8 Industries Where Asset-Based Financing Fits, and Why

Oct 6, 2026 · @Smart Business Funding

By Anthony Collin, CEO, Smart Business Funding. $500M+ funded since 2014. Updated October 2026. Asset-based financing is offered through our partner platform, and the partner sets the terms.

Asset-based financing works best when a business owns things that turn into cash on a predictable schedule. Some industries are built that way. Others aren’t, no matter how profitable they are.

Here are eight industries where asset-based financing tends to fit, the asset that does the heavy lifting in each, the catch to watch for, and the businesses where it usually doesn’t work.

The short version

Industry	Main fundable asset	What to watch
Wholesale distribution	Receivables and inventory	Customer concentration
Manufacturing	Receivables, inventory, equipment	Raw materials and work in process
Trucking and logistics	Freight receivables and trucks	Broker payment delays
Staffing	Receivables	Payroll timing
Construction	Equipment and progress billings	Retainage
Equipment rental	The rental fleet	Equipment age and use
Food and beverage production	Receivables from retailers	Perishable inventory
E-commerce and consumer products	Inventory	Few traditional receivables

1. Wholesale distribution

Distributors buy inventory, sell it on terms to business customers, and wait to get paid. That leaves two large, fundable assets on the balance sheet at once.

The catch: one big customer can dominate your receivables. Lenders typically cap any single customer at 10% to 20% of eligible receivables (Ratio), so a key account can count for less than you expect.

2. Manufacturing

Manufacturers often have all three major collateral types: receivables, inventory and machinery. That gives lenders several layers to lend against.

The catch: not all inventory counts equally. Finished goods generally earn higher advance rates than raw materials because they’re closer to becoming revenue (Legal Clarity), and work in process is often hard to value. For new machinery, equipment financing can sit alongside an asset-based line.

3. Trucking and logistics

Carriers deliver loads, invoice shippers or brokers, and wait for payment while fuel, drivers and insurance are due now. Freight receivables and the trucks themselves are both fundable.

The catch: slow-paying brokers push invoices toward the aging cutoff. Invoices more than about 90 days from invoice date commonly drop out of the borrowing base (Ratio).

4. Staffing

Staffing firms pay workers weekly but bill clients on longer terms. That gap is exactly what receivables-based financing is built to bridge, and staffing receivables are often owed by established companies.

The catch: payroll can’t wait for a slow month in your borrowing base. Keep a cushion of unused availability so a drop in billings doesn’t leave payroll short.

5. Construction

Contractors own valuable equipment and bill on progress. Equipment is appraised on orderly liquidation value and is often the steadiest collateral in the business.

The catch: retainage. Owners commonly hold back 5% to 10% of each progress payment until the project is complete (Paro). Many lenders won’t count retainage until it’s released, so your fundable receivables can run well below what you’ve billed.

6. Equipment rental

A rental company’s fleet is its business. Well-maintained equipment with an active resale market supports solid advances.

The catch: heavily used or specialized units appraise lower. Keep maintenance records current, because condition drives the appraisal.

7. Food and beverage production

Producers selling to grocery chains and distributors build receivables owed by large, creditworthy buyers, which lenders like.

The catch: perishable inventory. Stock that can’t be sold quickly is often treated as ineligible (ABF Journal), so expect most of the borrowing power to come from receivables rather than the warehouse.

8. E-commerce and consumer products

Brands holding significant inventory can borrow against it, especially finished goods with steady sales history.

The catch: online sellers often have few traditional receivables, so inventory carries the whole borrowing base, and inventory gets lower advance rates. Some lenders also advance against confirmed purchase orders from large retail customers (SFNet).

Where asset-based financing usually doesn’t fit

Restaurants, salons, fitness studios and many other service businesses get paid at the time of sale. They carry few receivables and little inventory that holds its value, so there’s not much for a borrowing base to measure.

That doesn’t mean they can’t get funded. It means a different structure fits better. A merchant cash advance such as our Direct Fund Program is based on consistent revenue rather than collateral, with a fixed daily or weekly remittance. A business line of credit is another option to compare.

Is your business a fit?

Start with 9 Things on Your Balance Sheet a Lender Will Fund to see which of your assets qualify. Then run your numbers through 7 Numbers an Asset-Based Lender Checks Before Saying Yes, and read 6 Red Flags Hiding in an Asset-Based Lending Term Sheet before you sign. If you own real estate, Your House or Your Building? compares property-backed options.

See all the industries we work with and how our process works. Ready to talk? Contact our team or start an application. More at smartbusinessfunder.com or 1-866-Re-Smart.

This article is for general education and is not legal, tax or financial advice. Eligibility, advance rates and terms vary by lender, industry and borrower and are subject to underwriting. The Direct Fund Program is a purchase of future receivables, not a loan.

For every option in one place, see our business funding overview and our business financing guide.