Asset-based Lending at Hancock Whitney

Asset-based lending (ABL) at Hancock Whitney provides a flexible financing solution designed for businesses that need working capital tied to the value of their tangible and, in some cases, intangible assets. This financing approach is tailored to companies with seasonal cash flow, growth opportunities, or liquidity constraints that traditional term loans cannot efficiently address. By leveraging receivables, inventory, equipment and other eligible collateral, borrowers gain access to a borrowing base that grows and contracts with business activity, creating a dynamic, responsive source of capital.

Core Features

• Borrowing base structure: The credit line is secured by a pool of assets, typically accounts receivable and inventory, with advance rates determined by the quality, age and concentration of the collateral.
• Flexible availability: As eligible receivables are collected and inventory levels change, the available borrowing capacity adjusts accordingly, aligning financing with working capital needs.
• Short- and long-term support: ABL can support short-term seasonal fluctuations as well as medium-term growth initiatives, including acquisitions and capital expenditures.
• Periodic reporting: Borrowers provide regular collateral reporting—such as aging schedules and inventory reports—enabling transparent monitoring of the borrowing base.
• Collateral monitoring and management: The bank conducts periodic reviews, appraisals and inspections as part of prudent risk management and to ensure the collateral maintains required value and marketability.

Eligible Collateral

Hancock Whitney’s asset-based lending programs typically accept a variety of secured assets, including:

• Accounts receivable originated from creditworthy customers
• Finished goods and raw material inventory with verifiable valuation
• Machinery and equipment that retain market value and can be appraised
• In some cases, select intangible assets or contract rights where enforceable and convertible to liquidity

Eligibility criteria and advance rates vary by asset type and industry. The bank works with each borrower to structure an appropriate borrowing base that reflects the company’s operating realities and risk profile.

Benefits for Businesses

• Improved liquidity: Convert receivables and inventory into immediate working capital to meet payroll, vendor obligations and growth needs.
• Scalable credit facility: Borrowing capacity adjusts with business activity, reducing the need to renegotiate credit lines frequently.
• Operational continuity: Support for seasonal businesses and companies with variable cash flows helps maintain uninterrupted operations.
• Faster access to capital: Compared to raising equity or securing new term debt, ABL can often be implemented more quickly once collateral and documentation are in place.
• Strategic flexibility: Funds can be used for working capital, inventory purchases, facility improvements and selective acquisitions, depending on the facility terms.

Who Should Consider Asset-based Lending?

Asset-based lending is suited for mid-market companies and larger private enterprises across many industries, including distribution, manufacturing, wholesale trade, business services and specialty retail. Typical candidates include:

• Companies with strong, diversified customer bases and reliable receivable collections
• Firms with significant inventory or equipment value relative to sales
• Businesses experiencing growth or seasonality that requires a flexible credit solution
• Organizations undergoing recapitalization, restructuring or seeking acquisition financing where cash flow coverage may be limited in the near term

Structure and Documentation

The structure of an asset-based lending facility usually includes a revolving line of credit secured by the borrowing base. Documentation typically consists of a credit agreement, security agreement, UCC filings, and collateral reporting requirements. Depending on complexity, additional intercreditor agreements or subordination arrangements may be required if other creditors are involved. The bank works collaboratively with borrowers and their advisors to define covenants, reporting cadence and events of default that align with the borrower’s operational profile.

Underwriting and Credit Considerations

Underwriting emphasizes the quality and collectability of collateral as well as the overall business model. Key areas of assessment include:

• Receivable aging and customer concentration
• Inventory turnover, valuation methods and storability
• Equipment condition, usage and resale value
• Historical and projected cash flow patterns
• Management experience, internal controls and reporting capabilities

Because collateral value drives availability, robust operational controls and transparent reporting are important to maintain capacity and manage risk.

Repayment and Pricing

Pricing for an asset-based lending facility typically includes an interest component, tied to a pricing grid that may vary with utilization and the borrower’s credit profile, along with fees for facility maintenance, collateral monitoring and appraisal where applicable. Repayment is generally governed by the borrower’s cash collections and use of availability; principal is repaid as receivables are collected and availability decreases when assets are liquidated or converted to cash.

Onboarding and Management

Hancock Whitney places emphasis on a streamlined onboarding experience and ongoing relationship management. The implementation process generally includes collateral evaluation, systems setup for reporting, staff training on covenant compliance and establishing communication protocols for periodic reviews. Dedicated relationship managers work with clients to adapt the facility as business needs evolve, helping optimize liquidity and support strategic initiatives.

Risk Management and Protections

Effective ABL programs balance borrower flexibility with prudent protections. Hancock Whitney employs controls such as reserve accounts, concentration limits, receivable verification and periodic audits to preserve collateral quality. These tools protect both the lender and borrower by ensuring the borrowing base accurately reflects the company’s available assets and by providing early warning of potential credit deterioration.

Why Choose Hancock Whitney for Asset-based Lending?

Borrowers seeking an asset-based lending partner benefit from a combination of industry knowledge, responsive underwriting and a commitment to customized solutions. Hancock Whitney’s regional focus, experienced lending teams and integrated treasury services allow clients to access capital while preserving operational flexibility. The bank prioritizes clear communication, efficient processes and long-term partnership to help companies manage working capital, pursue growth and navigate changing market conditions.

Next Steps

To evaluate whether an asset-based lending facility is appropriate, businesses should prepare recent financial statements, accounts receivable and inventory aging reports, and descriptions of major assets. This information enables a tailored assessment of borrowing capacity and structure. Hancock Whitney’s underwriting team then works with the borrower to design a facility that aligns collateral, liquidity needs and strategic goals.

Asset-based lending can unlock working capital tied up in a company’s balance sheet, providing a reliable financial tool for companies seeking agility, scalability and predictable access to liquidity.

Address Bank: Gulfport, Mississippi, U.S.
Bank: Hancock Whitney
Headquarters: Gulfport, Mississippi
Products: Loans & Credit
Type: Asset-Based Lending