Asset-Based Lending for Food and Beverage
Food and beverage (F&B) is an inventory-and-receivables business with dates on the stock and deductions on the invoices. ABL sizes the line to eligible AR and eligible inventory and adjusts for aged or customer-specific stock. The plant capacity and the brand sit behind the borrowing base.
Terms and facility size sit on Asset-Based Lending.
How This File Is Underwritten
Receivables come first. Grocers, foodservice, distributors, and GPOs pay. They also deduct slotting, spoils, billbacks, and shortage claims. Availability is the aging net of those items. One chain or one foodservice contract can be most of the book. Related-party invoices, rejected loads, and consignment settlements stay out of the first certificate.
Inventory is what sets an F&B file apart. Lenders care what the SKU is, how long it is good, and where it sits: plant, 3PL, public freezer, bonded, or in transit. Branded finished goods with a long code date advance better than ingredients, packaging, or customer-specific private label that only one retailer will take. Frozen and refrigerated work when the warehouse is real and shrink is measured. Commodities that reprice every week are a different file than packaged goods with a 12-month date. In-transit imported food can sit in the base when title, insurance, and landing are clean.
Holiday beverage, harvest, back-to-school protein, and summer fill produce a peak inventory and a stretched revolver. The line has to rise through that peak and pay down when the receivables convert. Lenders will ask for last year’s peak, last year’s paydown, and what is different this year.
Recalls, FDA or USDA history, slotting commitments, and a co-packer who holds finished goods are part of the file.
What Usually Binds
- Eligible AR after deductions and customer concentration
- Eligible inventory after code date, location, and SKU quality
- Turn speed versus expiration
- Peak-season need versus availability in a normal month
- Existing bank line, borrowing-base certificates, and whether that lender stays or is taken out
- Field-exam findings on shrink, commingling at a 3PL, and billback reserves
What To Send First
- AR aging by customer, plus deduction or billback history if you have it
- Inventory by SKU class, location, and age or code date
- Customer list and concentration
- Last year-end financials and current interim
- Existing line, latest borrowing-base certificate, and field-exam if one exists
- Bank statements
- Co-packer or 3PL agreements when that is where the stock lives
- Last seasonal peak and how the line paid down after it
The first question is how much of the current stock and the current aging a lender will call eligible, not what the warehouse is worth on a cost report.
When This Is The Wrong Product
If inventory is thin or too risky to advance on and the invoices are clean commercial bills, use factoring. If the need is a building you will occupy, a long-lived line, or a term loan against earnings, look at SBA 7(a) expansion, SBA 504, or equipment financing. If the clock is one purchase order and there is no invoice yet, use short-term capital for a PO or contract only as a bridge, then come back to ABL if this book is going to stay.
FAQs
Can we advance on ingredients and packaging?
Sometimes, at a lower rate than finished goods, and only if they are usable in the current program. Customer-specific packaging for a retailer that dropped the line usually comes out.
What about product at a retailer or on consignment?
Usually ineligible until it is sold and invoiced. Consignment is not borrowing-base inventory.
Does a recall kill the line?
It can freeze eligible inventory and put reserves on related AR. Disclose food-safety history in the first package.
Is imported food an importer page or this page?
This page if the company is an F&B processor or distributor. Landed-cost and LC detail goes in the first package.
Can this sit next to a bank line?
Yes, with a clean split of collateral or a takeout of the line that will not grow. Structure follows the current documents.
Do we need a field exam before a term sheet?
Many F&B files get one before or just after close because dates and 3PL locations do not show up cleanly on a spreadsheet.