Asset-Based Lending

Asset-based lending, or ABL, refers to the business practice of loaning money through secured collateral to serve business needs. An asset-based loan or line of credit may be secured by leveraging accounts receivable, inventory or fixed assets as collateral.

Asset-based lending allows a borrower to access the value of its working capital assets, usually at a lower cost, providing flexibility and quick access for their funding needs. Asset-based loans are often easier to obtain than traditional loans and lines of credit.

Our ABL finance team serves a wide range of industries, including:

• Manufacturers
• Wholesalers and distributors
• Business services
• Retailers and internet sellers
• Consumer product companies
• Metals
• Automotive
• Equipment rental companies
• Transportation

Facility sizes range from $15 million to more than $200 million, with typical advance rates in the range of:

• 85% to 90% of eligible accounts receivable
• 85% to 90% of inventory net orderly liquidation value, or NOLV
• 80% of M&E NOLV
• 50% of intangibles NOLV
• 70% of real estate appraised FMV

In most cases, we lend against accounts receivable and inventory. However, businesses can also use machinery and equipment, real estate, and intellectual property, such as patents or trademarks, as part of their borrowing base.

We offer both regulated asset-based lending and unregulated and, through CIT Northbridge, unconsolidated asset-based lending.

Yes. You can deduct the interest on a loan if the proceeds were used to generate taxable income. If tax-exempt investments are used as collateral for the loan, or the loan is used to pay for tax-exempt investments, none of the interest paid will be deductible. Consult with your tax advisor to make sure you're compliant with tax regulations and to maximize savings.

The standard timeline is 8 to 12 weeks from receipt of diligence to closing and varies from client to client.