Small Business
Finance Solutions

Accounts Factoring
The most powerful financing tool available to today's small business entrepreneurs

Purchase Order Finance
Financing the production of goods for subsequent delivery to large retailers

Asset-Based Lending
Loans provided to creditworthy clients against invoices, inventory, & equipment
 

What is Asset-Based Lending?
Asset-based lending is a powerful form of commercial finance with a number of unique characteristics. 

Unlike factoring which only addresses the financing of accounts receivable (invoices), asset-based lending also provides capital for inventory and equipment.  ABL is also a true loan, often structured as a revolving line of credit as opposed to factoring's purchase and sale attributes.

As a source of working capital, asset-based lending meets the needs of...

•   undercapitalized middle-stage companies rather than startups
•  companies experiencing rapid growth
•  companies involved in leveraged buyouts
•  companies operating under some financial distress.

In its most basic form, asset-based lending transactions are formatted primarily on the value of collateral and not just on a client's credit history.  As with factoring, the assets will usually be closely monitored, but through periodic audits rather than a factor's more hands-on participation in collection.

Asset-based lending is the natural transition from factoring for those manufacturers and distributors that grow to need inventory and equipment finance.  Sarasota Factors works closely with some of the nation's largest providers of asset-based lending. 

SOME ASSET-BASED LENDING BASICS
With its slightly lower fee structure, asset-based lending is the natural transition from factoring as you grow your business.  While factoring addresses the financing needs of exceptionally young companies or those in the service sector and generally void of inventory or large amounts of equipment, asset-based lending provides financing for inventory and equipment as well.

To access asset-based lending, a business will be required to have a certain amount of credit history.  Therefore, asset-based lending is typically reserved for companies with at least a three year operating record.

Asset-based lending facilities also tend to be considerable larger than those of factoring.  Although some lenders will provide credit in amounts as low as $50,000, ABL facilities generally tend to be $1 million and up with $5,000,000 being more the norm.