Asset Classes in ABF

ABF can be applied to virtually any asset that generates cash flows or holds stable value. But different asset classes present distinct risk profiles, valuation challenges, and structural considerations that fundamentally shape how facilities are structured and priced.

This guide examines the major asset classes financed through ABF, from traditional receivables and inventory to emerging categories like renewable energy and subscription revenue. Understanding these differences is essential for structuring appropriate facilities.

Receivables

Receivables—amounts owed to a company for goods or services—are among the most commonly financed assets in ABF. They offer short duration, high liquidity, and well-established valuation frameworks.

Trade Receivables

Trade receivables arise from B2B transactions where goods or services are delivered on credit. They form the backbone of traditional asset-based lending and factoring.

Supply-Chain Finance / Reverse Factoring

In reverse factoring, the buyer (not the supplier) anchors the transaction — the supplier sells approved invoices to a funder at the buyer's credit risk, not the supplier's. This enables advance rates of 80-95%+ based on the buyer's credit quality. Global factoring turnover reached approximately €3.7-3.9T in 2024 (FCI Annual Review). SCF platforms include Taulia, Kyriba, and C2FO; the largest programmes are bank-operated.

Consumer Receivables

Consumer receivables include credit card balances, personal loans, auto loans, and other amounts owed by individuals. These portfolios feature high granularity but require sophisticated credit scoring and collections infrastructure.

Credit Card Receivables

Credit card receivables are typically securitised through a master trust structure: a revolving pool of accounts where new originations are added continuously during the revolving period. The trust auto-amortises on an early amortisation event, protecting investors if collateral performance deteriorates.

According to CFPB 2024 data, the general-purpose credit card charge-off rate was approximately 3.0%; private-label credit cards were higher at approximately 3.8%. US revolving consumer credit outstanding reached approximately $1.32T in Q4 2025.

Healthcare Receivables

Healthcare receivables present unique characteristics due to insurance companies, government payers (Medicare, Medicaid), and complex billing processes. Advance rates of 65-80% reflect the uncertainty around denials and coding accuracy.

Inventory & Equipment

Physical assets present different challenges than receivables: they must be stored, maintained, and may depreciate or become obsolete. But they often provide crucial additional collateral when receivables alone are insufficient.

Inventory

Inventory financing covers raw materials, work-in-process (WIP), and finished goods. Advance rates vary significantly by type—WIP is often excluded entirely due to valuation difficulty and limited liquidation value.

Equipment

Equipment financing ranges from standard machinery to highly specialised assets. Value depends heavily on secondary market depth and maintenance history.

Real Estate

Real estate-backed ABF ranges from traditional commercial mortgages to structured approaches involving rent rolls and property portfolios. The asset class offers tangibility but presents challenges in liquidity and jurisdiction-specific enforcement.

Commercial Real Estate (CRE)

CRE financing covers office, retail, industrial, and multifamily properties. Cash flows derive from rental income, while collateral value depends on property condition, location, and market dynamics.

Residential Real Estate

Residential mortgage financing at scale involves portfolios of home loans—conforming, non-QM, or specialty products. Securitisation provides the primary exit for most originators, with advance rates of 85-98% for conforming loans reflecting government guarantee support.

Loans

Financing portfolios of loans creates a “loan on loan” structure where a lender finances an originator's loan book. This is the core of specialty finance ABF—enabling non-bank lenders to scale their origination.

Merchant Cash Advances (MCAs)

Merchant Cash Advances are technically not loans but the purchase of a specified amount of future receivables at a discount. Repayment is via a daily percentage of card revenues (typically 5-20% of daily card turnover). MCAs use factor rates (e.g., 1.15-1.45) rather than APR, making cost comparison difficult. ABF structures for MCA portfolios are growing as fintechs like Clearco, Capchase, and Pipe securitise contracted revenue streams.

Buy Now, Pay Later (BNPL)

BNPL has emerged as a significant ABF asset class over the past decade, with platforms like Klarna, Affirm, and Afterpay originating hundreds of billions in short-duration consumer credit. The asset class presents unique characteristics that differ from traditional consumer loans.

BNPL receivables feature very short tenors (often 6-12 weeks), high origination velocity, and distinctive funding economics depending on whether the model is merchant-funded or consumer-funded. Both models rely heavily on forward flow arrangements to fund rapid origination growth.

Merchant-Funded vs Consumer-Funded Models

Key Players & Securitisation Activity

Major BNPL platforms have accessed both forward flow arrangements and capital markets securitisation to fund their portfolios.

BNPL-Specific Risk Characteristics

Performance Metrics

For major pay-in-4 platforms, the CFPB reported an aggregated charge-off rate of 1.83% in 2023 (down from 2.63% in 2022). Multi-month BNPL instalment products have significantly different — typically higher — loss profiles.

Data Centres

The explosion in AI/ML workloads has transformed data centre financing from niche infrastructure into a major ABF opportunity. Multiple collateral layers—equipment, real estate, and contracts—create diverse ABF structures, from pure equipment financing to hybrid project finance arrangements.

Data centre ABF differs from traditional infrastructure project finance by focusing on discrete, financeable assets with identifiable cash flows rather than entire enterprise credit. This approach enables more granular risk assessment and can provide capital efficiency for both hyperscalers and colocation providers.

ABF Structures in Data Centres

Collateral Deep-Dive

Key Metrics for ABF Lenders

Risk Framework

Lender Considerations

Royalties & IP

Intellectual property and royalty streams represent a growing area of ABF. These assets generate cash flows without physical depreciation but face unique valuation challenges and platform concentration risks.

Software & Technology IP

Software licensing revenue and technology patents present growing opportunities but require careful diligence around customer concentration and technology obsolescence. SaaS metrics like ARR, net retention, and churn inform creditworthiness.

Emerging Asset Classes

New asset classes continue to enter ABF as originators seek funding and investors seek yield. These require careful diligence but may offer attractive risk-adjusted returns for those with domain expertise.

Asset Class Comparison

Choosing the Right Structure

Different asset classes suit different ABF structures. Receivables and inventory typically work well in ABL revolvers with dynamic borrowing bases. Longer-dated assets like loans and real estate may suit term facilities or securitisation. Royalties and IP often require bespoke structures given their unique characteristics.