About: Frequently Asked Questions

Asset-based lending (ABL) is a type of financing where a loan is secured by a company’s assets, such as accounts receivable, inventory, or equipment. This financing solution offers businesses an alternative to traditional loans, especially for companies that may struggle to secure capital through banks due to strict credit requirements. ABL allows business owners to unlock capital from their existing assets to fuel growth, cover operational expenses, or stabilize cash flow.

Asset-based lending (ABL) differs from traditional bank financing in its focus on the quality of the underlying collateral, rather than relying solely on a business’s creditworthiness. While banks prioritize the financial health and credit profile of a business, ABL lenders evaluate the value and performance of tangible assets. This flexibility allows asset-based lenders to offer solutions to businesses that may be considered too risky for conventional banks, making ABL an attractive option for many companies in need of financing.

Asset-based lending (ABL) serves a wide range of businesses, including manufacturers, wholesalers, distributors, and service providers. ABL is ideal for:

• Startups (1–3 years in operation) needing capital to support growth.
• Businesses with financing needs exceeding what traditional banks can offer.
• Companies facing financial difficulties that require a more flexible lending solution.
• Established businesses seeking capital to expand product lines, upgrade equipment, or boost revenue.

If your business needs financing for expansion, restructuring, or to navigate financial challenges, asset-based lending can help.

Many people confuse accounts receivable financing with factoring, but there are key differences. Factoring involves selling your accounts receivable to a lender at a discounted price. In contrast, accounts receivable financing through asset-based lending allows you to borrow money based on the value of your receivables while retaining ownership and control over them. This means you maintain control of your customer relationships and don’t need to sell off your invoices to access cash.

Celtic Capital offers several advantages that set us apart from other asset-based lenders, including:

• Personalized, creative, and flexible lending solutions tailored to your unique business needs.
• No financial covenants, giving you the flexibility to run your business without being restricted by strict requirements.
• No Lockbox, leaving you in control of your collections.
• Fast funding, with typical approval and disbursement in just 30 days after receiving a complete financial package.
• Client Access, our easy-to-use online account management tool.

Since 1982, Celtic Capital has been a trusted partner for companies seeking capital. Our approach is to focus on long-term relationships and provide financing solutions that promote business growth.

Yes! The vast majority of our clients successfully transition to traditional bank financing after working with us. Our primary goal is to help your business achieve financial stability and prepare you for future bank loans. When our clients are able to obtain bank financing, we view it as a shared success.

Asset-based lending (ABL) offers flexibility in how you use the capital. Common uses include:

• Business expansion or acquisition.
• Restructuring or business turnaround.
• Recapitalization for improved financial health.
• Taking advantage of supplier discounts.
• General cash flow needs.

Being a direct lender means that financing comes directly from Celtic Capital, without intermediaries or third parties involved. This allows us to offer more streamlined processes, faster approvals, and better control over the terms of your loan.

Loan pricing is customized to fit the unique needs of your business. There are no “standard” fees. All fees and terms will be clearly outlined in your Proposal, ensuring transparency and no unexpected costs down the line.

We believe that business owners should manage their businesses to suit their needs and wants instead of to financial covenants. This can be especially significant if a business is struggling, is seasonal, or if the owner wants more flexibility in how the business is managed. Covenants can be difficult for a borrower – the borrower must be in compliance and report to the lender that they are in compliance otherwise the lender can impose remedies (i.e., tighter borrowing limits, a freeze on borrowing, default interest rate increases or even asking the client to the exit the relationship). Our focus is on collateral performance, not financial covenants.

Many business owners don’t like losing control of their collections. That’s why we have a non-notification system that makes our deals invisible to the customers of our borrowers. Our borrowers’ customers will not send checks to us; they will continue to send checks directly to our borrowers.

Absolutely! Celtic Capital doesn’t compete with banks; we complement their services. Your bank can continue to manage your operating accounts, and you can use any other bank services that are right for your business. Plus, when your bank is ready to lend to you again, you can transition back without penalties.

Accounts receivable financing is a financial solution that allows businesses to unlock cash flow by using their outstanding invoices as collateral. Instead of waiting for customers to pay, businesses can get an immediate cash advance from an asset-based lender. This form of financing helps businesses manage working capital, pay expenses, and fuel growth.

In accounts receivable financing through an asset-based lender, your business uses its outstanding invoices as collateral to secure immediate working capital. The lender will assess your accounts receivable and typically offer a percentage of the invoice value as an advance. Unlike factoring, which involves selling your invoices to a third party, asset-based lending is a loan secured by your receivables. Once your customers pay the invoices, the repayment goes to the lender, and the remaining balance (minus fees) is returned to your business. This type of financing allows you to maintain control over your customer relationships while leveraging your receivables to improve cash flow.

Accounts receivable financing provides several benefits for businesses, including:

• Improved cash flow by accessing immediate funds from outstanding invoices.
• Doesn’t require giving up equity.
• Flexible financing that grows with your business as your sales increase.

