Which funding products does this apply to?

Business Line of Credit, Invoice Financing, Asset-Based Lending. Each has its own page listing the funders in this directory that offer it and what each one publishes about its terms.

Are the figures here quotes?

No. Every worked example is labelled illustrative and exists to show the arithmetic. What a particular lender charges is on that lender's page, where it publishes it at all.

The Find Me Funders research desk. Some drafting is AI-assisted, and every page that is says so at the top, including whether a person has checked its claims yet.

How do I know a figure here is right?

Where a page carries the green notice, its claims were checked against the sources listed at the end and a reviewer is named. Where it carries the amber one, nobody has verified it yet and you should confirm anything you plan to act on.

Are the examples real deals?

No. Every worked example is labelled illustrative and exists to show the arithmetic. What any particular lender charges is on that lender's page, where it publishes it.

Why do you never say what a typical rate is?

Because we cannot source it. A market average assembled from lenders who do not publish prices is a guess with a decimal point on it. Where a lender publishes a figure, we show that figure and say where it came from.

Is this financial or legal advice?

No. It is general information about how these products work. Outcomes depend on your contract and your state, and a lawyer or accountant licensed where you are is the person to ask about your situation.

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Quote a paragraph with a link back. Do not republish whole articles.

Asset-based lending vs factoring for the same receivables

Asset-based lending versus factoring for the same receivables

One lends against the ledger and leaves you to collect. The other buys specific invoices and collects them itself. The receivables are identical; almost nothing else is.

By Find Me Funders research desk Updated 14 September 2026 1090 words 5 min read

Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.

What is the difference between asset-based lending and factoring for the same receivables?

An asset-based facility is a loan secured by your whole receivable ledger, sized by a borrowing base, with you still owning and collecting the invoices. Factoring is a sale of specific invoices, where the factor owns them, usually notifies your customer, and collects directly. Factoring is easier to qualify for and priced per invoice; an asset-based line is usually cheaper on the same volume but demands reporting infrastructure, covenants and often cash dominion.

Same collateral, two entirely different relationships.

The structural difference

Asset-based lending.You borrow against the ledger. The invoices stay yours, the lender takes a lien on them, and a borrowing base decides how much you can draw. You keep collecting, unless the facility has cash dominion, in which case the money routes through a lender-controlled account but the receivable is still your asset.

Factoring.You sell specific invoices. The factor pays you most of the face value now, holds a reserve, collects from your customer, and releases the reserve less its fee when payment arrives. Ownership transfers. See invoice factoring.

Who talks to your customer

Most factoring is on notification: your customer receives a notice of assignment and pays the factor directly. In some industries that is completely unremarkable. In others it is read as a distress signal. Non-notification factoring exists but is harder to qualify for.

An asset-based lender normally has no contact with your customers while the facility performs, which is one of the real reasons companies prefer it.

Qualifying

Factoring is easier. The decision leans on your customers' credit rather than yours, and a young or unprofitable business with strong debtors can often factor when it cannot borrow. An asset-based facility requires reporting systems, reconcilable data, financial statements and usually a minimum size, because the monitoring cost does not scale down well.

Cost, honestly

On the same volume, an asset-based line is normally the cheaper structure — interest on what you draw, plus fees — while factoring is priced as a discount per invoice for the days it is outstanding, plus service charges. But the comparison depends on utilisation. A facility with an unused line fee, a monitoring fee and exam costs, drawn lightly, can cost more per dollar borrowed than factoring the handful of invoices you actually needed to finance.

Compare them the same way: total cost over twelve months divided by the average funds you actually had, not headline rate against headline discount.

The other differences that decide it

Covenants. Factoring generally has none. An asset-based facility has reporting and often financial covenants.
Recourse. In factoring, recourse decides who eats an unpaid invoice. Most facilities are full recourse, and non-recourse usually only covers customer insolvency, not disputes.
Flexibility. You can factor selectively, invoice by invoice. A borrowing base takes the whole ledger.
Exit. Both often carry minimum volume commitments and termination fees. Read those before you compare anything else.

The comparison run properly

Illustrative only —suppose you invoice $2,400,000 a year and customers pay in 45 days on average, so roughly $295,900 of receivables is outstanding at any moment. Every figure below is constructed to show the method.

Put an asset-based facility with a $500,000 commitment next to it: interest at 11% on the drawn balance, an unused line fee of 0.5%, monitoring at $750 a month, and $8,000 a year of field exam costs. Against it, factoring at an 85% advance rate and a discount of 2% per 30 days or part thereof, which at 45 days is two periods, so 4% of face.

Heavy use.You keep around $200,000 drawn all year. The facility costs $22,000 of interest, $1,500 of unused line fee, $9,000 of monitoring and $8,000 of exams — $40,500, or 20.2% of the money you actually had. Holding the same $200,000 by factoring means financing about $1,908,000 of invoices across the year at 4% each, which is $76,340, or 38.2%.

Light use.The need turns out to be $60,000 on average. The facility now costs $6,600 of interest, $2,200 of unused line fee and the same $17,000 of monitoring and exams — $25,800, or 43.0% of the money you had. Factoring the same $60,000 of average funds costs $22,902, still 38.2%, because factoring carries almost no fixed cost to spread.

The crossover is utilisation, not rate. Fixed costs make the asset-based facility cheap when you use it and expensive when you do not. Run it on your own expected drawn balance before anyone quotes you a spread.

The concentration problem, which hits both

If one customer is 45% of your ledger, neither structure treats that ledger the way you do. An asset-based lender applies a concentration cap: receivables from any one account debtor above a stated share of the total drop out of the base. A factor decides customer by customer, and may take that customer's invoices at a lower advance or decline them.

The result is the same in both. The invoices you most want financed are the ones the formula likes least. Ask for the concentration limit as a number before you build a forecast on the facility.

What changes on the day something goes wrong

A disputed invoice.In factoring, a dispute usually makes the invoice ineligible and triggers a chargeback to you, often within a stated number of days. In an asset-based facility it comes out of the borrowing base at the next certificate, which can create an over-advance you have to repay.

A slow customer.Both structures age receivables out, commonly at 90 days. The receivable still exists; the financing against it stops.

Dilution.Credit notes, short payments and settlement discounts all reduce what a dollar of invoice actually collects. Asset-based lenders measure it and hold a reserve against it; factors price it into the advance rate. If your credit note volume is high, expect it to be found and expect it to cost you.

Ask both providers the same six questions

The full eligibility and ineligibility list in writing, including concentration limits and the aging cut-off.
The advance rate, and every reserve that sits behind it.
Total annual cost in dollars at two drawn balances — the one you expect, and half of it.
Whether your customers will be notified, and the exact wording of the notice.
The recourse position on an unpaid invoice, and how many days you have before a chargeback.
The minimum volume or minimum fee, the initial term, the notice window, and the termination fee.

Put the two sets of answers side by side. The structures differ enough that nothing shorter than that makes them comparable.

A rough rule

If you have receivables, reporting systems and enough volume to absorb monitoring costs, price the asset-based facility first. If your systems are thin, your customers are stronger than your balance sheet, or you only need to finance certain invoices, factoring is the structure that will actually be available to you.