Asset-Based Lending (ABL)

Definition:

A debt transaction where a borrower’s assets, such as inventory and accounts receivable, are used as collateral for the borrower’s debt obligations. In general, lenders will lend up to a specific percentage of the value of the secured asset(s) and borrowers will use such loans to satisfy short-term cash requirements. ABL is typically used by borrowers who are considered less creditworthy. A Large Blue Chip Company rarely uses this form of financing.

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