Asset-Based Lending: Borrow Against What Your Business Owns

Asset-Based Lending: Revolving Credit

Your receivables, inventory and equipment can secure a revolving credit line sized by a monthly borrowing base. Approval comes the same day on a complete file, and new lines close in 2–5 days.

  • ✓Up to 90% of qualifying receivables.
  • ✓Up to 50% of inventory value.
  • ✓Up to 70% of equipment forced liquidation value, net of liens.
Up to 90%Of qualifying receivables
Same DayApproval on a complete file
2–5 DaysTo close a new line

Start with your receivables

ABL pricing is Variable and set after the lending partner’s review. Enter your receivables profile to start your request.

Executive Summary: Asset-Based Lending

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What it is: Asset-based lending is defined as a revolving credit line secured by receivables, inventory, equipment and sometimes real estate, sized by a borrowing base. IFXI’s lending partner sets the base from your collateral, and you draw against it as your balances change. It is a loan, so it sits on your balance sheet as debt.

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The numbers: Receivables: up to 90% of qualifying receivables · Inventory: up to 50% of inventory value · Equipment: up to 70% of forced liquidation value, net of existing liens, after appraisal · Pricing: Variable · Approval: same day · Closing: 2–5 days.

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Key constraints: Your customers pay into the lending partner’s lockbox, and you report the borrowing base each month. Receivables past 90 days and slow-moving inventory drop out of the base. Equipment needs an appraisal before it adds availability.

The Fast Facts on Asset-Based Lending

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How much can I borrow against inventory and equipment?

The short answer is up to 50% of inventory value and up to 70% of equipment forced liquidation value, net of existing liens, after an appraisal. Receivables add up to 90% of their qualifying balance, and the three layers together make up your borrowing base.

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What does asset-based lending cost?

The short answer is that pricing is Variable: the lending partner sets it from your collateral mix, line size and reporting. You see the terms in your quote before you sign. Compare the structure in factoring vs. asset-based lending.

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Is asset-based lending a loan?

The short answer is yes: asset-based lending is a secured revolving line, recorded on your balance sheet as debt. You draw, repay as your customers pay into the lockbox, and draw again up to your borrowing base.

Cash flow gaps asset-based lending can close

Growth outran your bank line

Sales and receivables grew, and the bank line stayed at last year’s cap. Each new order now waits on cash.

Inventory ties up your cash

A seasonal build or a bulk buy locks cash in stock for months. Inventory can count toward a borrowing base.

Equipment sits unused as collateral

Paid-off machinery holds value that no current line draws on. An appraisal turns part of it into availability.

What is asset-based lending?

How the borrowing base works

Take $800,000 of qualifying receivables at 85%, $400,000 of inventory at 50% and equipment with $400,000 of liquidation value net of liens at 70%. The base is $1,160,000, and you draw up to that amount.

Lockbox, reporting and the field exam

Your customers pay into the lending partner’s lockbox, and each payment reduces your balance. You file a borrowing base certificate each month, and the lending partner examines the collateral in the field.

How ABL differs from factoring

Factoring sells individual invoices for an advance. An asset-based line is a loan secured by all three asset classes. Companies with heavy inventory or equipment, or a bank exit, use ABL; see debtor-in-possession financing for Chapter 11.

Typical Projects

Eligible assets by business type

An asset-based line is sized by what your balance sheet holds, then redrawn each month as those balances move. These are the three most common collateral profiles and what the field exam looks at in each.

Distributors & wholesalers

Receivables & inventory line

The classic working capital revolver. Receivables carry most of the availability, finished inventory adds a second layer, and the base recalculates monthly.

Facility sizeSet by your borrowing base

Advance on receivablesUp to 90% of qualifying receivables

Advance on inventoryUp to 50% of inventory value

Estimated pricingVariable

ApprovalSame day on a complete file

What you submit

✓ AR and AP aging with concentration detail

✓ Perpetual inventory report by category and location

✓ Two years of financials plus interim statements

✓ UCC searches and existing lender payoff figures

What shrinks availability: slow-moving or obsolete stock and AR past 90 days come out of the base. An asset-based line is debt, so covenants and monthly reporting apply.

Manufacturers & equipment-heavy operators

Machinery & fixed asset facility

Your balance sheet is weighted toward plant and equipment, so an appraised fixed-asset tranche sits alongside the revolver.

Facility sizeSet by your borrowing base

Advance on equipmentUp to 70% of FLV, net of liens

Advance on receivablesUp to 90% of qualifying receivables

Estimated pricingVariable

ApprovalSame day; appraisal before the equipment line

What you submit

✓ Fixed asset register with purchase dates and book value

✓ Recent third-party equipment appraisal if you have one

✓ Real property details and any existing mortgages

✓ Capacity utilization and maintenance records

A professional appraiser values your equipment first. Lines run up to 70% of its forced liquidation value, the price it would bring in a quick sale such as an auction, minus any existing liens.

Companies exiting a bank relationship

Bank exit & turnaround facility

Your bank called the line, tripped a covenant or exited your industry. The assets are sound and the business is viable, but the lender is gone.

