Your receivables can carry more credit than your bank line does.
A ledger based line advances against what your customers already owe you and grows as you bill. Availability is set by your receivables, not only by last year's earnings. We qualify it, structure it, and place it with the right lender.
Cash flow lending runs out before a growing business does.
Most bank lines are sized to a multiple of trailing earnings. That works until the business changes faster than the financial statements do.
Sales are outrunning the line
New customers and bigger orders mean more receivables to carry. A line sized to last year's earnings stays flat while your working capital need climbs.
Earnings took a step back
A soft year, a one time cost or a margin squeeze can trip a leverage covenant even when the customer base is solid. Receivables based availability holds up better.
You are paying for expensive capital
Invoice factoring, stacked advances or high cost term debt can often be replaced by a revolving line priced against the same receivables.
A transition is coming
An acquisition, a partner buyout, a recapitalization or a large new contract all need flexible capital that scales with the operating business.
A line that resets with every invoice.
Ledger based lending looks at your receivables as a pool, not invoice by invoice. Your customers keep paying you the way they do today.
Your invoice
Every new invoice adds to the pool of receivables that supports the line.
Availability resets
The lender applies an advance rate to eligible receivables, typically weekly or monthly, through a borrowing base report.
Draw as needed
Borrow up to available capacity for payroll, inventory or growth, and pay interest only on what you use.
Collections repay
As customers pay, collections reduce the balance, and the capacity is there to draw again.
More room than a cash flow line. Less friction than factoring.
| Ledger based line | Invoice factoring | Cash flow bank line | |
|---|---|---|---|
| What sets the size | Eligible receivables in the pool | Each invoice sold | A multiple of trailing earnings |
| Grows with sales | Yes, automatically | Yes, invoice by invoice | Only when renewed or amended |
| Customers involved | Usually not notified | Usually notified to pay the factor | No |
| Reporting | Borrowing base report, aging, periodic field exam | Schedules of invoices submitted | Financial statements and covenant tests |
| Relative cost | Moderate | Highest | Lowest, when you qualify |
General characteristics only. Terms vary by lender, industry and borrower profile.
What could your receivables support?
Lenders do not advance against every dollar of receivables. Invoices aged past 90 days are usually excluded, and a single customer above a set share of the pool is capped. See everything lenders exclude.
Enter three numbers to see a rough range. It takes about a minute.
Illustrative estimate only. Not an offer or commitment to lend. Actual availability depends on lender review, field examination and the eligibility terms negotiated.
Built for established businesses that sell to other businesses.
Strong candidates
- Roughly $5M to $100M in annual revenue
- Business to business or government receivables
- Manufacturing, distribution, staffing, transportation and business services
- Federal contractors with steady billing history
- Growing faster than the current bank line allows
Usually a harder fit
- Consumer receivables or cash register sales
- Construction billing heavy with retainage and progress payments
- Receivables concentrated in one or two slow paying customers
- Pre revenue businesses or very small receivable balances
- Unresolved tax liens or disputed receivables
Most of the work happens before a lender sees the deal.
Asset based lenders underwrite the collateral closely. A clean package gets better terms and closes faster. We handle that work and stay in it through closing.
Analyze
We review your aging, customer mix, financials and current debt to size a realistic line.
Qualify
We find what a field examiner will find, from aged balances to concentration and liens, and address it up front.
Structure
Advance rates, eligibility, reporting frequency and cash control terms that fit how you actually operate.
Execute
We place the deal with the lender best suited to it, negotiate the terms, and stay with you to closing.
Illustrative scenario. Not a specific client or transaction.
A distributor doing about $14M in revenue had a $1.5M bank line sized to its earnings. Sales grew 30% in a year and receivables climbed past $3M, but the line stayed where it was. The owner was stretching suppliers to make payroll.
Moved to a ledger based line, those same receivables could support well over $2M in availability, rising with every month of new sales. The business stopped financing its growth out of supplier terms.
What owners ask us first.
Will my customers know I have an asset based line?
Usually not. In a ledger based structure your customers keep paying you, often into a lockbox or a designated account. That is different from factoring, where customers are typically told to pay the factor directly.
What is a field exam?
Before closing, and periodically after, the lender sends an examiner to test your receivables and reporting. It confirms the borrowing base is accurate. We help you prepare so there are no surprises.
Are there covenants?
Usually fewer than a cash flow loan. Many asset based lines carry a single coverage test that only applies if availability drops below a set level. Terms vary by lender, and we negotiate them.
Can inventory or equipment be included?
Often, yes. Many lenders add an inventory component to the borrowing base, and equipment or real estate can support a term piece alongside the revolver. It depends on the collateral and the lender.
How long does it take?
From a complete package, many asset based lines close in roughly 45 to 90 days, including the field exam. Preparation on our side shortens that.
How is Cobalt paid?
Advice is free. We are compensated when financing closes, and we disclose how before you commit to anything.
Tell us about your receivables.
A Managing Partner reviews every inquiry, usually within one business day. No credit pull and no obligation to start the conversation.
- If there is a fit, we will ask for a recent aging report and financials.
- Your borrowing base estimate is included with your message.