Faster access to funds than traditional loans or lines of credit.

Most businesses with outstanding invoices can qualify for accounts receivable financing, including small and mid-sized companies. Eligibility typically depends on your business’s invoicing practices, the quality of your customer base, and the volume of outstanding receivables, rather than a strict annual revenue minimum. While some asset-based lenders may require a minimum in annual revenue, those thresholds usually depend on your industry and the strength of your accounts receivable. Businesses that have creditworthy customers and a steady flow of invoices are more likely to qualify, regardless of their annual revenue.

The amount of financing you can receive through accounts receivable financing depends on the total value of your outstanding invoices. Lenders usually advance up to 85-90% of the value of your accounts receivable. The quality of your customers’ credit and the age of the invoices also play a role in determining how much you can access.

Funds from accounts receivable financing can typically be accessed within 24 to 48 hours of submitting your invoices. This makes it one of the fastest ways to get working capital compared to traditional financing methods, allowing you to continue operations without delays.

Yes, there are fees associated with accounts receivable financing through an asset-based lender, but they are generally structured as interest rates or financing fees. Instead of the factoring fees seen in invoice factoring, asset-based lenders typically charge:

• Interest on the loan: This is usually calculated based on the amount of capital you’ve borrowed and the time you hold the advance.
• Origination fees: Some lenders may charge a one-time fee for setting up the financing arrangement.
• Maintenance or service fees: These fees may cover the costs associated with managing the loan, including monitoring your receivables.

The total cost can vary based on things like the size of the loan, the length of the financing agreement, and the risk associated with your business. These fees are typically lower than the fees charged in factoring, and they offer more flexibility in terms of repayment.

While both accounts receivable financing and factoring involve using invoices as collateral, the main difference lies in the structure of the arrangement. In factoring, the lender (factor) purchases your receivables outright and takes over collections. In accounts receivable financing, you retain control over your customer relationships and collections, and the lender simply provides a loan based on the value of your receivables.

Businesses that have slow-paying customers or need quick access to cash to cover operating expenses can benefit the most from accounts receivable financing. Industries such as manufacturing, wholesale distribution, staffing agencies, and service providers often rely on accounts receivable financing to smooth out cash flow gaps caused by extended payment terms.

If your business struggles with cash flow gaps due to long payment cycles, accounts receivable financing could be a great option. It’s ideal for businesses that need quick access to funds but don’t want to give up ownership, need funds a bank won’t provide, or are looking to grow.

Many people confuse accounts receivable financing with factoring, but there are key differences. Factoring involves selling your accounts receivable to a lender at a discounted price. In contrast, accounts receivable financing through asset-based lending allows you to borrow money based on the value of your receivables while retaining ownership and control over them. This means you maintain control of your customer relationships and don’t need to sell off your invoices to access cash.

Equipment refinancing is a financing option that allows businesses to use existing equipment as collateral to secure new funding. This process helps businesses unlock the value of their owned equipment and improve cash flow. By refinancing equipment, companies can access additional capital to meet other financial needs, whether it’s for expansion, operations, or debt consolidation.

Most types of equipment, including machinery, vehicles, and heavy-duty tools, can be refinanced as long as they are in good working condition and possess significant market value. Asset-based lenders typically have specific criteria regarding the age, condition, and value of the equipment. While well-maintained and relatively new equipment is often eligible for refinancing, outdated or poorly maintained assets may not qualify.

Refinancing equipment through an asset-based lender offers several key benefits:

• Improved Cash Flow: to meet immediate business needs.
• Access to working capital: without tying up other assets.
• Streamlined process: through an asset-based lender rather than with a traditional lender.
• Retain Ownership: of your equipment while gaining greater financial flexibility.

Not all lenders provide equipment-only financing. At Celtic Capital, we make equipment-only loans on existing manufacturing equipment (and/or rolling stock) that’s company-owned and housed in its own facility. We lend on 80% of the equipment’s forced liquidation value. The key is that the equipment should be necessary for your business operations and have a proven resale or market value.

Most businesses that own equipment, including manufacturing companies, and transportation businesses, can qualify for equipment-only financing. Celtic Capital evaluates the value of the equipment rather than focusing on the company’s balance sheet. As long as the equipment is in good condition and has sufficient value, you could qualify for a loan or line of credit to help you expand or upgrade your operations.

Unlike traditional equipment refinancing loans which may require additional collateral like receivables, equipment-only financing focuses solely on the equipment itself. This means your business can obtain financing based on the value of the equipment, and the lender holds the equipment as collateral, reducing the need for other forms of security.

Equipment-only financing through Celtic Capital offers several key benefits:

• Improved Cash Flow: to meet immediate business needs.
• Access to working capital: without typing up other assets.
• Streamlined process: through an asset-based lender rather than with a traditional lender.
• Retain Ownership: of your equipment while gaining greater financial flexibility.