Who provides $3MM to $25MM receivables facilities?
At this size, the funders change. Facilities above $3MM are typically provided by larger independent factors, bank-owned factoring groups and asset-based lenders, both bank and non-bank. Each has a different appetite for leverage, reporting, industry and credit quality.
Our role is placement. We do not lend or fund. We package your file so it reads the way these funders underwrite, take it to a short list of those most likely to compete for it, and help you compare the term sheets that come back. Facilities under $3MM are handled through our direct invoice factoring track.
How does a borrowing base work?
A borrowing base is the formula that sets how much you can draw at any time. It starts with total receivables, removes ineligible accounts, applies an advance rate, and may add a smaller advance on inventory. You report it on a certificate, weekly or monthly, and availability moves with it.
Eligibility rules do most of the work. Common exclusions are invoices over 90 days from invoice date, cross-aged accounts (where too much of one customer’s balance is past due), foreign receivables without credit insurance, related-party sales, contra accounts where you also owe the customer, and concentrations above a cap, often 20%–30% per customer.
| Line | Amount |
|---|---|
| Gross accounts receivable | $12,000,000 |
| Less: over 90 days | ($900,000) |
| Less: cross-aged and contra accounts | ($400,000) |
| Less: concentration excess | ($700,000) |
| Eligible receivables | $10,000,000 |
| AR availability at 85% | $8,500,000 |
| Eligible inventory at 50% of cost, capped | $1,500,000 |
| Total availability before reserves | $10,000,000 |
| Less: availability reserves (e.g. rent, taxes) | ($300,000) |
| Net availability | $9,700,000 |
Asset-based lending vs. factoring at scale: what is the difference?
Both fund against receivables, but they are structured differently. Factoring is a purchase of invoices; asset-based lending is a revolving loan secured by receivables and often inventory. At this size, the practical differences are cost, control and covenants.
Companies with consistent profitability, clean financial reporting and an accounting team usually get better pricing from ABL. Companies with losses, rapid growth, a covenant problem or concentrated customers often fit better with a large factor, which leans on customer credit and controls collections more directly. The factoring vs. ABL guide goes deeper.
| Feature | Large factoring facility | ABL revolver |
|---|---|---|
| Legal form | Purchase of receivables | Revolving loan secured by AR and often inventory |
| Pricing | Fee per period or prime-plus; higher overall | Interest over a benchmark plus unused and collateral fees |
| Covenants | Few or none | Often a fixed charge coverage test, sometimes springing |
| Collections | Customers pay factor directly | Lockbox or blocked account; customers may not see a change |
| Reporting | Schedules of accounts per funding | Borrowing base certificate, AR and AP agings monthly or weekly |
| Best fit | Growth, losses, turnarounds, concentrated customers | Profitable, stable, strong reporting |
What is a field exam and how should you prepare?
A field exam is an on-site or remote review of your books by examiners working for the funder. They test whether your receivables are real and collectible and whether your reporting is reliable. It is standard in ABL and in larger factoring facilities, and it is usually repeated once or twice a year after closing.
Examiners typically trace sample invoices to proof of delivery and cash receipts, review credit memos and dilution, test AR aging accuracy, check that sales and payroll taxes are current, and review AP for vendors who could claim priority. Expect the exam fee to be charged to you. Clean, reconciled records shorten it and help pricing.
- Reconcile AR aging to the general ledger before the exam starts.
- Pull dilution history: credits, returns, discounts and write-offs for the last 12 months.
- Have proof of delivery or acceptance ready for your largest customers.
- Document tax payments, insurance and any liens or judgments.
What does the placement process look like?
