Asset Based Loan

From Open Risk Manual

Definition

Asset-Based Loan. (ABL) It is an agreement between an organization (customer) and a financial organization in which the latter provides the customer with a structured facility combining secured loans and revolving credits.

The customer may pledge/assign as Collateral any combination of assets used in the conduct of its business (for instance, receivables, inventories, plants and machineries, properties, brands, and so on).

ABL instruments are normally complex structures combining revolving credit lines based on current assets with amortizing loans based on fixed assets. ABL is used for larger customers, normally in a restructuring or management buyout (MBO) situation.

Syndication between ABL organizations for very large facilities is common.

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