What is Asset-Based Lending?

Asset-based lending, or ABL, is a revolving credit line backed by the company's hard assets, typically unpaid invoices and inventory, sometimes equipment and real estate. It is the structure most businesses move into when they outgrow their bank line but still have real collateral to borrow against.

As of 2026, most ABL deals run $3M to $25M, priced at Prime plus 1–5%. Lenders advance roughly 70–90% on unpaid invoices and 50–75% on inventory underneath. You report your eligible collateral on a regular schedule, usually weekly or monthly, and the lender raises or lowers your available credit accordingly. Customer payments flow into a separate bank account in your name, paying the line down automatically as new invoices come in.

ABL and invoice factoring are close cousins. Both create a revolving line collateralized by unpaid invoices. The difference is that factoring is the sale of an asset and stays off the balance sheet, while ABL is true debt with formal borrowing reports. For larger operators with clean financials, ABL usually wins on cost and presentation. For smaller deals or distressed credits, factoring is often the better tool.

ABL is the right structure for funding growth that has outpaced a bank, supporting an acquisition, consolidating expensive debt into a single line, or stabilizing a manufacturer with a long production cycle that needs to borrow against work-in-progress and finished inventory.

Setup takes six to eight weeks, with a field examination and legal documentation. We often bridge the first step with a faster working capital loan, then move into ABL once the underwriting is complete. The bridge buys time, and ABL is the permanent structure the business is moving into.