of Asset-Based Lending

Asset-based lending isn’t new. Its roots date back to the Middle Ages, where merchant banking allowed traders to borrow against goods and merchandise. By the 20th century, formal finance companies emerged, offering loans secured by inventory and equipment.

ABL gained more popularity in the 1960s and 70s, particularly in North America, as businesses sought alternative sources of financing outside of rigid, traditional lenders.

How Does Asset-Based Lending Work?

ABL is straightforward: a lender provides a loan using one or more business assets as collateral. The loan agreement outlines how much of the asset’s value can be borrowed against—typically a percentage.

For example, if a business has $500,000 in inventory, a lender might offer a loan worth 70% of that value.

At EBF, our approach ensures that clients:

• Retain use of the asset
• Receive competitive capital access
• Experience minimal disruption to operations

For companies undergoing restructuring or bankruptcy protection, DIP financing may be a more suitable option than ABL.

Benefits of ABL

• Fast approval and funding
• Larger loan amounts based on asset value
• No dilution of ownership or shares
• Rebuild or establish credit score
• Often lower interest rates than unsecured loans

Is Asset-Based Lending the Right Fit for Your Business?

ABL isn’t for everyone. However, for many non-creditworthy businesses or those facing temporary cash challenges, it can be a lifeline.

Here’s how to determine if it suits your situation:

1. Type of Business

Asset-based lending is ideal for sectors with physical assets:

• Manufacturing
• 3PL Storage & Distribution
• Construction
• Wholesale

2. Short-Term Cash Flow Needs

If your business experiences cash flow gaps but has high-value assets, ABL offers a way to bridge that gap quickly.

3. Available Collateral

Do you own inventory, machinery, equipment, or receivables? If so, you likely qualify for asset-based financing.

4. Credit Score Challenges

Traditional banks often reject businesses with weak or no credit. With ABL, the collateral carries more weight than your credit history.

5. Cost and Loan Terms

ABL may involve higher fees or rates than some loans, depending on your agreement. Always compare your business financing options and ensure you’re working with a transparent, ethical lender.

Need guidance? Our team at EBF is here to walk you through the options.

If you’re navigating financial recovery, our turnaround consulting team can help guide your strategy alongside ABL.

Frequently Asked Questions About Asset-Based Lending

What assets can be used in asset-based lending?

Common assets include inventory, equipment, accounts receivable, and real estate. The lender evaluates the asset’s value to determine the loan amount.

Is asset-based lending risky?

Like all loans, it carries risk. However, if structured well and used for growth or working capital, it is a practical solution with clear repayment terms.

How fast can funds be accessed through ABL?

ABL is known for its speed. Once collateral is assessed, funds can be available within a few days.

Can startups use asset-based lending?

Generally, ABL suits established businesses with physical assets. However, early-stage companies with equipment or receivables may still qualify.

How is ABL different from traditional financing?

Traditional loans rely heavily on credit history and financial statements. ABL is asset-backed, making it more accessible for businesses with collateral but limited credit.

How much can I borrow with asset-based lending?

The amount depends on the value of your collateral. Lenders typically offer 70–85% of accounts receivable and 50–70% of inventory or equipment value.

What happens if the value of my asset drops?

If collateral value decreases, your borrowing base may shrink. This could reduce your available credit or require additional collateral to maintain the loan.

What industries benefit the most from ABL?

Industries with high volumes of tangible assets, such as manufacturing, transportation, wholesale, construction, and retail, often benefit most from asset-based lending.

Conclusion: Financing Built Around Your Business Assets

Asset-based lending is a flexible, scalable way to meet urgent short-term financing solutions. Whether you’re managing short-term cash flow, preparing for growth, or recovering from financial setbacks, ABL may be the key to unlocking opportunity.

At EBF, we specialize in helping businesses find the right fit for their financing needs. Our asset-based lending solutions are transparent, competitive, and personalized to your unique business situation.

Contact Express Business Funding today to explore how asset-based lending can support your business goals.