Asset-Based Lending: Unlocking Growth Through Your Assets

Asset-Based Lending (ABL) is a financing solution where businesses use their assets as collateral to secure loans. Assets such as accounts receivable, inventory, equipment, or real estate are leveraged to obtain working capital. This flexible funding method is ideal for businesses needing cash flow to grow, manage operations, or navigate financial challenges.

In Asset-Based Lending, lenders assess the value of the borrower’s assets to determine the eligibility for loans. A percentage of the appraised value of the asset is the loan amount, usually ranging between 50% and 85%. For instance, accounts receivable can secure around up to 85% of their value, while inventory or equipment may secure less.

The loan size varies with the performance of the asset, making it a dynamic funding option. Businesses pay back the loan as they liquidate assets, such as receivables, into cash.  The cycle involves: 

1. Asset evaluation and appraisal
2. Determination of a borrowing base from the asset value
3. Periodic tracking of the collateralized assets

ABL ensures that funds are available for a business when it needs it, often sooner than other traditional loans, supporting businesses during growth phases or seasonal cycles.

Although Asset-Based Lending offers considerable flexibility, there are some issues that a business has to consider:

• Asset Dependence: The loan amount directly depends on the values of the assets, which can change.
• Costs: The interest rates and fees might be more than those charged for traditional loans.
• Monitoring: Ongoing monitoring is a norm, where lenders require periodic asset audits to ensure the collateral is still sufficient.

Asset-based lending is a very practical solution for businesses looking for liquidity without giving up equity. By using existing assets, companies can enhance cash flow, seize opportunities, and drive growth effectively.

Avon River Ventures (ARV) provides customized asset-based lending solutions supported by over 80 years of combined experience. We specialize in the raising of finance against different types of assets, such as inventory, machinery, accounts receivable, real estate, cash deposits, and intangible assets like patents, trademarks, and trade secrets. Our streamlined process-from due diligence to funding and ongoing service-assures quick access to capital for business growth.

We offer significant credit availability through customized loan arrangements tailored to your business needs. Avon River Ventures’ Asset-Based Lending is dedicated to providing your company with the best overall financing solution, including limited or no financial covenants and the ability to commit to, fully underwrite, and syndicate large transactions. ARV offers flexible financing with limited or no financial covenants and the ability to underwrite and syndicate large transactions. 

Generally speaking, Avon River Ventures provides advance rates on the collateral up to:

• Accounts Receivable: Up to 90%
• Real Estate (FMV): Up to 85%
• Machinery/Equipment: Up to 90%
• Inventory: Up to 90%
• Intellectual Property: 100% up

Qualifications:

• Over 2 years in operation
• More than $100,000 in annual revenue
• The company is registered in the U.S. or Canada

Trust ARV for effective, tailored asset-based financing to help drive your business forward.

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