What is Asset-based Lending?

Asset-based lending is a financing approach that uses a borrower’s assets—such as accounts receivable, inventory, machinery, and sometimes real estate—as collateral to secure a loan or a revolving credit facility. Unlike traditional unsecured lending, ABL focuses primarily on the value and liquidity of pledged assets, allowing companies with limited earnings history or uneven cash flow to access capital based on asset strength rather than purely on cash flow metrics.

Why Choose Atlantic Union Bank for ABL?

Atlantic Union Bank combines regional expertise with a relationship-driven approach to underwriting and servicing asset-based credit facilities. Borrowers benefit from personalized credit structures, responsive underwriting, and seasoned credit officers who understand industry-specific asset dynamics. Our team works with business owners, CFOs, and advisors to design facilities that match operational realities and strategic objectives, while providing transparent covenants and practical reporting requirements.

Key Features and Benefits

• Collateral-focused underwriting: Lending limits are determined by eligible accounts receivable, inventory values, and other qualifying assets to maximize borrowing capacity.
• Flexible structures: Revolving lines of credit, term loans, and combination facilities tailored to seasonal needs, acquisitions, or capital expenditures.
• Improved liquidity: Immediate access to working capital to support growth, supplier payments, payroll, and operational continuity.
• Preserved ownership: Owners retain equity control while leveraging assets to fund expansion, recapitalization, or turnaround strategies.
• Transparent reporting: Clear borrowing base calculations and periodic reporting designed to reduce surprises and foster trust between borrower and lender.
• Industry experience: Expertise across manufacturing, distribution, wholesale trade, transportation, construction, and service industries.

Who Benefits Most from ABL?

Asset-based lending is particularly well-suited for businesses that have substantial tangible assets but may face weaknesses in operating earnings or uneven cash flows. Typical candidates include:

• Distributors and wholesalers with sizable inventory and invoice portfolios.
• Manufacturers needing working capital for production cycles or equipment purchases.
• Companies undergoing rapid growth that need capital faster than traditional cash-flow lending permits.
• Businesses in turnaround or restructuring that require liquidity to stabilize operations.
• Family-owned firms or sponsor-backed companies pursuing acquisitions or ownership transitions.

Typical Loan Components

An ABL facility from Atlantic Union Bank generally includes a borrowing base, advance rates, and customary covenants:

• Borrowing base: A periodic calculation of eligible collateral values (receivables, inventory, equipment) that determines available borrowing capacity.
• Advance rates: Percentage of collateral value that can be borrowed—commonly higher on accounts receivable and lower on inventory or fixed assets.
• Reserves and concentrations: Mechanisms that address customer concentration, slow-moving inventory, or disputed receivables to protect the credit quality.
• Covenants and reporting: Financial reporting and collateral schedules with an emphasis on practicality and transparency rather than excessive administrative burden.
• Field examinations: Periodic reviews and audits of collateral, typically conducted by third-party examiners or the bank’s asset specialists.

Application and Underwriting Process

The ABL underwriting process at Atlantic Union Bank is collaborative and efficient. After an initial assessment of eligibility, our team will work with your management to:

1. Review historical financial statements, aging reports, and inventory data to establish collateral quality and eligibility.
2. Determine advance rates and borrowing base methodology tailored to your business and industry norms.
3. Structure the facility to address working capital needs, seasonal patterns, and planned growth initiatives.
4. Coordinate due diligence, including field examinations and collateral confirmations as needed, while minimizing disruption to operations.
5. Implement the facility with clear documentation, schedules, and ongoing support to ensure smooth administration.

Risk Management and Relationship Support

Atlantic Union Bank approaches ABL with a balance of risk prudence and client partnership. Our credit professionals provide proactive portfolio management, tailored covenant design, and pragmatic solutions when businesses face operational or market challenges. The goal is to act as a strategic financial partner, providing timely advice, flexible refinements, and the liquidity needed to execute business plans.

Getting Started

Clients typically begin with a confidential conversation about business objectives and current working capital constraints. From there, Atlantic Union Bank will outline possible structures, expected timelines, and documentation requirements. The process emphasizes clarity, speed, and minimal administrative overhead so management can stay focused on running the business.