BankerCollege

Overview of this Topic 

Monitoring and controlling collateral is critical to the asset-based lender to mitigate repayment risk. Collateral evaluation begins with a comprehensive field examination to determine value, followed by a continuing program of periodic examinations. The collateral and loan values are monitored continuously (daily/weekly/monthly) to ensure that the realizable value of the collateral is always sufficient to repay outstandings.

This loan webinar will explain how the ABL policy and process must work to ensure the bank is repaid on time, in full, and as agreed.

Description of Topic:   Asset-based lending (often referred to as “ABL”) is a form of commercial lending designed to finance safely the working capital needs of a borrower whose cash flow currently may not support debt repayment. Like other commercial loans, cash flow is the primary repayment source for an asset-based loan but with stronger reliance on the company's assets as collateral and firmer control over the receipts of the collateral’s liquidation.

Collateral typically available to secure the asset-based loan includes accounts receivable, inventory, machinery and equipment, general and specific intangibles, real estate, and other assets. Because working capital support is the primary objective of most asset-based loan facilities, accounts receivable and inventory generally are the bank's core collateral. Personal guaranties, often secured, can be taken.

Areas Covered in Session:

•  CHARACTERISTICS OF ABL BORROWERS
• CUSTOMERS’ ADVANTAGES FOR AN ABL FACILITY
• COLLATERAL CONSIDERATIONS  
• RISKS
• TYPES OF FACILITIES
• HOW ADVANCE RATES ARE DETERMINED