Asset Based Lending

Asset-Based Lending

Market Direct Capital connects businesses with private lenders, family offices, and private equity funds that provide asset-based lending secured by accounts receivable, inventory, and equipment. Facilities are sized to a defined borrowing base so working capital grows alongside sales, inventory, and eligible collateral.

Where ABL fits

Use an asset-based line or term loan when cash conversion cycles lengthen or when bank lines are not a fit due to rapid growth or unique collateral.

• Working capital: Finance receivables and inventory for production and fulfillment.
• Growth and turnaround: Fund expansion, seasonality, or recovery plans with monitored collateral.
• Refinance and cleanup: Replace high-cost advances and strengthen liquidity.
• Complement to equipment: Pair with equipment term debt or sale-leaseback.

Borrowing base components

The borrowing base is recalculated on a schedule using certificates and supporting reports. Advance rates vary by asset quality and reporting frequency.

• Accounts receivable: Advances on eligible A/R less concentrations and aged buckets.
• Inventory: Raw, WIP, and finished goods considered case by case with reserves.
• Equipment and other assets: Additional availability or separate term debt secured by equipment.
• Reserves: Dilution, ineligibles, and availability caps documented clearly.

Common structures

Facilities are designed around sales cycles, collateral reporting, and cash flow profile.

• Revolver: Line of credit tied to borrowing base with interest-only monthly payments and periodic true-ups.
• Term loan: Amortizing or interest-only period followed by amortization, secured by equipment or a portion of the base.
• Split-lien or unitranche: Coordination between ABL and equipment lenders or a combined structure from one provider.
• Monitoring: Field exams, appraisal updates, and monthly or weekly reporting depending on profile.

What lenders review

Underwriting focuses on collateral quality and the company’s ability to manage working capital efficiently.

• A/R quality: Customer concentrations, disputes, credits, and aging trends.
• Inventory controls: Turns, obsolescence policies, and cost accounting.
• Financials: Margins, SG&A discipline, and cash conversion trend.
• Operations: Systems for reporting, purchasing, and collections.
• Support: Personal or corporate guarantees and any additional collateral.

Process

We keep documentation targeted to speed review while giving credit teams clear visibility into collateral and cash flow.

1. Read-out: Goals, timing, latest A/R aging, inventory report, and brief financials.
2. Packaging: Lender-ready summary, borrowing base view, and proposed advance rates.
3. Approval: Confirm reporting cadence, reserves, and covenants if required.
4. Funding: Closing checklist, intercreditor if applicable, and initial advance.

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Related programs

• Equipment financing including refinance and sale-leaseback.
• Working capital for staffing, inventory, or marketing needs.
• Private real estate loans for facilities or collateral support.
• Private non-bank SBA 7(a) when long-term amortization is appropriate.