What is asset-based lending?
With asset-based lending (ABL), the value of your assets determines how much you can borrow, rather than primarily your profitability. The lender looks at receivables, stock, machinery and sometimes property, and provides a percentage of their value as credit.
Typical advance rates
| Asset | Percentage |
|---|---|
| Receivables (creditworthy debtors, NL/EU) | 80–90% |
| Finished goods in stock | 40–60% |
| Raw materials | 30–50% |
| Machinery (liquidation value) | 50–70% |
| Property | 50–70% |
Who is it suitable for?
ABL is well suited to asset-rich businesses: wholesale, production, manufacturing, transport and construction. Businesses with fluctuating results can also often obtain ABL finance, as the collateral is the deciding factor.
Advantages
✅ Flexible limit: as your stock grows, your credit limit grows with it ✅ May be available during losses or a turnaround ✅ Often more borrowing capacity than a conventional overdraft facility ✅ No equity dilution
Disadvantages
❌ Extensive reporting: often monthly or even weekly schedules of pledged assets ❌ Valuation and inspection costs (field audits) ❌ If stock values fall, your available credit also falls — just when you need it most ❌ Extensive security requirements, leaving little scope for other lenders
Practical example
A wholesaler with €4 million in receivables and €3 million in stock can often obtain €3,2 million (80% of receivables) plus €1,5 million (50% of stock) through ABL: a total of €4,7 million in working capital. A fixed overdraft facility of €2 million would be more realistic from a bank.
Conclusion
Asset-based lending turns untapped value on your balance sheet into working capital. It requires disciplined record-keeping, but offers much more borrowing capacity than traditional credit — especially during rapid growth or seasonal peaks.
Stappen om financiering op activa te begrijpen
- Maak een overzicht van debiteuren, voorraad en overige activa.
- Controleer waardering en bestaande zekerheden.
- Lees welke activa de financier accepteert en welke kortingen gelden.
- Bereken ook een scenario waarin de onderpandwaarde daalt.
Sources and scope
Examples and policy choices in this article are illustrative, not a current quotation, fixed standard or financial or legal advice. The editorial revision date relates to the summary, structure and source references; it is not a reference date for the underlying data.
| Primary source | What is it used for? |
|---|---|
| KVK (Dutch Chamber of Commerce) — checking business partners | Company identification and checks on business partners. |
Source links support the topic mentioned, but do not automatically substantiate all percentages, time frames or examples in this article. Check current terms and rules with the responsible authority.
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