Unlocking Working Capital for Florida’s Growing Companies

Maintaining robust cash flow is a perennial challenge for mid-sized and large companies. Factors such as seasonal variation, rapid scaling and complex capital needs can present particular difficulties in financial planning. These enterprises often require strategic financing options to ensure they can navigate the complexities of the fast-paced business world.

Asset-based lending (ABL) is a powerful tool to help businesses secure the capital they need to succeed. They can leverage assets they already own to gain access to flexible working capital, tapping into a secure, affordable source of funding that can flex and scale with their operations.

ABL is a practical, responsive solution that enables stability and growth. It offers particular benefit to Florida businesses, which often face challenges managing cyclical revenue and are in many cases expanding to meet tourist demand.

What Is Asset-Based Lending?

Asset-based lending is a type of commercial financing that secures funding by using a company’s assets, such as inventory, equipment or real estate. Compared to traditional loans, ABL has a lower emphasis on credit scores and financial histories, instead focusing on the value of the collateral. This approach benefits businesses by offering them greater flexibility in borrowing and access to larger loan amounts.

ABL is a version of secured lending in which lenders require tangible collateral to reduce risk and enable lower interest rates, higher loan amounts or more lenient eligibility requirements. In contrast, lenders make unsecured loans based on an assessment of creditworthiness, which typically results in higher interest rates, lower loans amounts and stricter eligibility rules.

The amount of capital accessible via ABL is determined by the “borrowing base,” a formula that involves a certain percentage of the asset value. The borrowing base increases in proportion to the value of the company’s assets, allowing companies to borrow as they grow.

How Asset-Based Lending Supports Growth

Access to working capital is nonnegotiable for growing enterprises, and ABL offers funding that expands with a company. Businesses can meet their daily operational needs or pursue expansion opportunities without disruption to their cash flow. They utilize ABL for a range of purposes, including funding payroll, expanding operations and replenishing inventory.

ABL offers the advantage of flexibility and scalability, enabling barrier-free growth. ABL supports improved cash flow management, enabling companies to remain flexible and utilize cash strategically. Additionally, available credit increases as a business gains customers, boosts inventory or acquires new assets. As a result, ABL is particularly well-suited to support rapid business growth, multi-location operations and companies with complex supply chains. ABL can be especially useful in industries that tend to involve high asset values and a need for robust cash flow, such as manufacturing, distribution, wholesale, logistics and healthcare.

Asset-Based Lending Solutions for Florida Commercial Enterprises

Florida businesses operate in a unique environment defined by tourism, seasonal cycles and the heavy presence of agriculture. Retail, hospitality, agricultural and many other enterprises face fluctuating customer demand and production timelines.

Asset-based lending helps Florida businesses navigate variable cash flow by providing access to capital in a way that aligns with seasonal patterns and changing demand. ABL allows for strategies such as increasing inventory ahead of the peak tourist season to seamlessly take advantage of demand spikes.

For example, a regional Florida wholesaler serving statewide retailers may require additional working capital to expand its distribution capacity. By leveraging its real estate to secure funding through ABL, the wholesaler taps into a flexible credit line that allows it to upgrade its logistics, buy new delivery vehicles and secure inventory in anticipation of high-demand seasons.

In this way, ABL provides Florida enterprises the flexibility and financial security to smoothly respond to market changes while continuing to pursue growth.

Is Asset-Based Lending Right for Your Business?

Asset-based lending is ideal for companies that are asset-rich, expanding their operations or managing complex capital requirements. If your business maintains valuable inventory, equipment or real estate, ABL can transform those assets into accessible working capital.

ABL is also highly valued by companies seeking flexible credit structures, customized lending options and relationship-based banking. Lending with ABL can be personalized to support operational scale, industry pressures and long-term plans.

ABL can typically allow for higher levels of lending with fewer restrictions compared to other financing options. Here’s how ABL compares to other loan options:

• Business line of credit: A business line of credit, which relies on creditworthiness and provides fixed borrowing limits, is less flexible and scalable than ABL but is a good option for a growing business without high-value assets.
• Working capital loans: Working capital loans rely on credit strength and typically offer fixed, short-term funding for daily operation, making them more limited than ABL but good for companies seeking stability and steady cash flow.
• Inventory financing: Inventory financing, which gives funding based on inventory alone as the borrowing base, severely curtails the amount of accessible capital compared to ABL and is best for businesses with lower credit scores or high-value inventory.

Determining whether ABL is right for your business may require input from a specialist. Seacoast Bank’s commercial lending advisors help business leaders explore lending options, with ABL as a promising option for larger, fast-growing and more complex organizations.

FAQs About Asset-Based Lending

Contact Seacoast to Learn About Asset-Based Lending

Asset-based lending is a powerful tool that can help Florida businesses unlock working capital, stabilize their cash flow and pursue growth. The flexibility and scalability of ABL make it an ideal choice for mid-sized to large enterprises that need to navigate seasonal fluctuations, compete in a rapidly changing environment and expand their business as new opportunities arise.

Seacoast Bank’s lending specialists can help you investigate which lending solution is the best fit for your goals. Speak to a banker today by filling out our contact form below and learn more about how asset-based lending can support your future success.