SFGH Congratulates partner Jonathan P. Friedland for speaking at a recent West LegalEd Center webinar titled "Asset-Based Lending."
Congratulations to SFGH partner Jonathan P. Friedland for speaking at a recent West LegalEd Center webinar titled "Asset-Based Lending."
An asset-based loan (ABL) is made by a lender who underwrites the loan primarily by valuing the company’s assets, such as accounts receivable (A/R) and inventory. An ABL lender can be distinguished from a “cash flow” lender in that while a cash flow lender secures its loan against the borrower’s assets, as does an ABL lender, the cash flow lender underwrites the loan based on the cash flow and general credit-worthiness of the borrower. An ABL lender, in contrast, looks primarily to the ability to liquidate its collateral should it need to, to be repaid. Since ABL lenders are willing to provide loans to companies with weaker financial performance, they are able to provide financing to companies who are not eligible for a cash flow loan. ABL lenders typically charge higher interest rates than cash flow lenders as a result of greater risk of non-performance. This webinar explained ABLs, explores its pros and cons, and discusses the basics of negotiating one.