Facility sizeSet by your borrowing base

Advance on receivablesUp to 90% of qualifying receivables

CovenantsSet in the lending partner’s agreement

Estimated pricingVariable

ApprovalSame day; payoff set at closing

What you submit

✓ Current forbearance or demand letter from the bank

✓ Thirteen-week cash flow forecast

✓ Turnaround plan and any advisor engagement

✓ Full collateral schedule and exact payoff figure

Unpaid payroll taxes need disclosure. A federal tax lien can take priority over the collateral, so the lending partner reviews it case by case, and an IRS subordination may be part of that review.

If your receivables are strong and inventory and equipment are light, compare invoice factoring as well. Send your balance sheet through the quote form, and an IFXI specialist forwards your request.

How to get funded with asset-based lending in 3 steps

1

Request your quote

Send your receivables aging, inventory report and equipment list through the quote form. An IFXI specialist reviews your request and forwards it the same day.

2

Approve & open the line

The lending partner reviews the collateral and checks credit. Approval comes the same day, the line closes in 2–5 days, and the borrowing base sets what you can draw.

3

Draw, repay, report

You draw as you need cash. Customer payments go to the lockbox and repay the balance, and a monthly certificate resets the base.

How money moves in asset-based lending: you request a quote, an IFXI specialist forwards it, the lending partner sets a borrowing base and you draw on the line, your customers pay into the lending partner’s lockbox, and each payment repays the line.YouIFXI specialistLending partnerYour customers1. Quote request2. Forwarded same day3. Line opened; you draw up to the borrowing baseYou invoice and report monthly4. Pay the lockbox; balance repaid

Funding timeline for asset-based lending

StageTypical Timeframe
Quote request submittedDay 0
ApprovalSame day on a complete file
Collateral review, documents and UCC-1 filing2–5 days to close
Equipment appraisalBefore equipment adds to the base
Draw requestsSame day or 24 hours once the line is active
Borrowing base certificateMonthly

Timeline notes for asset-based lending

  • ✓Asset-based lending is debt, and the line carries covenants set in the lending partner’s agreement.
  • ✓Your customers pay into the lending partner’s lockbox.
  • ✓The lending partner files a UCC-1 financing statement on the collateral.
  • ✓Receivables past 90 days and slow-moving inventory drop out of the base.
  • ✓Pricing is Variable and appears in your quote before you sign.

Who qualifies for asset-based lending and what you need

RequirementWhat qualifiesNotes
ReceivablesB2B invoices to creditworthy customersUp to 90% of qualifying receivables.
InventoryFinished, saleable goodsUp to 50% of inventory value; obsolete stock drops out.
EquipmentAppraised machinery and fixed assetsUp to 70% of forced liquidation value, net of existing liens.
Existing liensPayoff of the current lender at closingA tax lien gets a case-by-case review and does not rule you out.
VolumeEstimated $50,000 a month minimumNo maximum; the borrowing base sets the line.
Your creditNo minimum credit scoreThe application authorizes business and personal credit reports.

Quote documents for asset-based lending

  • ✓Receivables and payables aging reports.
  • ✓Perpetual inventory report by category and location.
  • ✓Fixed asset register and any recent appraisal.
  • ✓Two years of financial statements plus interim figures.
  • ✓Payoff figures for any existing lender.

What delays funding: a missing payoff letter, an inventory count that does not match the books, and equipment liens nobody disclosed.

Transparent Costs for Asset-Based Lending

What to Expect in CostsWhat Affects the Costs
Receivables: up to 90% of qualifying receivables.

Inventory: up to 50% of inventory value.

Equipment: up to 70% of FLV, net of liens.

Pricing: Variable.		Collateral mix: receivables carry more availability than inventory or equipment.

Line size and use: what you draw affects the cost.

Reporting and exams: appraisals and field exams are part of the terms.

See pricing.

Worked example: a $1,160,000 borrowing base

LineAmount
Qualifying receivables$800,000
Availability at 85%$680,000
Eligible inventory value$400,000
Availability at 50%$200,000
Equipment FLV, net of $100,000 in existing liens$400,000
Availability at 70%$280,000
Borrowing base$1,160,000
Balance already drawn$600,000
Available to draw today$560,000
PricingVariable

Illustrative example inside the published limits. Your quote sets your actual advance rates and pricing.

