What the base is allowed to include
Trade AR that meets aging and concentration tests. Inventory that survives excess-and-obsolete and eligibility screens. Iron only if the lender will take an OLV appraisal and a lower advance. Customer-owned tooling does not belong in the base. WIP may be ineligible or sharply haircut. The field exam tests whether the books match the floor.
Federal Reserve G.17 printed manufacturing utilization at 76.0% (Source: Federal Reserve G.17). A busy national print does not make ineligible AR eligible.
What ABL will not replace
SBA 7(a) still finances change-of-ownership goodwill inside a $5 million box (Source: SBA). ABL will not. SBA versus ABL versus mezzanine is the comparison owner. Many plants use ABL as the revolver after close, not as the entire purchase check.
BLS May 2025 machinist median pay of $58,750 is a labor backdrop, not an advance rate (Source: BLS).
| Base component | Typical role | Common haircut |
|---|---|---|
| Eligible AR | Primary revolver | Aging, offsets, concentration |
| Eligible inventory | Secondary | E&O, WIP, customer-owned |
| M&E at OLV | Term or sublimit | Appraisal + lower advance |
| Goodwill | Not in the base | Use 7(a) or equity |
Who should not shop ABL first?
A buyer whose entire price is intangible. A job shop whose AR is 80% one customer. A seller who will not allow a field exam. Jason Taken is a business broker. Educational information only. The lender owns the exhibit.
How a plant borrowing base usually gets built
The lender’s exhibit defines eligible AR: typically under a stated aging bucket, not in dispute, not due from affiliates, not offset by customer tooling or quality claims. Then an advance rate — often discussed in market-practice ranges of 70–85% on eligible AR — is applied to what remains. Inventory is similar: raw and finished that can be sold, not customer-owned, not obsolete, often with a lower advance and a cap. WIP is frequently ineligible or token. Machinery, if included, rides an OLV appraisal and a still-lower advance.
Certificates are weekly or monthly. If the controller cannot produce one, you do not have an ABL candidate. If the shop bills milestone work that is not yet shippable, ask whether that AR is eligible before you model availability as if it were cash.
Acquisitions that need goodwill still need 7(a) or equity for that slice. ABL can sit beside that slice as the revolver that funds working capital after close. SBA versus ABL versus mezzanine is the comparison. This noun is only the base.
Do not print a promised advance rate on this site as a quote. Ranges are practice talk. The exhibit is the law of the facility. The glossary will not invent a rate.
Isolation
The glossary keeps ABL off the 7(a) H1. The FAQ holds the question. When the borrowing base is the real constraint, book a confidential intro call.
Concentration, offsets, and the truck that is not at the plant
A 40% customer with a quality-claim history can be ineligible or capped. A customer who owns tooling in your building can offset AR. Both are common on job shops. Model availability after those cuts, not before. If the revolver is the only way the buyer makes payroll in month two, those cuts are the deal. Pair ABL with a cash-flow piece or walk.
Resin on a railcar and parts at a processor can be eligible, ineligible, or capped depending on the exhibit. List the locations before the first certificate. Examiners love the location nobody mentioned. A CIM should not treat “ABL available” as a cash forecast. Bring an AR aging, an inventory-by-class export, the top customer percentages, and whether anyone else owns tooling in the building. Goodwill still needs another product. Asset-based lending is the manufacturing credit box. After the base noun is straight, a confidential intro call is the conversion path.
What ABL is not
It is not 7(a). Goodwill cannot sit in the base. Acquisitions that need goodwill still need 7(a) or equity for that slice. ABL can sit beside that slice as the revolver that funds working capital after close. It is not a promised advance rate this site will quote. Ranges are practice talk. The exhibit is the law of the facility.
How it shows up: eligible AR and inventory after offsets and concentration cuts, sometimes OLV of machinery. Certificates are weekly or monthly. If the controller cannot produce one, you do not have an ABL candidate. SBA versus ABL versus mezzanine is the comparison. This noun is only the base.