Need additional working capital to grow your business? Borrow it!
One form of asset based lending is call accounting receivable factoring. Account Receivable or Invoice Factoring is essentially a line of credit using your accounts receivable as collateral to provide additional working capital for your business. In a asset based lending relationship, we advances funds to your account against a line of credit (LOC) based on a percentage of your eligible outstanding receivables. We have a lockbox in which payment from your customers are received and credited against the outstanding balance of your LOC. Unlike factoring, ABL offers you the flexibility to manage the timing of your cash advances so yo can control your cost of money. Asset-based lending is general used by businesses in start-up, growth mode, or by businesses experiencing a shortage of cash. It is also used by those business currently in a factoring relationship that desire more control of their finances.
Example Availability: Following is a simplified example of the available funds for a ABL line of credit where the company has $1million of receivables outstanding and has a loan of $400,000 against their receivables.
Outstanding account receivables balance $1,000,000
Less A/R >90 days past due (ineligibles) (75,000)
Total eligibles A/R $925,000
Available to borrow (80% of eligible) $740,000
Less the outstanding LOC balance ($400,000)
Available to borrow $340,000
