Asset-Based Lending Structuring: What Matters Beyond the Borrowing Base.
Last month, we discussed where Asset-Based Lending fits and why it remains one of the most practical financing tools available to growing and transitioning businesses.
This month, we want to focus on something equally important:
Structure.
In Asset-Based Lending, the strength of a facility is not determined solely by the amount of collateral available. It is also determined by how the facility is built around the business’s realities.
Two borrowers may appear similar on paper. Similar revenue. Similar assets. Similar borrowing needs.
Yet the right solution for each may look very different.
That is where thoughtful structuring matters.
More Than a Formula.
Asset-Based Lending is often described in terms of borrowing bases and advance rates. Those are important tools, but they are only part of the picture.
- Strong structures consider questions such as:
- How quickly do receivables convert to cash?
- Is customer concentration manageable?
- Is inventory fast-moving, specialized, or seasonal?
- Does equipment hold dependable liquidation value?
- Is the business entering a growth phase or navigating a temporary transition?
- What reporting cadence is realistic and useful?
- Should the facility revolve, amortize, or combine both?
Our approach is to understand the business’s needs first, then design a facility that is practical, responsible, and built to support the path forward.
Why Collateral Quality Matters.
Not all assets carry the same lending value.
Two companies may each report significant receivables, but one may have diversified customers with strong payment histories, while the other may have aged receivables or concentrated exposure.
The same applies to inventory and equipment. Value on a balance sheet does not always equal realizable value in the field.
This is why disciplined lenders look beyond headline numbers and focus on asset quality, liquidity, and control.
A Real Example.
A recent Garrington Capital transaction involved a $4.5 million USD Asset-Based Lending facility for a snack food manufacturer in Pennsylvania, supported by accounts receivable, inventory, and machinery & equipment.
This is a useful example of why structuring matters.
A business with multiple asset classes often benefits from a facility designed around its actual operations. Receivables may support day-to-day working capital. Inventory may help finance production cycles and order flow. Equipment can provide additional borrowing capacity through a term component.
Rather than forcing the borrower into a one-dimensional solution, a properly structured facility can align capital with the business’s needs.
Where Garrington Capital Fits.
With facilities typically ranging from $2 million to $30 million, Garrington Capital focuses on collateral-driven lending solutions for businesses that require thoughtful structuring, direct communication, and reliable execution.
We aim to work constructively with existing lenders and referral partners to help businesses access practical capital solutions when conventional structures become restrictive.
Let’s Talk.
If you are working with a company whose assets are strong but whose current facility no longer fits, Garrington Capital is always open to an early discussion.