Asset Back Lending ("ABL") typically provides collateralized credit facilities to borrowers with high financial leverage and marginal cash flows.
Video Asset backed lending
Collateral
ABL's primary focus is on collateral and liquidity with leverage and cash flow being secondary considerations. Borrowings under an asset-based facility are limited by the collateral base, which is measured by liquidation value of accounts receivable, inventory and fixed assets rather than by reference to direct, ongoing cash generation capacity.
Maps Asset backed lending
ABL versus Distressed Lending
ABL structures can be contrasted with distressed lending which typically provides credit facilities to borrowers with good cash generation capacity but short-term liquidity issues. Such loans typically take the form of bridge or Mezzanine capital or similar hybrid structures and often place the distressed lender in a better position than existing common shareholders and lenders with respect to company's assets and cashflow.
See also
- Finance, Personal finance, Settlement (finance)
- Debt, Consumer debt, Debt consolidation, Government debt
- Bank, Fractional-reserve banking, Building society
- Annual percentage rate (a.k.a. Effective annual rate)
- Default (finance)
- Interest-only loan, Negative amortization, PIK loan
- Loan guarantee
- Loan sale
- Payday loan
- Refund Anticipation Loan
- Stafford loan
- Student loan
- Syndicated loan
- Title loan
- Student loan default
- Credit risk
- Default (finance)
- High-yield debt
- Private equity
References
Source of article : Wikipedia
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