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Asset Based Lending
Asset
based lending is a specialized loan product that provides fully
collateralized credit facilities to borrowers with
high financial leverage and marginal cash
flows.
High leverage and tight cash flow can be the
result of the following:
Acquisition
Management Buyout
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Recapitalization
Growth Financing
Turnaround
Borrowings under an asset-based facility are
limited by a borrowing base, which is comprised of advance rates
applied to the liquidation value of accounts
receivable, inventory and fixed assets. These assets serve as collateral for the
revolving credit and term loan, respectively.
A typical ABL facility includes a three-year
revolving credit that is used to support working
capital needs and may
include a term loan. The term loan will not exceed 40% of the total combined credit facility and amortizes between 5-15 years, depending
on the useful life of the underlying asset.
Asset-Based Facilities can easily be combined
with other sources of capital including high yield
bonds, asset
securitizations, mezzanine financings and second
lien financings. Asset based lending is a specialized loan product that provides fully collateralized credit facilities to borrowers with high financial leverage and marginal cash flows.
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For small to mid-cap companies, we offer asset-based lending, ranging
from $1 million to $100 million with syndication capabilities for
larger transactions. Our products include revolving lines of credit,
letters of credit, bridge and special accommodation financing,
debtor-in-possession and exit financing, acquisition lines of credit,
and companion equipment and real estate loans for a variety of
business capital needs. |
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Primary
applicants for asset-based lending are companies that show favorable
operating performances, and are typically looking for a flexible
solution to securing working capital:
Asset based financing is designed for:
Rapid Growth
Expansion into new Products or Markets
High Leverage
Capital-Intensive Industries
Acquisitions, Recapitalizations, Turnarounds
Asset Based Lending VS Commercial Financing?
ABL's primary focus is on
collateral and liquidity with leverage
and cash flow being secondary
considerations.
Typically, asset-based facilities provide
borrowers with more
liquidity and fewer financial
covenants.
Asset based borrowers usually have higher
financial leverage
and marginal cash flows.
Revenues between $15 million and $100 million BCF's Asset
based lending team services
manufacturers, wholesalers and
distributors with revenues
between $15 million and $100
million. BCF believes in
building a meaningful relationship with
its clients.
Asset Based Solutions
Operating Capital is tied up in slow
receivables.
Sales Growth is being restricted by current
Credit Arrangement
Seasonality peaks are straining resources.
Supplying or buying overseas requires a letter
of
credit
Acquisition is resulting in a leveraged
financial
condition
Operational problems are draining
resources/liquidity
Industry is experiencing an economic downturn
Industry sector suddenly becomes out of favor
Increasing pressure to pay dividends or to
recapitalize |
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