Learn More About Asset-Based Financing (ABL)
Speritas Capital can help you access creative financing solutions using a wide range of your existing balance sheet assets as collateral.
Asset-based financing can be a great option to manage working capital or to position your company for growth.
Here’s how asset-based lending works…
ABL Loan Structures
Asset-based borrowing can be structured as a revolving line of credit, a term loan or a combination.
Revolving line of credit – You’re able to borrow based on acceptable collateral at each line of credit draw. You can borrow as much as the lender will lend based on the collateral, or you can borrow very little or even none.
This is perfect for volatile, temporary or seasonal liquidity needs. You could view this as “liquidity insurance.”
Term Loan – You borrow a fixed amount for a fixed period of time. Asset-based term loans are typically structured for longer-life assets such as machinery and equipment.
What types of security will lenders accept? Lenders will often agree to a term loan secured by Machinery & Equipment (M&E) and to a line of credit secured by accounts receivable and inventory.
Questions? Call or text 203-247-4358
Recently Funded ABL Deals by Speritas Capital
Check out more of our recently funded deals.
7 Types of Asset-Based Loans & the Collateral Used to Secure Them
Accounts Receivable Financing: Sell or pledge your accounts receivables and use your customers’ credit to generate liquidity. Smaller deals generally require a true sale while larger deals can be structured as a collateralized line of credit.
Purchase Order Financing: PO financing provides financing early in the fulfillment cycle.
With purchase order finance, you borrow money secured by the your customer’s purchase order. A PO finance company steps in and pays your suppliers. This is another way to borrow using your customers’ credit.
Inventory: Many lines of credit are secured by accounts receivable and inventory.
Raw materials and finished goods are generally accepted as eligible inventory collateral, usually at a discount to the book value. Revolving lines of credit can be structured to allow funding for seasonal increases in inventory.
Machinery and Equipment (M&E): Almost all new and used equipment can be financed either as an equipment financing or an equipment lease. Soft costs can be wrapped into the lease. Start-ups can often qualify for equipment finance.
Commercial Real Estate Financing: A company’s commercial real estate is usually financed separately from an asset-based credit facility but some lenders will include this asset class in their facility, either as bootstrap collateral for a line of credit or as a term loan.
Intellectual Property: Many companies have invested heavily in product or service development and have a substantial IP asset on their balance sheets. IP can be added to a collateral pool in cases where the IP is commercialized and can be independently valued.
Contracts: Contracts that represent monthly recurring revenue (e.g., for SaaS-based companies) can be used as collateral for a line of credit or term loan.
How Does Speritas Capital Help?
Because Speritas Capital is a debt advisory firm, we have access to a wide variety of asset-based lending structures. We’re not beholden to any one lender or structure so we can use our creativity and experience to design a structure that truly fits the needs of our clients.
We work with clients to develop a financial presentation which properly represents their status. For companies in turnaround mode, we can help them test whether they’re ready for the bank ABL market or whether they need to focus on the private lender market.
We can also arrange financing for each asset type separately. For example, a direct to consumer business will not have commercial account receivables but will need to maintain inventory. This is where inventory lenders can add value. Minimum size for inventory loans is $200,000 with no maximum.
So whether you’re a smaller firm looking to grow through accounts receivable or purchase order finance, a lower middle market firm looking for more liquidity or a lower cost of funds, or an operating company looking at an acquisition, we can help you assess your options, introduce one or more lenders, and assist in structuring the deal.
Questions for Us?
You need a strategic, cost effective solution to your financing needs and a financing advisor you can trust. And one who never takes upfront fees. Let us put our decades of banking and structuring experience to work for you – email Speritas Capital Partners with your questions about asset-based financing today.
Call or text Jeff Bardos, CEO
directly at 203-247-4358,
or Schedule a call
