Asset-based Lending at Truist Financial

Asset-based lending (ABL) at Truist Financial is a flexible financing solution designed to help companies convert their balance sheet assets into working capital. Tailored for middle-market and growth-oriented companies across a wide range of industries, Truist's ABL facilities provide access to capital secured primarily by accounts receivable, inventory, equipment, and other eligible assets. These credit facilities are structured to support seasonal needs, growth initiatives, liquidity management, balance sheet restructuring, and the execution of strategic transactions such as acquisitions or divestitures.

How It Works

ABL is built around a borrowing base, a formula that determines the amount a borrower can draw based on the value and quality of eligible collateral. Truist evaluates receivables, inventory, and other specific asset classes, applies advance rates and reserves, and then sets a revolving or term capacity that can be used for day-to-day operations or one-time investments. Regular reporting, collateral monitoring, and periodic valuations ensure the facility remains aligned with the borrower’s current asset profile.

Key Features

• Borrowing Base Flexibility: Credit capacity adjusts with the size and composition of eligible assets, allowing borrowing power to grow or contract in line with business needs.
• Multiple Collateral Types: Support for accounts receivable, finished goods and raw material inventory, pledged machinery and equipment, and in some cases, intellectual property or real estate liens.
• Revolving and Term Components: Facilities can combine a revolving line for working capital needs with term loans for capital expenditures or acquisitions.
• Competitive Pricing: Pricing reflects the credit profile, collateral quality, industry, and facility structure, offering competitive spreads and fee structures for qualified borrowers.
• Customized Covenants and Structures: Covenants and reporting requirements are tailored to balance lender protection with operational flexibility.
• Relationship Management: Dedicated underwriting and relationship teams provide hands-on support and industry expertise, often integrating Treasury and deposit solutions for broader banking convenience.

Typical Uses of ABL

Truist’s ABL facilities are commonly used for:

• Financing working capital needs driven by seasonality or rapid growth
• Funding acquisitions or facilitating corporate roll-ups
• Refinancing higher-cost debt to improve cash flow
• Supporting turnaround or restructuring efforts
• Providing liquidity for management buyouts or shareholder changes

Industries Served

Truist serves a broad cross-section of industries where tangible balance sheet assets can support credit, including manufacturing, wholesale distribution, retail, consumer packaged goods, business services, transportation, healthcare suppliers, and select technology and industrial sectors. Underwriting considers industry cyclicality, concentration risks, supply chain dependencies, and asset liquidity.

Underwriting and Eligibility

Underwriting emphasizes the quality, collectability, and traceability of collateral as well as the borrower’s cash flow dynamics and management capabilities. Common eligibility criteria include:

• Receivables from creditworthy customers with acceptable aging profiles
• Inventory that meets defined valuation and control standards
• Documented title and lien perfection for pledged assets
• Robust financial reporting and internal controls
• Experienced management with a demonstrated ability to execute the business plan

Monitoring and Reporting

ABL facilities generally require regular reporting to maintain transparency and protect both parties. Reporting may include accounts receivable aging reports, inventory reconciliations, periodic audits or field examinations, and standard financial statements. Truist leverages structured reporting tools and can integrate with borrowers’ accounting systems to streamline data delivery and reduce administrative burden.

Risk Management and Covenants

Covenants are designed to align borrower behavior with the protection of collateral value and to ensure timely remediation of issues. Typical covenants may include borrowing base certificates, permit or compliance requirements, payment waterfall provisions, and limits on additional indebtedness or liens. When appropriate, the ABL structure may include reserves or holdbacks to mitigate specific exposures such as concentrated customer risk or slow-moving inventory.

Benefits to Borrowers

• Enhanced Liquidity: Convert working capital assets into reliable funding to support operations and growth.
• Scalable Capacity: As receivables and inventory grow, borrowing capacity can increase without renegotiating fundamental terms.
• Cost Efficiency: Often lower cost than unsecured financing for companies with strong collateral profiles.
• Operational Support: Access to industry expertise, cash management tools, and treasury services to optimize cash flow and working capital cycles.
• Structured Flexibility: Facility structures can be customized to seasonal patterns, inventory turns, and acquisition timelines.

Common Structuring Considerations

Structuring an ABL facility requires balancing borrower liquidity needs with lender protection. Considerations include selecting eligible collateral, determining advance rates for different asset classes, setting minimum availability levels, defining reporting cadence, and establishing events of default and cure periods. Term timing, fee schedules, and integration with other credit facilities are also part of the design process.

Implementation and Onboarding

Truist aims to make implementation efficient through a defined onboarding process. This typically includes collateral assessments, legal documentation and perfection of security interests, installation of reporting mechanics, training for borrower personnel on reporting requirements, and coordination of any third-party appraisals or auditors. After initial setup, periodic reviews and proactive relationship management help ensure the facility remains aligned with business objectives.

Scenarios and Examples

Examples of how ABL can be applied include:

• A distributor with seasonal sales patterns leverages an ABL revolving line to fund inventory buildup before peak season while repaying as sales occur.
• An acquisitive middle-market company combines an ABL revolver with term debt to close multiple acquisitions without diluting cash reserves.
• A manufacturer converts slow-moving receivables into cash to fund a product line expansion, using equipment as additional collateral for term financing.

Why Choose Truist?

Truist combines commercial banking experience with industry knowledge and a collaborative approach to structuring ABL facilities. Borrowers benefit from a dedicated team that integrates underwriting, operations, and treasury services to deliver a financing solution that supports growth while maintaining disciplined risk controls. The goal is to craft an arrangement that provides predictable liquidity and operational convenience, enabling management to focus on strategic priorities.

Next Steps

To evaluate eligibility and structure a facility that fits your business, a thorough assessment of your balance sheet, cash flow profile, and collateral composition is required. Truist’s professionals work with management teams to define objectives, model borrowing base scenarios, and establish an efficient reporting and servicing framework tailored to each client’s needs.

Address Bank: Truist Center, Charlotte, North Carolina, U.S.
Bank: Truist Financial
Headquarters: Charlotte
Products: Loans & Credit
Type: Asset-Based Lending