What makes Factoring different from Asset Based Lending (ABL)
An ABL requires an extensive analysis of all outstanding receivables, inventory and equipment. The lender determines what the liquidation value of these items would be and based upon this determination creates a commensurate line of credit for the business.
An ABL line of credit will change based upon the changing stock of inventory, receivables and even equipment.
This type of arrangement is highly adaptable. Your line of credit will usually grow as your business grows.
It is a more holistic approach, which allows certain businesses to collateralize all of their assets instead of just real estate.
Unfortunately this type of financing usually will not work for very small businesses or businesses without a sophisticated accounting setup like a perpetual inventory system.