Asset-Based Lending vs. Bank Line of Credit vs. Merchant Cash Advance (MCA)

FeatureAsset-Based LendingBank Line of CreditMerchant Cash Advance (MCA)
Typical Approval SpeedSame day; closing in 2–5 daysEstimated 2–8 weeks1–3 days
Min. Credit Score RequirementNone: collateral drives the lineEstimated 650–700+ (owner personal)Estimated 500+ (owner personal)
Maximum Advance Rate90% receivables, 50% inventory, 70% equipment FLVVariable (% of collateral or assets)Estimated 70%–80% of monthly revenue
Debt Added to Balance Sheet?Yes: a secured revolving loanYes: revolving debt liabilityYes: recorded as a liability
Hidden Fees / CovenantsVariable pricing in your quote; covenants in the agreementOrigination, maintenance, annual review, covenantsFactor rates, daily ACH debits, prepayment penalties (Variable/Estimated)
Best ForCompanies with receivables, inventory and equipmentEstablished companies with strong financials and collateralBusinesses with steady deposits and little collateral

When asset-based lending is not the right fit

  • ✗Reporting takes time. You file a borrowing base certificate each month, and the lending partner runs field exams and appraisals.
  • ✗Light collateral limits the line. A service company with few receivables and no inventory gets little availability; compare invoice factoring.
  • ✗It adds debt and covenants. The line sits on your balance sheet, and the agreement sets covenants you must meet.
  • ✗A UCC-1 covers your assets. Under Article 9 of the UCC, the filing secures the line and can block other financing on the same collateral.

How IFXI handles your request for asset-based lending

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No long-term contracts

The lending partner’s agreement has no long-term contract, so you keep the line while it fits your balance sheet.

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Terms before you sign

Your quote shows the advance rates for each asset class and the Variable pricing before you commit.

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An IFXI specialist on your request

An IFXI specialist reviews your quote request, gathers the collateral reports, and forwards your file the same day.

Funding scenarios for asset-based lending

Illustrative example · September 2026 · Chicago, IL

Auto parts distributor outgrows a bank line

Funding Amount
$1,240,000
Industry
Auto parts distribution
Customer Type
Repair shops and regional retailers
Funding Type
Revolving asset-based line
Invoice Terms
Revolving line
Advance Rate
85% receivables; 50% inventory
The Problem

Receivables reached $1,000,000 and inventory $780,000, and the bank line stayed capped below the seasonal build.

The Solution

The lending partner set a base at 85% of qualifying receivables and 50% of inventory, with customer payments into its lockbox.

Result

A $1,240,000 borrowing base, drawn ahead of the fourth-quarter inventory build.

Illustrative example · July 2026 · Houston, TX

Fabricator adds an equipment tranche

Funding Amount
$991,000
Industry
Metal fabrication
Customer Type
Energy and industrial contractors
Funding Type
Asset-based line with equipment
Invoice Terms
Revolving line
Advance Rate
80% receivables; 70% equipment FLV
The Problem

Receivables of $600,000 supported only part of a new contract, and paid-off machinery sat outside any line.

The Solution

An appraiser valued the equipment at $730,000 forced liquidation value with no liens. The lending partner added 70% of it to the base.

Result

$480,000 from receivables plus $511,000 from equipment: a $991,000 base.

Illustrative example · May 2026 · Pittsburgh, PA

Wholesaler replaces a departing bank

Funding Amount
$1,050,000
Industry
Food service wholesale
Customer Type
Restaurant groups and institutions
Funding Type
Bank exit asset-based line
Invoice Terms
Revolving line
Advance Rate
75% receivables; 50% inventory
The Problem

The bank exited the sector and set a payoff date, with $900,000 in receivables and $750,000 in inventory on the books.

The Solution

The lending partner reviewed the payoff and an IRS tax lien case by case, then paid off the bank at closing.

Result

A $1,050,000 base: $675,000 from receivables and $375,000 from inventory.

Where IFXI arranges asset-based lending

We connect B2B businesses with asset-based lending in:
Texas, Florida, New York, Illinois, Georgia, Ohio, and Pennsylvania.

Frequently asked questions about asset-based lending

What is asset-based lending and how does it work?

Asset-based lending is defined as a revolving credit line secured by receivables, inventory, equipment and sometimes real estate, sized by a borrowing base. You draw up to the base, your customers pay into the lending partner’s lockbox, and the base resets each month as your collateral changes.

The short answer is up to 50% of inventory value and up to 70% of equipment forced liquidation value, net of existing liens, after an appraisal. Receivables add up to 90% of their qualifying balance, and the total of the three is your borrowing base.

The short answer is that factoring sells specific invoices for an advance of 70% to 90%, while asset-based lending is a secured loan against receivables, inventory and equipment together. ABL carries monthly reporting and covenants, and the line appears on your balance sheet as debt.

The short answer is that you can draw $560,000 more on a $1,160,000 asset-based lending base when $600,000 is already drawn. The base comes from $680,000 of receivables availability, $200,000 from inventory and $280,000 from equipment, and pricing is Variable.

Forced liquidation value is defined as the price an asset would bring in a quick sale such as an auction. The lending partner sets equipment lines at up to 70% of forced liquidation value, net of existing liens, after a professional appraisal of the machinery.

The short answer is approval the same day on a complete file and closing in 2–5 days, once the lending partner reviews the collateral and files the UCC-1. Equipment adds to the base after its appraisal, and draws on an active line fund same day or within 24 hours.

Yes, you can apply with a tax lien: the lending partner reviews it case by case, and it does not rule you out. A federal tax lien can take priority over collateral, so the review may include an IRS subordination request.

Sources

General information about asset-based lending. Rates, loan amounts and approval come from IFXI’s lending partner after its review and can change.

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