Asset Based Financing

A structured discussion around the business need.

If your company is having hyper growth or financial distress and needs additional working capital to achieve your goals, asset-based lending may be best suited for you. This form of lending may supply you with a higher value than alternative lending facilities. Here profitability is less of a determining factor.

This form of lending may supply you with a higher value than alternative lending facilities. Here profitability is less of a determining factor.

Asset-based lending looks at what the business owns rather than what its last two years looked like on paper. Inventory, receivables and equipment carry the facility. It is the structure that tends to work when a business is sound but its recent numbers are distorted by something outside its control.

A distribution company was holding higher-priced inventory through the COVID supply-chain squeeze when its bank withdrew the day-to-day facility. We placed a $4,000,000 asset-based facility against the inventory and receivables, which kept the business trading through the disruption rather than forcing it to sell stock into a bad market.

Public financing options

Terms and availability depend on the business, transaction, and lender. Publicly described considerations in this area include:

What matters here is what the balance sheet holds — inventory turn, the age of receivables, and whether equipment is owned outright or already pledged. It can also identify the people to involve, the matters requiring validation, and the order of next steps so the discussion remains useful to both the business and the lender.