Insights
ABL Glossary
Explore our asset-based lending glossary. Here you can find important industry terms and definitions, explained in a simple and clear way. Our goal is to demystify key language and terminology.
ABL isn’t complicated; it’s under-explained. At its core, it’s about turning what you already have into what you actually need: liquidity.
Accounts Receivable (A/R)
The money your customers owe you.
In ABL, that’s not “waiting to get paid”, it’s working capital you can tap now.
Advance Rate
How much of your assets can you actually unlock?
85% advance rate = you get most of the value now, not later when you need it less.
Asset-Based Lending (ABL)
Financing is built around what your business actually has, not what a bank hopes your cash flow looks like on paper.
If you’ve got receivables, inventory, or equipment, you’ve got borrowing power. Simple as that.
Availability
What’s ready to use today? Not a projection. Not a maybe.
Actually, the amount you can draw in dollars.
Borrowing Base
The formula that determines how much you can borrow.
More quality assets in → more liquidity out. It’s the engine behind everything.
Collateral
What backs the loan?
In ABL, it’s not abstract; it’s your receivables, your inventory, your real business assets doing real work.
Collateral Monitoring
Ongoing visibility into your assets.
Not micromanagement, just making sure everything lines up.
Concentration Limit
Too much exposure to one customer = risk.
This keeps your borrowing base from leaning too heavily on a single relationship.
Covenants
The guardrails.
Not meant to trip you up, meant to keep things running within agreed boundaries.
Dilution Against AR
When returns, credits, and discounts erode the invoice value.
It happens, but lenders are paying attention.
Dilution of Ownership
Equity dilution is straightforward: when new shares are issued, everyone’s ownership percentage decreases, including the Founder’s.
Eligible Receivables
Invoices lenders are comfortable advancing against.
Clean, current, and collectible, the kind you’d bet on getting paid.
Field Exam
A closer look under the hood.
Lenders verify your numbers, your processes, and your assets. Standard stuff, nothing to lose sleep over.
Ineligible Receivables
The ones lenders won’t touch.
Too old, too messy, or too uncertain.
Inventory Financing
Your inventory isn’t just sitting there; it’s capital.
ABL turns product on shelves into cash you can actually use.
Line of Credit
Capital that moves with you.
Borrow it, pay it down, use it again—no need to keep starting over.
Lockbox or Blocked Account
Payments go straight to a controlled account.
It streamlines collections and keeps everything transparent.
Overadvance
Going past your standard limit—on purpose.
Used strategically, approved carefully, and typically temporary.
Revolver
A credit line that expands and contracts with your business.
More assets = more access. Less friction, more flexibility.
Turnover
How quickly you convert invoices into cash.
Faster collections = stronger liquidity = more borrowing capacity.
Working Capital
The lifeblood of your business.
Payroll, inventory, growth, none of it happens without it. ABL keeps it flowing.
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