What is Asset Based Lending (ABL)? 
- A loan generally secured by accounts receivable inventory, equipment, and/or real estate
- Financing is governed by a borrowing base based on asset values
- Lenders are typically focused on liquidity and asset conversion to cash as primary source of repayment
- Structures include revolvers supported by working capital assets and term loans supported by fixed assets
Why Use Asset Based Loans?
- Limited and more flexible covenants, typically based on asset coverage and liquidity
- Leverage tolerance for asset-rich borrowers is greater than permitted by "traditional" lending
- ABL works well in combination with other junior financing alternatives (second lien, mezzanine, high yield)
- Efficient borrowing mechanics, which allow for pay down and re-borrowing of funds when needed, thus limiting interest expense
Who Uses Asset Based Loans?
- Companies with growth opportunities
- Working capital intensive companies
- Financial sponsors looking for acquisitions
- High quality, asset-rich companies
- Seasonal or cyclical businesses
- Companies undergoing turnarounds
When to Utilize Asset Based Loans?
- Specialty Finance (PO/AR/Inventory/Letters of Credit)
- Infrastructure
- Working capital
- Debt restructurings
- Turnarounds
- Buy/Lease Back
What is the profile of a typical Portfolio Client?
- Tangible collateral - accounts receivable and inventory, equipment and/or owner-occupied real estate
- Typically not rated or rated below A
- Companies in need of expansion or growth financing
- Seasonal company with modest cash flow
- Cyclical company at or near a trough
- Leveraged buy-out, add-on acquisition or recapitalization
- Growth or acquisition opportunities
- Operational turnaround