What is asset-based lending?

Asset-based lending (ABL) is business financing secured by specific company assets — typically accounts receivable, inventory, equipment, or real estate. The borrowing base is determined by the liquidation value of pledged assets: lenders typically advance 75%–90% of eligible receivables and 50%–70% of eligible inventory. ABL is ideal for asset-heavy businesses with thin profits, rapid growth companies that have outgrown traditional bank credit, or businesses in turnaround situations. Interest rates are higher than traditional bank loans but lower than MCA or factoring. ABL requires ongoing reporting of asset values and regular audits, which adds administrative burden.