Asset-based Lending at First Horizon National Corporation

First Horizon National Corporation offers asset-based lending (ABL) solutions tailored to companies that require flexible, working capital finance secured primarily by a borrower’s assets. This product is designed for middle-market businesses, private equity-backed companies, and operating firms in industries where asset-rich balance sheets, seasonal working capital needs, or temporary cash flow constraints make traditional cash-flow lending impractical. The ABL facility emphasizes predictable availability, collateral-driven advance rates, and pragmatic covenant structures to support growth, stabilization, and turnaround strategies.

Key Features

• Collateral-Driven Advances: Borrowing capacity is determined by eligible accounts receivable, inventory, equipment, and other permissible assets. Advance rates vary by asset class to reflect liquidation values and marketability.
• Flexible Structures: Facilities can be structured as revolving lines of credit, delayed draws, term loans, or combined facilities that include letters of credit and swingline options.
• Borrowing Base Mechanics: Regular reporting and periodic collateral valuations drive the borrowing base calculation, ensuring utilization closely matches available collateral value.
• Customized Covenants: Financial covenants are tailored to the borrower’s operating profile, with covenant packages that can include fixed charge coverage tests, minimum liquidity triggers, or reporting covenants rather than rigid covenant-heavy frameworks.
• Rapid Availability: ABL facilities are structured to provide quick access to liquidity for seasonal peaks, working capital gaps, or acquisition financing needs.

Benefits

Asset-based lending at First Horizon delivers multiple benefits for eligible companies:

• Improved Liquidity: Convert receivables, inventory, and other assets into immediate cash to fund operations, payroll, and growth initiatives.
• Scalable Financing: As collateral levels grow or change, borrowing capacity can expand or contract in alignment with business cycles, providing a dynamic financing tool.
• Lower Cost of Capital for Asset-Rich Firms: Competitive pricing is available for borrowers with strong collateral profiles and effective collateral management capabilities.
• Operational Support: First Horizon’s ABL teams collaborate with management on collections, inventory management, and reporting to maximize borrowing capacity and minimize covenant pressure.
• Support for Strategic Transactions: ABL can be used to finance acquisitions, divestitures, and working capital needs arising from growth or restructuring efforts.

Eligible Borrowers and Industries

Typical borrowers include distribution companies, manufacturers, wholesalers, retailers, and services businesses that maintain substantial inventory or receivables. The product also supports manufacturers with finished goods, seasonal retailers, and professional services firms with predictable collections. First Horizon evaluates each borrower on industry dynamics, customer concentration, supply chain stability, and collateral quality.

Collateral and Underwriting

Underwriting centers on collateral quality and control. Eligible collateral categories commonly include:

• Accounts receivable (domestic and approved foreign concentrations)
• Inventory (raw materials, work-in-process, finished goods)
• Equipment and machinery where valuation supports advance rates
• Letters of credit and cash deposits as credit support

Underwriting involves a review of customer credit profiles, collectability, inventory turnover, and physical inspections where appropriate. Advance rates are calibrated to liquidation values and recovery timelines. Borrowing base certificates and periodic audits ensure ongoing alignment between loan exposure and collateral value.

Process and Documentation

The onboarding process typically includes preliminary credit assessment, collateral due diligence, legal perfection of security interests, and implementation of reporting systems. Documentation is customized to reflect the borrower’s operating cadence and consists of a credit agreement, security agreement, UCC filings, and reporting formats. First Horizon works to streamline implementation and align reporting cycles with the borrower’s internal processes.

Pricing and Structure

Pricing is competitive and based on facility size, collateral mix, industry risk, and borrower credit. Facilities may include commitment fees, utilization-based pricing tiers, and customary fees for letters of credit and standby arrangements. Pricing structures are designed to be transparent and to incentivize strong collateral management and timely reporting.

Risk Management

First Horizon’s ABL approach prioritizes risk mitigation through collateral controls, regular monitoring, and proactive engagement. Techniques include lockbox arrangements, concentrated customer watchlists, inventory inspections, and covenant triggers for significant deviations from forecasted performance. The lender seeks to align interests with management teams by structuring remedies that preserve enterprise value while addressing credit concerns efficiently.

Why Choose First Horizon for Asset-Based Lending?

Borrowers partner with First Horizon for practical, relationship-driven financing solutions that balance flexibility and discipline. The bank’s ABL capabilities are supported by experienced credit teams, industry knowledge, and an emphasis on operational collaboration. This combination helps companies navigate cyclical pressures, capitalize on growth opportunities, and maintain working capital efficiency without sacrificing operational control.

Typical Use Cases

• Seasonal ramp for distributors and retailers
• Working capital to support rapid revenue growth
• Bridge financing for acquisitions and carve-outs
• Rescue and restructuring financing where collateral is a primary source of repayment

Final Considerations

Asset-based lending at First Horizon National Corporation is a purpose-built solution for companies with asset-driven balance sheets seeking reliable liquidity, scalable capacity, and collaborative credit partners. With a focus on clarity in borrowing base mechanics, pragmatic covenants, and operational support, these facilities provide a powerful tool for managing cash flow and supporting strategic objectives.

Address Bank: Memphis, Tennessee, U.S.
Bank: First Horizon National Corporation
Headquarters: Memphis
Products: Loans & Credit
Type: Asset-Based Lending