They will be able to raise funds for business expansion more smoothly if they can make use of their accounts receivables as collateral. ABL is said to be more time-consuming compared with lending against real estate collateral.
Viewed in another way, however, the process of utilizing ABL allows a borrower firm and a financial institution to take more time and have closer communications regarding the characteristics and future vision of firms’ businesses. This will encourage a borrower firm to make business decisions based on more accurate analysis of its growth potential and profitability.