Asset Based Lending
What is Asset Based Lending?
- Asset Based Lending (ABL) 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:
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Acquisition
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Management Buyout
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Recapitalization
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Growth Financing
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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.
Differences Between ABL and Traditional 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.
ABL's Target Market
We provide uniquely tailored leveraged lending solutions to meet financing needs for clients with annual revenues from $1 million to over $30 million.
- Revenues Between $1 million and $30 million — Miel Financial services manufacturers, wholesalers and distributors with revenues between $1 million and $30 million. Miel Financial in building a meaningful relationship with its clients.
Why Choose Miel Financial?
- An experienced underwriter is always involved, allowing us to provide the capabilities of a commercial finance company with high level of customer service.
- Miel Financial can be a source of transitional capital, allowing the borrower to move from an ABL structure to more traditional commercial financing as the borrower's financial profile improves.
- If the facility is refinanced with Miel Financial, the costs can be sharply reduced.
- Miel Financial ABL provides a single point of access to other junior capital products including second lien loans, subordinated debt and mezzanine financing.