Western Alliance Bancorporation’s Asset-based Lending (ABL) solution is designed to provide flexible, scalable financing that leverages a company’s eligible assets to support working capital, growth initiatives, acquisitions, and balance sheet restructuring. Tailored for middle-market and sponsor-backed companies across a broad range of industries, this product offers liquidity solutions where traditional cash-flow lending may be constrained or insufficient. The program combines experienced underwriting, specialized collateral servicing, and pragmatic deal structuring to deliver accessible capital while managing credit risk through asset-based collateral coverage.

Core Features and Structure

An ABL facility through Western Alliance typically centers on a revolving line of credit secured by accounts receivable, inventory, and other tangible assets. Facilities can include outstandings for letters of credit, swingline, and term loan components for capital expenditures or acquisition financing. Key structural features include:

• Advance Rates: Competitive advance percentages on eligible receivables and inventory, calibrated to asset quality and industry norms.
• Borrowing Base: Monthly calculation based on verified schedules and aging, with availability fluctuating according to eligible collateral values.
• Collateral Coverage: Security interests in accounts receivable, inventory, equipment, and, where applicable, real estate or intellectual property.
• Availability Periods: Revolving commitments designed for ongoing liquidity needs with options for staggered renewals or multi-year commitments.
• Flexible Repayment: Seasonal or cyclical businesses can structure payments and revolvers to match cash flow patterns.

Benefits for Borrowers

Asset-based lending provides several advantages for companies seeking reliable liquidity:

• Greater Access to Capital: Firms with significant tangible assets can secure financing even when cash flow metrics are transitional or uneven.
• Scalability: As receivables and inventory grow, available borrowing capacity can expand, aligning capital with business growth.
• Speed and Certainty: Focused underwriting of asset value often delivers faster execution timelines compared with complex cash-flow deals.
• Operational Support: Dedicated collateral servicing and reporting teams help streamline collections, inventory controls, and compliance.
• Customized Solutions: Facilities can be structured to support seasonal working capital, acquisition bridges, debtor-in-possession financing, and other specialized needs.

Eligibility and Typical Borrower Profile

Western Alliance’s ABL is ideal for companies that maintain substantial accounts receivable and inventory balances and require a lending relationship that can flex with operational cycles. Common borrower profiles include:

• Manufacturers and distributors with broad receivables and sizable inventory positions.
• Wholesale and retail businesses that need working capital to support seasonal peaks.
• Service providers with large contract or invoice receivables.
• Private equity portfolio companies seeking acquisition financing or growth capital.

Underwriting and Collateral Management

Underwriting focuses on asset quality, concentration, collectability, and collateral controls. The process includes a thorough review of customer receivables, inventory aging and turnover, historical cash collections, and accounts concentration risk. Supporting operational controls – such as receivable verification, inventory audits, field examinations, and third-party appraisals – are used as appropriate to validate collateral values. Throughout the life of the facility, monthly or weekly reporting ensures accurate borrowing base calculations and early identification of trends that may impact availability.

Covenants, Monitoring and Reporting

ABL agreements include covenants designed to preserve collateral value and maintain transparent operations. Typical covenants may require regular delivery of borrowing base certificates, aging schedules, cash receipts reports, and periodic financial statements. Covenant packages are tailored to the transaction and may include reporting on concentration exposure, inventory obsolescence reserves, and notice requirements for material changes. Monitoring is collaborative, providing borrowers with clarity on required controls while allowing them to focus on business performance.

Use of Proceeds

Proceeds from an asset-based facility can be used for a variety of corporate purposes, including:

• Working capital and seasonal liquidity management.
• Funding capital expenditures or equipment purchases.
• Financing acquisitions, roll-ups, or strategic investments.
• Refinancing higher-cost indebtedness and improving balance sheet flexibility.

Risk Mitigation and Recovery Strategies

Asset-based lending emphasizes collateral protection and proactive risk mitigation. Early detection mechanisms, collateral verification, and conservative advance rates help preserve lender recoverability. In workout situations, the secured nature of the facility typically provides a clearer path to resolution, including accelerated collection strategies, liquidation of inventory, and enforcement of security interests where necessary. Throughout, the objective is to maximize recovery value while seeking solutions that enable borrower continuity when possible.

Why Choose Western Alliance

Western Alliance combines industry-focused expertise with a hands-on approach to structuring asset-based facilities. The bank’s teams work closely with borrowers to design practical covenants, provide transparent reporting frameworks, and integrate collateral servicing that reduces administrative burden. Borrowers benefit from seasoned credit professionals who understand industry cycles, as well as tailored solutions that balance flexibility with sound risk management.

Application and Lifecycle Experience

The application process emphasizes efficiency and clarity. Prospective borrowers typically provide financial statements, accounts receivable and inventory schedules, aging analysis, and operational documentation for underwriting. After closing, clients receive ongoing support through dedicated relationship managers and collateral specialists who assist with reporting, borrowing base calculations, and strategic planning to optimize availability. Periodic reviews ensure that the facility continues to meet evolving capital needs.