AllBusiness.com
    • Starting a Business
    • Career
    • Sales & Marketing
    • AI
    • Finance & Fundraising
    • M & A
    • Tech
    • Business Resources
    • Business Directory
    1. Home»
    2. Angel & Venture Funding»
    3. Small, Specialized Asset-Based Lenders Find Their Niche»
    Small, Specialized Asset-Based Lenders Find Their Niche

    Small, Specialized Asset-Based Lenders Find Their Niche

    Sam Thacker
    Angel & Venture FundingFinancing & Credit

    A number of small flexible and focused asset-based lenders have entered the commercial finance scene since 2008. Although 2008 seems like an eternity ago, many legacy either because they had wholesale lenders who stopped their relationships or because they suffered deep losses. That left a void in the asset-based lending space.

    Machine-shops are good candidates for Asset-based lines of credit

    Thankfully, a number of smaller more flexible asset-based lenders have emerged to close the gap and the commercial finance industry has seen some serious changes since 2008.

    New breed of asset-based lenders like smaller loan size

    There are a significant number of smaller lenders who have established themselves where small businesses couldn’t find an asset-based loan. The gold standard for minimum asset-based loans was $1 million in funds employed at all times. The new “standard” is $500,000 or less of funds employed. Collateral is typically accounts receivable and inventory. Some asset-based lenders will allow you to use equipment as part of their collateral. The new breed of small, sometimes hard-to-find asset-based lenders will take a much smaller transaction. Now smaller companies can tap into this type of credit facility, which is especially helpful when they need help finding raw materials and finished goods inventory.

    Smaller asset-based lenders are finding vertical markets

    Although all lenders have to be careful not to have too high a concentration in one type of industry, the new breed of ABL lenders has shown they like to make loans in industries they know best. One lender for example likes to finance frozen fish, fresh produce, and goods imported from South America. They like those businesses because they have had success with them and feel comfortable with these products in case they have to liquidate inventory quickly.

    New breed of small asset-based lenders will finance more risk

    Asset-based lenders traditionally have not financed riskier types of companies because their fee structure was so low. The new breed of Asset-based lender may be more expensive than the large asset-based lenders like Wells Fargo Business Credit or Bank of America, but they will take on more risk and are still less expensive than most factoring companies.

    Niche asset-based lenders more flexible

    ABL lending has traditionally been used for acquisition and growth capital purposes. Smaller, more flexible asset-based lenders will finance work in process and raw materials used in manufacturing or fabrication.

    As the economy in some parts of the country is rebounding, small companies still don’t have access to the amount of credit needed to replenish their working capital though traditional banking. Thankfully commercial finance companies have been able to help. The new breed of ABL lenders can bridge the gap for businesses having sales of $6 million or more that need financing for both accounts receivable and inventory.

    The next segment of this two-part series will explain what to look for when searching for a small ABL lender.

    Sam Thacker is a partner in Austin Texas based Business Finance Solutions.

    LinkedIn: https://www.linkedin.com/in/smbfinance

    Twitter: @SMBFinance

    Hot Stories

    A small business owner looking at her personal credit

    New Development Could Improve Small Business Owners’ Credit

    A businessperson holding a briefcase of cash, representing angel investor

    Angel Investor vs. Venture Capital: Which Is Right for Your Startup?

    Profile: Sam Thacker

    Sam Thacker is a partner in Austin, Texas-based Business Finance Solutions. Since 1994 he has been in the banking and finance industry as a commercial lending officer, banking consultant, and advocate for small business financing. He has originated over $400 million in loans to hundreds of businesses across many industries. Sam is a nationally respected working capital finance professional, speaker, and writer. Sam also teaches classes to trade associations and other groups. He has been praised by readers and class attendees in programs he teaches for his ability to explain complicated financial concepts in easy to understand terms. For more information about using a SBIC fund to help your business grown, email info@bfs-usa.com or give us a call at 512.990.8756.

    BizBuySell
    logo
    AllBusiness.com is a premier business website dedicated to providing entrepreneurs, business owners, and business professionals with articles, insights, actionable advice,
    and cutting-edge guides and resources. Covering a wide range of topics, from starting a business, fundraising, sales and marketing, and leadership, to emerging AI
    technologies and industry trends, AllBusiness.com empowers professionals with the knowledge they need to succeed.
    About UsContact UsExpert AuthorsGuest PostEmail NewsletterAdvertiseCookiesIntellectual PropertyTerms of UsePrivacy Policy
    Copyright © AliBusiness.com All Rights Reserved.
    logo
    • Experts
      • Latest Expert Articles
      • Expert Bios
      • Become an Expert
      • Become a Contributor
    • Starting a Business
      • Home-Based Business
      • Online Business
      • Franchising
      • Buying a Business
      • Selling a Business
      • Starting a Business
    • AI
    • Sales & Marketing
      • Advertising, Marketing & PR
      • Customer Service
      • E-Commerce
      • Pricing and Merchandising
      • Sales
      • Content Marketing
      • Search Engine Marketing
      • Search Engine Optimization
      • Social Media
    • Finance & Fundraising
      • Angel and Venture Funding
      • Accounting and Budgeting
      • Business Planning
      • Financing & Credit
      • Insurance & Risk Management
      • Legal
      • Taxes
      • Personal Finance
    • Technology
      • Apps
      • Cloud Computing
      • Hardware
      • Internet
      • Mobile
      • Security
      • Software
      • SOHO & Home Businesses
      • Office Technology
    • Career
      • Company Culture
      • Compensation & Benefits
      • Employee Evaluations
      • Health & Safety
      • Hiring & Firing
      • Women in Business
      • Outsourcing
      • Your Career
      • Operations
      • Mergers and Acquisitions
    • Operations
    • Mergers & Acquisitions
    • Business Resources
      • AI Dictionary
      • Forms and Agreements
      • Guides
      • Company Profiles
        • Business Directory
        • Create a Profile
        • Sample Profile
      • Business Terms Dictionary
      • Personal Finance Dictionary
      • Slideshows
      • Entrepreneur Profiles
      • Product Reviews
      • Video
    • About Us
      • Create Company Profile
      • Advertise
      • Email Newsletter
      • Contact Us
      • About Us
      • Terms of Use
      • Contribute Content
      • Intellectual Property
      • Privacy
      • Cookies