Glossary · Trucking Finance
Asset-Based Lending (ABL).
Revolving credit facility secured by accounts receivable, equipment, or inventory; typical for fleets with $5M+ annual revenue.
What it is
Asset-Based Lending (ABL) is a revolving credit facility secured by tangible business assets — primarily accounts receivable, but also equipment, inventory, and sometimes real estate. Borrowing capacity is calculated against a borrowing base: typically 80–85% of eligible receivables plus an advance rate against equipment. Pricing usually runs Prime + 2–6%, materially cheaper than factoring.
ABL lenders require a field exam (an independent auditor verifies receivables, equipment, and controls), monthly borrowing-base certificates, and financial covenants on liquidity, leverage, and fixed-charge coverage. Minimum facility size is usually $1M+, with most ABL lenders preferring $5M+ in commitment. Major ABL providers active in trucking include Triumph Bancorp, eCapital, Wells Fargo, and Bank of America Merrill Lynch. Some facilities bundle equipment-loan tranches alongside the revolver to consolidate the carrier's debt stack with one lender.
Why it matters for trucking finance
ABL is what factoring graduates into for mid-sized fleets. Same concept — lending against receivables — but cheaper, more flexible, and less operationally invasive (no per-invoice verification, no broker notification on every load). Transitioning from factoring to ABL is a milestone for growing fleets, typically around $5M annual revenue. Underwriting is more rigorous (audited financials, projections, covenants) but unlocks materially lower cost of capital — often 4–8% all-in versus 12–20% on factoring spread.
Related terms
- Working Capital — Short-term unsecured business funding used to bridge cash-flow gaps, cover operating expenses, or capitalize on opportunities; APR typically 14–34%.
- Line of Credit — Revolving credit facility allowing the carrier to draw funds as needed up to an approved limit; pays interest only on drawn balance.
- Recourse Factoring — Factoring arrangement where the carrier remains liable for unpaid invoices if the broker fails to pay; lower rates than non-recourse.
Related Dispatched products
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The vocabulary above is the upper-funnel layer. If you are ready to move on financing, factoring, or insurance, start the matching flow — soft pull, no credit impact to begin.