Asset-Based Lending for Distributors and Wholesalers
Distributors and wholesalers are the same ABL file with two leanings. Both buy, hold, and sell. Working capital is in invoices after the sale and in inventory before it. The label on the door matters less than whether availability will come mostly from AR or mostly from stock.
Terms, advance rates, and facility size sit on the Asset-Based Lending page.
How This File Is Underwritten
AR-heavy distributor: Authorized lines, dealer or retailer invoices, faster turns. The lender spends more time on the aging: eligibility days, chargebacks, rebates, advertising accruals, and whether you buy from the same account you sell to. One large retail or dealer customer can cap the base even if the rest of the book looks clean.
Inventory-heavy wholesaler: Deeper stock, seasonal builds, more SKUs. The lender spends more time on mix and turns: what will actually sell, what is private label vs branded, what is dated or in the wrong season. Warehouse location and how you count stock show up in the field exam.
Both files still need a real aging and a real inventory file. A distributor with almost no stock can look like a factoring candidate. A wholesaler with weak invoices and aged and obsolete inventory does not get a larger cap just because the warehouse is full.
What Usually Binds
- Eligible AR: Sets most availability on the distributor-leaning file.
- Inventory mix and turns: Sets most availability on the wholesaler-leaning file.
- Customer concentration: A handful of accounts can cap the revolver.
- Vendor rebates, dilutive credits, and contras: Shrink AR relative to the gross aging.
- Seasonal inventory: Availability rises into the build and falls if the season misses.
- Cash flow: Reviewed for ongoing operations. Not the primary sizing test.
What To Send First
- AR aging and AP aging
- Inventory by category or SKU, with turns or aging if you have it
- Top customers and top vendors
- Rebate, chargeback, or accrual detail if those are material
- Last year-end financials and current interim
- Debt schedule and current line (cap, unused, dominion)
- Bank statements
- Any existing borrowing-base certificate
The first question is which side of the base is real: collectible invoices, salable stock, or both.
When This Is The Wrong Product
If there is almost no inventory and the book is creditworthy B2B invoices, invoice factoring may be simpler than a full borrowing-base revolver.
If the stock is slow, seasonal-miss, or uncounted, ABL will not treat the warehouse as cash. Fix the inventory story or size a smaller line to AR only.
If the company needs a term loan against earnings and the trade book is thin, use cash-flow or SBA sizing, not a forced ABL.
FAQs
Do we need two facilities, one for AR and one for inventory?
Usually no. One revolver, one base, two components. Reserves and eligibility differ by component.
We are an exclusive distributor. Does that help?
It can help the customer and vendor story. It does not replace an aging or a concentration limit.
Will the lender visit the warehouse?
On an inventory-heavy file, expect a field exam and ongoing reporting. On a thin-stock distributor, the exam is lighter and AR-focused.
Can this replace a maxed bank line?
Yes, if the base supports more than the current cap.