How a Credit Line Based on Receivables Works

Lucas and Luna break down how asset-based lending tied to accounts receivable works for small businesses, using the example of a $2 million manufacturer that turned $400,000 in stuck invoices into a revolving credit line. They explain the advance rate calculation, the role of the borrowing base certificate, and why lenders charge SOFR plus three to five percent. Luna challenges whether this is just factoring with a different name. Lucas contrasts the two structures and explains why retaining customer relationships matters. The hosts also touch on how lenders audit receivables and what happens if a customer pays late. A practical episode for any business owner sitting on unpaid invoices. #AccountsReceivable #AssetBasedLending #BorrowingBase #CashFlow #CreditLine #Factoring #Invoice #Lending #LenderAudit #Manufacturer #Receivables #RevolvingCredit #SmallBusiness #SOFR #SupplyChain #WorkingCapital #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo