Asset Backed Lending

Credit facilities secured by short-term receivables, inventory, and trade assets

An Asset Backed Lending (ABL) Facility is a credit facility secured by short-term receivables, inventory, and trade assets. It is the most common facility type on Port Markets. They can be set up for both fintech originators & trading enterprises.

Each ABL Facility is configured as either Revolving or Term at launch - it determines how capital is deployed, recycled, and repaid.

Revolving ABL

Continuous drawdown and recycling of capital against eligible collateral. As receivables are collected, repaid capital is redeployed into new eligible assets within the same facility. Good for fintech originators with recurring, ongoing asset generation - trade finance companies, invoice factoring platforms, and distributors with continuous receivable flow.

Term ABL

Epochs

Every ABL Market operates on a pre-defined epoch - a fixed time period that governs when deposits and redemptions are processed. They are usually 90 days and during each epoch:

• Deposit requests are queued and processed at epoch boundary.

• Redemption requests are queued during a 7 day redemption window, 30 days before epoch boundary. Revolving facilities are rolled over automatically and by end of epoch, incoming liquidity and outgoing requests are cleared. If redemption requests exceed available liquidity, they are filled pro-rata (pari-passu). If redemption cannot be processed fully, the facility enters a cure period.

How It Works

An ABL Facility operates as a secured credit facility. The borrower pledges a pool of eligible assets as collateral, and capital is deployed against these assets subject to defined parameters. The facility mechanics differ based on the mode configured at launch:

Revolving

The borrower pledges a pool of eligible receivables (and in some cases, inventory) as collateral. Capital is drawn against these assets up to a pre-defined advance rate, and as collections are received, the facility revolves — repaid capital can be redeployed into new eligible assets.

The structure is analogous to a traditional asset backed lending facility, with on-chain transparency and tokenized investor positions to enable fast capital turnover and efficiency.

Capital Flow

Investors → Market (SPV) →  Originator/Trading Enterprise → Receivables / Inventory
                                              ↓
                              Obligors pay → Collections → SPV Waterfall → Investors

1. Investors allocate capital to the Market.

2. Fintech Originator/Trading Enterprise requests drawdowns against eligible receivables, subject to advance rate and concentration limit checks.

3. Capital is deployed to finance the underlying trade or inventory.

4. Obligors pay at maturity of the receivable.

5. Collections flow through the SPV waterfall — senior investor claims are satisfied first, followed by junior positions.

6. Facility revolves - repaid capital is available for new drawdowns against fresh eligible assets.

Term

Key Parameters

Advance Rate

The advance rate determines how much capital can be drawn against each dollar of eligible receivables. Advance rates are calibrated based on:

• Historical collection performance and dilution rates

• Obligor credit quality

• Asset type and tenor

• Geographic and currency risk

Typical advance rates for trade receivables on Port range from 80% to 95%, depending on the asset quality and structural protections.

Eligible Assets

Not all assets originated by the borrower qualify for financing under the facility. Eligibility criteria define which receivables can be included in the borrowing base:

• Obligor quality: Minimum credit rating or financial profile requirements for the end obligor (the party owing on the receivable).

• Tenor limits: Maximum days outstanding for a receivable to be eligible. Receivables beyond a defined aging threshold are excluded.

• Geographic restrictions: Eligible jurisdictions for obligors and underlying transactions.

• Exclusion criteria: Disputed receivables, related party receivables, and receivables from sanctioned entities are excluded.

Borrowing Base

The Borrowing Base is the total value of eligible receivables multiplied by the advance rate. This represents the maximum amount the counterparty can draw at any given time.

Borrowing Base = Σ (Eligible Receivable Face Value) × Advance Rate

The borrowing base is recalculated periodically (typically weekly) via API integrations or portfolio reports. As receivables are collected and new receivables are originated, the borrowing base adjusts dynamically.

Concentration Limits

Concentration limits prevent excessive exposure to any single risk factor:

• Single Obligor Limit: Maximum percentage of the facility that can be exposed to any individual obligor (e.g., no more than 10% to a single buyer).

• Industry Limit: Maximum exposure to any single industry sector.

• Geographic Limit: Maximum exposure to any single country or region.

• Top N Obligor Limit: Maximum combined exposure to the largest N obligors.

If a drawdown request would breach a concentration limit, it is rejected until the portfolio is rebalanced.

Amortization Schedule (Term Facilities)

For term facilities, repayment structures vary based on the borrower's cash flow profile:

Bullet Repayment

Full principal and interest due at maturity. Common for very short-tenor loans (30 days) where a single payment is practical.

Amortizing

Balloon

Borrower Eligibility

Each Market defines borrower eligibility criteria for facilities:

• Business type: Eligible industries and business models.

• Financial profile: Minimum revenue, operating history, and financial health indicators.

• Credit assessment: Minimum credit score or rating from the fintech originator's underwriting model.

• Geographic eligibility: Permitted jurisdictions.

• Loan history: Track record of prior borrowing and repayment performance.

Covenants (Revolving Facilities)

Ongoing conditions the counterparty must satisfy, including minimum collection ratios, maximum delinquency and default rates, minimum tangible net worth, and reporting compliance. Covenant breaches trigger defined escalation procedures. See Structural Protections — Covenants for the full list and enforcement details.

Structural Protections

ABL Facilities incorporate multiple layers of downside protection: counterparty-retained first-loss tranches (typically 5–20%), over-collateralization from advance rate buffers, concentration limits enforced at drawdown, insurance coverage where applicable, SPV ring-fencing of facility assets, and additional collateral and security (guarantees, receivables assignment). In the event of default, defined recovery procedures activate including collection acceleration, backup servicing, and legal enforcement.

See Structural Protections for the complete framework including calibration methodology, and Default & Recovery for the full escalation and recovery process.

Use Cases

ABL Facilities are well-suited for:

Revolving

• Trade receivables financing: Financing invoices from creditworthy buyers across global trade corridors.

• Approved payables programs: Financing supplier payments on behalf of large corporate buyers.

• Inventory financing: Financing goods in transit or warehoused inventory backed by warehouse receipts or bills of lading.

• Distributor financing: Providing working capital to distributors purchasing from manufacturers for resale.

Term

• Seasonal businesses: Businesses requiring short-term capital to finance inventory ahead of peak demand periods.

• SME bridge financing: Small businesses bridging cash flow gaps between receiving orders and collecting payment.

• Supplier financing: Businesses purchasing raw materials or goods for resale that require short-term capital to fund procurement.

• Operational financing: Short-term capital for payroll, rent, or other operational expenses during growth phases.

Examples

Example: Revolving - Textile Supply Chain Finance

A textile supply chain finance platform originates receivables from textile manufacturers selling to major European retailers. The Market is structured as a revolving ABL Facility:

• Facility size: $5M

• Advance rate: 80%

• Tenor: 60–90 day receivables

• Concentration: Max 15% per obligor

• Junior tranche: 20% retained by fintech originator

• Insurance: Trade credit insurance covering 90% of obligor default risk

• Target yield: 12–14% annualized for senior investors

Example: Term - Green Coffee Pre-Procurement

A trading enterprise borrows to purchase green coffee beans in the off-season, locking in supply and avoiding peak harvest pricing. The Market is structured as a term ABL Facility:

• Facility size: $4M

• Use of funds: Purchase of green coffee inventory (warehouse receipt backed)

• Tenor: 120–180 days (aligns with procurement → roasting → offtake)

• Repayment: Bullet at maturity (from sales to roasters/export)

• Interest rate: 11–15% annualized (to trading enterprise)

• First-loss: 20% held by facility arranger or trading enterprise

• Collateral: Warehouse receipts; invoice receivables.

• Target yield: 9–12% annualized for senior investors