An asset-based line lends against a borrowing base: set percentages of your eligible receivables, inventory and sometimes equipment. As you invoice and restock, availability rises, and as collateral shrinks, it falls.
It tends to suit businesses with large, steady receivables and inventory, such as distributors and manufacturers. Pricing is usually lower than unsecured options because the collateral carries much of the risk, but the monitoring is heavier. Expect regular borrowing base reports, field exams and a blanket lien.
The lender decides what counts as eligible. Old invoices, heavy customer concentrations, foreign receivables and slow-moving inventory are commonly excluded or discounted, so your usable line can sit well below the headline limit.