Asset-based lending lets a business borrow against what it owns rather than relying solely on profitability. Here is how ABL works and which businesses it suits.
What asset-based lending is
Asset-based lending (ABL) is financing secured by a company’s assets — accounts receivable, inventory, equipment or real estate. The borrowing capacity is tied to the value of those assets rather than purely to cash-flow ratios.
How borrowing capacity is set
Lenders advance a percentage of eligible asset values — for example a share of receivables and a portion of inventory. As those assets grow, so can the available financing, which makes ABL flexible for growing or seasonal businesses.
Who it suits
ABL works well for companies that are asset-rich but may not fit conventional cash-flow lending — businesses in growth, turnaround, acquisition, or with lumpy cash flow. It can provide working capital that a traditional term loan cannot.
Structuring an ABL facility
Because facilities are tailored to the asset base and monitored against it, structuring the right arrangement — and matching it to the right lender — is key. That is where specialized guidance pays off.
How Gurpinder Gaheer can help: Asset-Based Lending in Ontario · Book a free 30-minute consultation