A competitive placement takes roughly four to eight weeks, longer if inventory appraisals, an SBA or bank intercreditor, or a turnaround story are involved. The goal is to get two or three real term sheets so you can compare advance rates, eligibility, pricing, covenants and reporting rather than accept the first offer.
| Week | Milestone |
|---|---|
| 1 | Intake call, AR and AP agings, financials, borrowing base estimate |
| 1–2 | File packaged; targeted outreach to a short list of factors and ABL lenders |
| 2–3 | Funder calls with management; indicative term sheets |
| 3–4 | Term sheet comparison and selection; deposit for diligence |
| 4–7 | Field exam, appraisals if needed, legal documentation, intercreditors |
| 6–8 | Closing, payoff of existing lender or factor, first draw |
When do larger companies end up here?
Most companies come to a large AR facility from a specific trigger: a bank line called or not renewed, a covenant default, growth beyond what the current factor can support, or an acquisition that doubled receivables. See bank called or cut my line and covenant default for how those situations are typically handled.
Companies already factoring with a smaller funder often step up to an ABL once profitability and reporting improve. A buyout of the incumbent is part of most of these transitions; see factor buyout.
What should you have ready before a large AR placement?
Bring three years of financial statements (reviewed or audited if you have them), interim financials, detailed AR and AP agings, a customer concentration report, inventory reports if relevant, existing loan or factoring agreements, and a short summary of why you need the facility and what changed. A clear explanation of any losses or covenant issues does more for pricing than hoping a funder will not ask.
Step by step
- Estimate your borrowing baseStart with gross AR, remove likely ineligibles and apply an 80%–90% advance to see realistic availability.
- Assemble the packageFinancial statements, agings, concentration report, inventory data and existing debt documents.
- Run a competitive processWe take the file to a short list of larger factors and ABL lenders suited to your profile.
- Compare full termsWeigh eligibility rules, reserves, covenants, reporting and fees, not just the headline rate.
- Clear diligence and closeComplete the field exam and documentation, pay off the incumbent and make the first draw.
Illustrative scenario
Aerospace supplier after a bank non-renewal
A Southeast aerospace components supplier with about $40MM in annual sales and $11MM of receivables learned its bank would not renew a $7MM line after a loss year tied to a program delay. Customers were defense primes and tier-one suppliers paying in 45–75 days.
- File packaged with a clear explanation of the program delay and the recovery backlog
- Term sheets received from an ABL lender and a large factor; the ABL required a covenant the company could not yet meet
- Selected a $10MM receivables facility from a large factor with an 85% advance and concentration caps by customer
- Field exam completed in week five; bank paid off and lien released at closing in week seven
Outcome: The company kept funding production through the recovery, with a plan to revisit ABL pricing once two profitable quarters were on the books.
A composite example for illustration, not a specific client, offer or promise of terms.
Questions people ask
What is the difference between ABL and factoring for a $10MM company?
ABL is a revolving loan secured by receivables and often inventory, priced as interest over a benchmark, usually with covenants. Factoring is a purchase of receivables with fewer covenants and generally higher cost. Profitable companies with strong reporting usually get better pricing from ABL; companies in transition often fit a large factor better.
How long does a large AR facility take to close?
Roughly four to eight weeks is typical. Field exams, inventory appraisals and intercreditor agreements with existing lenders are the main drivers. A well-prepared file with reconciled agings moves faster.
Do large factors still notify customers?
Many do, though larger factors are more flexible on non-notification for strong, established companies. ABL lenders typically use a lockbox or blocked account without changing how customers interact with you. Ask each funder how collections are handled.
What advance rate should I expect on receivables at this size?
Advance rates commonly run 80% to 90% of eligible receivables. Eligibility rules and concentration caps often matter more than the headline rate. A higher advance with strict eligibility can produce less availability than a lower advance with broader rules.
Are inventory advances included?
Often, yes. Inventory is usually advanced at a lower rate, commonly a percentage of cost or of net orderly liquidation value, and frequently capped as a share of total availability. An appraisal may be required.
Is FactorRoute the lender on large facilities?
No. We are not a lender and do not fund facilities. We prepare the file, introduce it to larger factors and ABL lenders, and help you compare terms. The funder you choose underwrites, documents and funds the facility.