Asset-based Lending at Goldman Sachs

Asset-based lending (ABL) at Goldman Sachs is a flexible financing solution designed to help mid-market and larger corporations convert eligible balance-sheet assets into working capital. By focusing on the value of collateral — such as accounts receivable, inventory, machinery, real estate and other eligible assets — ABL provides borrowers with predictable access to liquidity that can be deployed for growth initiatives, refinancing, acquisitions, seasonal working capital needs, and balance sheet optimization.

Core features

• Collateral-driven credit facility: Borrowing capacity is determined primarily by the appraised and advanceable value of eligible assets rather than purely by earnings metrics.
• Revolving and term structures: Facilities can include revolvers for ongoing liquidity needs and term tranches for specific financed projects or capital expenditures.
• Flexible advance rates: Advance rates are calibrated to the quality and composition of the collateral pool and may vary across asset classes (e.g., domestic receivables vs. inventory).
• Periodic collateral valuation: Regular reporting and periodic valuations support transparent borrowing base calculations and timely liquidity adjustments.
• Integrated treasury and cash management: Facilities are structured to support operational cash flows with tailored payment and collection arrangements.

Benefits for borrowers

• Improved liquidity and working capital management: Convert underutilized assets into cash without diluting ownership or changing long-term capital structure.
• Scalability: Funding capacity can grow with the business as eligible assets increase, supporting organic growth and seasonality.
• Speed and predictability: Collateral-based underwriting can enable faster access to committed liquidity compared to earnings-based loans, especially for businesses with strong asset coverage.
• Complementary to other financing: ABL can sit alongside term loans, capital markets financing and equity, providing a stable liquidity layer while preserving other funding alternatives.
• Risk management: By aligning available liquidity with collateral performance, borrowers can better manage working capital volatility.

Typical eligible collateral

Eligible collateral categories commonly include:

• Accounts receivable (domestic and in some cases select foreign receivables)
• Finished goods and raw material inventory
• Equipment, machinery and fixture assets
• Real property and leasehold interests (subject to appraisal and title review)
• Certain intellectual property or contract rights, where appropriate and appraisable

For whom ABL is most appropriate

Asset-based lending is well-suited to companies that maintain significant receivables or inventory relative to earnings, businesses undergoing rapid growth or transition, companies with cyclical cash needs, and private equity-backed sponsors seeking efficient working capital solutions for portfolio companies. It is appropriate for firms that value structural flexibility, responsive borrowing base mechanics and the ability to scale capital as the asset base expands.

How the facility works

A typical Goldman Sachs ABL facility begins with due diligence to assess the quality and value of eligible collateral, establish advance rates and set covenants. Once documentation is in place, the borrower delivers regular collateral reporting (e.g., aged receivable schedules, inventory reports) and follows operational protocols such as cash dominion, collection lockbox arrangements and insurance requirements. The lender calculates the borrowing base at agreed intervals and funds up to the permitted availability. Periodic audits and ongoing monitoring help ensure compliance and alignment of advance rates with asset performance.

Structuring flexibility and customization

Goldman Sachs structures ABLs with the flexibility to meet sector-specific and company-specific needs. Transaction features can include multi-currency or cross-border support, sub-limits for different asset classes, seasonal or swingline facilities for short-term emergency funding, and covenant packages calibrated to client objectives. Specialized underwriting teams bring industry expertise to assess complex collateral types such as trade finance receivables, agri-business inventory, or capital-intensive manufacturer equipment.

Risk management and covenants

Effective risk management is central to ABL. Covenant frameworks are designed to mitigate credit, collateral and operational risks while enabling the borrower to operate efficiently. Common elements include borrowing base covenants, minimum liquidity thresholds, reporting obligations, insurance and maintenance covenants for funded equipment, and periodic field examinations. Goldman Sachs emphasizes transparent covenant negotiation to align incentives and support sustainable access to liquidity.

Operational servicing and borrower support

The servicing model combines automated reporting platforms with dedicated relationship teams. Borrowers receive clear guidance on collateral eligibility, reporting formats and collection protocols. Field examiners and valuation specialists work alongside client teams to ensure that asset valuations reflect market conditions and accounting practices. This operational support reduces administrative friction and helps preserve borrowing capacity over time.

Why choose Goldman Sachs for asset-based lending

• Expertise across industries: Deep experience in evaluating asset quality across a broad range of sectors, enabling nuanced advance rate and structuring decisions.
• Holistic capital solutions: Ability to coordinate ABL with other financing sources, including term debt, acquisition financing and balance-sheet advisory.
• Global capabilities: Access to cross-border execution and multi-jurisdictional structuring where required by international businesses.
• Client-focused execution: Emphasis on tailored documentation, operational efficiency and proactive portfolio management.

Conclusion

Asset-based lending at Goldman Sachs offers a pragmatic, collateral-centered approach to liquidity that aligns with the operational realities of asset-rich businesses. By combining disciplined underwriting, customized structuring and integrated servicing, these facilities provide dependable working capital solutions that adapt as businesses grow, season and transform. Whether addressing near-term cash needs or creating a scalable liquidity platform for strategic initiatives, ABL can be a powerful instrument in a comprehensive financing strategy.

Address Bank: 200 West Street, New York City, New York, U.S.
Bank: Goldman Sachs
Headquarters: New York City
Products: Loans & Credit
Type: Asset-Based Lending